Fiscal/Actuarial Note
Date Requested:January 24, 2011
Time Requested:05:03 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2011R1922 Introduced HB2765
CBD Subject: HEROES EARNINGS
Retirement Systems Impacted by Legislation:
CPRB Administered Plans
FUND(S)
ALL
Sources of Revenue
You must select Revenue Source(s)!
General Fund,Other Fund State and Local Govts
Does the proposed legislation create:
You must make a selection(s)!
Neither Program nor Fund

    The bill is intended to bring all CPRB administered plans into compliance with the federal Heroes Earnings Assistance and Relief Tax Act of 2008. Compliance is required to keep each plan’s federally qualified tax exempt status.
    
    The primary benefit contained in the bill is to provide that if a member of a system is called into active duty from covered employment and dies while on such active duty, the retirement system shall provide the same death benefit as if the member were actively employed on the date of death.
    
    The additional benefit applies to a very select circumstance for members of the military. The death benefit assumptions in CPRB plans assume continuous employment so that regular death benefit eligibility is assumed to be uninterrupted. The Board Actuary does not anticipate any change in current assumptions due to this bill. The Normal Cost and Actuarial Accrued Liabilities for each CPRB administered plan to which this bill applies shall be unchanged.
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 $0.00 $0.00 0.00 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/A
Explanation of above estimates
    There is no cost impact since both the Normal Cost and Actuarial Accrued Liabilities shall be determined under the current actuarial assumptions adopted by the CPRB for each impacted plan without adjustment.
    
    Benefits under this bill are expected to be at most a minor increase in death experience due to higher exposure to death decrements while on active duty versus the current exposure during full time employment.
    
    For the long term, future experience studies will automatically adjust future assumptions should excessive experience warrant a change.
Analysis of Impact on Public Pension Policy
    The benefits provided in this bill are required by federal statutes and therefore must be adopted to protect each covered plan’s federal tax qualification.
    
    Due to the federal requirement, the minimal benefit impact, and the fact that the costs of each plan will not be impacted at this time, the Pension Reform restrictions are not believed applicable to this bill.
Fiscal Note Summary

Explain in a clear and concise manner what effect this measure will have on costs and revenues of state government.

    The bill is intended to bring all CPRB administered plans into compliance with the federal Heroes Earnings Assistance and Relief Tax Act of 2008. Compliance is required to keep each plan’s federally qualified tax exempt status.
    
    The primary benefit contained in the bill is to provide that if a member of a system is called into active duty from covered employment and dies while on such active duty, the retirement system shall provide the same death benefit as if the member were actively employed on the date of death.
    
    The additional benefit applies to a very select circumstance for members of the military. The death benefit assumptions in CPRB plans assume continuous employment so that regular death benefit eligibility is assumed to be uninterrupted. The Board Actuary does not anticipate any change in current assumptions due to this bill. The Normal Cost and Actuarial Accrued Liabilities for each CPRB administered plan to which this bill applies shall be unchanged.

Fiscal Note Detail
Show over-all effect in Item 1 and 2 and, in Item 3, give an explanation of Breakdown by fiscal year, including long-range effect.
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services
Current Expenses
Repairs and Alterations
Assets
Other
2. Estimated Total Revenues
3. Explanation of above estimates (including long-range effect):
    There is no cost impact since both the Normal Cost and Actuarial Accrued Liabilities shall be determined under the current actuarial assumptions adopted by the CPRB for each impacted plan without adjustment.
    
    Benefits under this bill are expected to be at most a minor increase in death experience due to higher exposure to death decrements while on active duty versus the current exposure during full time employment.
    
    For the long term, future experience studies will automatically adjust future assumptions should excessive experience warrant a change.


Memorandum
    The benefits provided in this bill are required by federal statutes and therefore must be adopted to protect each covered plan’s federal tax qualification.
    
    Due to the federal requirement, the minimal benefit impact, and the fact that the costs of each plan will not be impacted at this time, the Pension Reform restrictions are not believed applicable to this bill.
Person Submitting Fiscal Note
Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email
harry.w.mandel@wv.gov