Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
TRS
FUND(S):
2601
Sources of Revenue:
General Fund
Legislation creates:
Neither Program nor Fund
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
The Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 18-7A-28e ( c ) prohibits additional benefits for active members prior to July 1, 2034. See the Pension Committee chairman for details.
The bill adds a secondary post retirement survivor benefit election similar to PERS. Although the option does require an actuarial adjustment, expected anti-selection will increase TRS liabilities for active members as well as current retirees and therefore violates Pension Reform.
Expected anti-selection cost impacting Normal Cost and Actuarial Accrued Liabilities were not calculated.
Fiscal Detail of Actuarial Impact
Impact on current benefit costs, prior service benefit costs and ongoing contribution requirements following full implementation.
| Impact On |
Following Full Implementation |
| Increase in Unfunded Actuarial Accrued Liability |
Initial Impact on Annual Contribution Requirement of System(s) |
Contribution Increase as a Percentage of Annual Payroll |
| Total Annual Costs |
$999,999.00 |
$999,999.00 |
9.00 % |
| Normal Cost of System |
N/A |
$999,999.00 |
9.00 % |
| Past Service Liabilities |
$999,999.00 |
$999,999.00 |
9.00 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
|
N/A |
Explanation of above Actuarial estimates:
There is an expected anti-selection impact on the long term costs of the plan for active and retired members. The cost was not determined since such an increase for active members violates pension reform.
Analysis of Impact on Public Pension Policy:
The bill violates Pension Reform provisions which could have a significant impact on the State and its credit ratings if revised.
The bill would require revisions regarding Pension Reform limitations for active members in order to be considered.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 18-7A-28e ( c ) prohibits additional benefits for active members prior to July 1, 2034. See the Pension Committee chairman for details.
The bill adds a secondary post retirement survivor benefit election similar to PERS. Although the option does require an actuarial adjustment, expected anti-selection will increase TRS liabilities for active members as well as current retirees and therefore violates Pension Reform.
Expected anti-selection cost impacting Normal Cost and Actuarial Accrued Liabilities were not calculated.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2007
Increase/Decrease
(use"-") |
2008
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
99,999 |
99,999 |
99,999 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
There is an expected anti-selection impact on the long term costs of the plan for active and retired members. The cost was not determined since such an increase for active members violates pension reform.
Memorandum
The bill violates Pension Reform provisions which could have a significant impact on the State and its credit ratings if revised.
The bill would require revisions regarding Pension Reform limitations for active members in order to be considered.
Person submitting Fiscal Note: Harry W. Mandel, MAAA, MSPA, Board Actuary
Email Address: HMandel@wvadmin.gov