Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

Emergency Medical Services Retirement System

FUND(S):

EMSRS

Sources of Revenue:

Other Fund local governments

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 allows for certain EMSRS members who were with PERS agencies and had not purchased available “past service credits” with their PERS agency to elect to purchase the service directly in EMSRS.
    
    Costs can only be determined after the purchase election period expires 12/31/2010. The purchase of service is at 60% of the AAL, generating a UAAL of 40% of the benefit value under the Plan. This is consistent with EMSRS provisions allowing other past service purchases for non PERS agencies. Estimated costs were included in the original EMSRS legislation.
    
    Final costs will be calculated base on actual usage of the service purchase provisions in the Bill. Based on previous purchase experience, it is estimated that UAAL in the range of $40,000 to $60,000 will result during the election period. Based on the average of $50,000, the increase in contribution requirement will be $4,000 through FY2037. The service purchase impacts the UAAL only and does not change the Normal Cost.



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 $50,000.00 $4,000.00 0.02 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $50,000.00 $4,000.00 0.02 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2037 N/A


Explanation of above Actuarial estimates:


    Relatively few members with prior service eligible for purchase have been identified at the preparation of this AN. Based on the purchase experience through 12/31/2008 for non PERS agencies, a net purchase rate of about 10% is expected. The actual UAAL cannot be determined until the purchase period window is closed.
    
    If significantly more eligible members are identified or a higher usage rate occurs, actual usage could exceed the projected usage as shown in this AN.

Analysis of Impact on Public Pension Policy:


    This bill treats these PERS agencies with prior service credits in a like manner to non PERS agencies with past service available for purchase in the original legislation.
    
    A clarifying provision is required in the Bill to define the “retroactive service” referenced in the Bill under “section two, article ten, chapter five” of the code.



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    This is a local governments plan. The plan does not impact the costs nor revenues of state government.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
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):


    This is a local governments plan. The plan does not impact the costs nor revenues of state government.



Memorandum


    This is a local governments plan. The plan does not impact the costs nor revenues of state government.



    Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
    Email Address: harry.w.mandel@wv.gov