Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
Teachers Retirement System
FUND(S):
TRS 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).
This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 18-7A-28e( c ) which prohibits any increase in benefits to active members. The bill would provide up to 6 additional months of disability retirement benefits to active members who retire under disability retirement in the future.
See the Pension Committee chairman for details.
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 |
$999,999,999.00 |
$999,999,999.00 |
99.99 % |
| Normal Cost of System |
N/A |
$999,999,999.00 |
99.99 % |
| Past Service Liabilities |
$999,999,999.00 |
$999,999,999.00 |
99.99 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
|
N/A |
Explanation of above Actuarial estimates:
The bill eliminates the disability retirement eligibility requirement that the member with 10 or more years of service must be disabled for 6 months prior to application for disability requirement. Additionally, members with 5 but less than 10 years of service would no longer be required to be absent from work due to disability for 6 months prior to application.
The elimination of the 6 month waiting periods effectively allows members to receive 6 additional months of disability retirement benefits.
Analysis of Impact on Public Pension Policy:
The bill as drafted violates 2005 Pension Reform restrictions for improvements to active members benefits. The bill would need to amend 2005 Pension Reform restrictions to be allowable under current Statutes. Such amendment in the 2005 Pension Reform statutes would be contrary to public pension policy set by the Legislature in 2005 when Pension Reform was adopted by the Legislature.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 18-7A-28e( c ) which prohibits any increase in benefits to active members. The bill would provide up to 6 additional months of disability retirement benefits to active members who retire under disability retirement in the future.
See the Pension Committee chairman for details.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
999,999,999 |
999,999,999 |
999,999,999 |
| 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):
The bill eliminates the disability retirement eligibility requirement that the member with 10 or more years of service must be disabled for 6 months prior to application for disability requirement. Additionally, members with 5 but less than 10 years of service would no longer be required to be absent from work due to disability for 6 months prior to application.
The elimination of the 6 month waiting periods effectively allows members to receive 6 additional months of disability retirement benefits.
Memorandum
The bill as drafted violates 2005 Pension Reform restrictions for improvements to active members benefits. The bill would need to amend 2005 Pension Reform restrictions to be allowable under current Statutes. Such amendment in the 2005 Pension Reform statutes would be contrary to public pension policy set by the Legislature in 2005 when Pension Reform was adopted by the Legislature.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov