Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
Public Employees Retirement System
FUND(S):
2510
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 5-10-22h ( c ) prohibits increases in active member benefits unless PERS is at least 85% funded on the latest actuarial valuation date. As of July 1, 2008, PERS funded percentage was 84.2% therefore failing the funded level test. See the Pension Committee chairman for details.
The bill provides additional military service credits in PERS for various lengths of National Guard service. Service periods are recognized outside of armed conflicts currently restricting active military service credits. The actuary does not have any statistical information available regarding PERS members with National Guard service that would be required to attempt to quantify the costs of the Bill.
Costs have not been determined for the benefits provided in this bill.
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 actuary does not have information on PERS members with National Guard service that can be applies to calculate the costs of the service being provided under the bill. Information needed would include the length of national guard service and the amount of military service credits already available under PERS for the member due to periods of activation of National Guard units. The actuary is not aware of any immediate source of this data.
Analysis of Impact on Public Pension Policy:
This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 5-10-22h ( c ) prohibits increases in active member benefits unless PERS is at least 85% funded on the latest actuarial valuation date. As of July 1, 2008, PERS funded percentage was 84.2% therefore failing the funded level test. Failure to restrict benefits as provided under 2005 Pension Reform could have an adverse impact on the financial credit rating of the State of West Virginia.
If this benefit is to be pursued, it is recommended that a study resolution be passed with sufficient funding to complete a survey of PERS members regarding their National Guard service and activation service they currently have completed.
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 5-10-22h ( c ) prohibits increases in active member benefits unless PERS is at least 85% funded on the latest actuarial valuation date. As of July 1, 2008, PERS funded percentage was 84.2% therefore failing the funded level test. See the Pension Committee chairman for details.
The bill provides additional military service credits in PERS for various lengths of National Guard service. Service periods are recognized outside of armed conflicts currently restricting active military service credits. The actuary does not have any statistical information available regarding PERS members with National Guard service that would be required to attempt to quantify the costs of the Bill.
Costs have not been determined for the benefits provided in this bill.
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 |
0 |
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 actuary does not have information on PERS members with National Guard service that can be applies to calculate the costs of the service being provided under the bill. Information needed would include the length of national guard service and the amount of military service credits already available under PERS for the member due to periods of activation of National Guard units. The actuary is not aware of any immediate source of this data.
Memorandum
This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 5-10-22h ( c ) prohibits increases in active member benefits unless PERS is at least 85% funded on the latest actuarial valuation date. As of July 1, 2008, PERS funded percentage was 84.2% therefore failing the funded level test. Failure to restrict benefits as provided under 2005 Pension Reform could have an adverse impact on the financial credit rating of the State of West Virginia.
If this benefit is to be pursued, it is recommended that a study resolution be passed with sufficient funding to complete a survey of PERS members regarding their National Guard service and activation service they currently have completed.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov