| Date Requested:January 12, 2012 Time Requested:03:55 PM |
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| Retirement Systems Impacted by Legislation: Public Employees and Teachers Retirement Systems |
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|---|---|---|---|
| FUND(S) PERS 2510: TRS 2601 |
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Sources of Revenue You must select Revenue Source(s)! | |||
| General Fund,Other Fund Local Governments | |||
Does the proposed legislation create:
Neither Program nor Fund You must make a selection(s)! | |||
| This Actuarial Note has been prepared for the Committee Substitute for Senate Bill No. 163. The Committee Substitute provided by the Senate Pension Committee reduces the retiree increase from $24 to $12 in the formula providing the increase.
This Committee Substitute Bill as drafted meets WV Statutes under 2005 Pension Reform Legislation. For PERS, Section 5-10-22h(a) limitation of $55,153,000 is met for a retiree increase. For TRS, Section 18-7A-28e ( a ) limitation of $94,451,000 is met for a retiree increase.. PERS UAAL would increase by $51,205,000. The contribution for PERS would increase by $10,522,000 annually for six years, FY2013 through FY2018. TRS UAAL would increase by $92,378,000. The contribution for TRS would increase by $18,982,000 annually for six years, FY2013 through FY2018. |
| 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 | $143,583,000.00 | $29,504,000.00 | 1.04 % |
| Normal Cost of System | N/A | $0.00 | 0.00 % |
| Past Service Liabilities | $143,583,000.00 | $29,504,000.00 | 1.04 % |
| Fiscal Year Past Service Amortization Period Ends |
N/A | FY 2018 | N/A |
Explanation of above estimates |
|---|
| Retirees and beneficiaries receiving retirement benefits on July 1, 2012 would receive an annual increase of $12.00 time years of benefit service, payable monthly under their current benefit option. Since increased benefits are for retirees only, there is no increase in the Normal Cost for either plan.
The benefit increase was run as of the latest actuarial valuation date of July 1, 2011 using ProVal actuarial software used by the CPRB. The increase is representative of the increase on the actual payment effective date under the bill. |
Analysis of Impact on Public Pension Policy |
| The retiree benefit increase provided under the Senate Pensions Committee Substitute for Bill No. 163 meets 2005 Pension Reform limitations.
It is noted that under 2005 Pension Reform provisions, the retiree increase may be amortized over 6 years at $29,504,000 per year. Alternatively, to fully fund the increase in current appropriations this legislative session would require a combined $143,583,000 appropriation dedicated to the increase in the bill. |
Explain in a clear and concise manner what effect this measure will have on costs and revenues of state government.
| This Actuarial Note has been prepared for the Committee Substitute for Senate Bill No. 163. The Committee Substitute provided by the Senate Pension Committee reduces the retiree increase from $24 to $12 in the formula providing the increase.
This Committee Substitute Bill as drafted meets WV Statutes under 2005 Pension Reform Legislation. For PERS, Section 5-10-22h(a) limitation of $55,153,000 is met for a retiree increase. For TRS, Section 18-7A-28e ( a ) limitation of $94,451,000 is met for a retiree increase.. PERS UAAL would increase by $51,205,000. The contribution for PERS would increase by $10,522,000 annually for six years, FY2013 through FY2018. TRS UAAL would increase by $92,378,000. The contribution for TRS would increase by $18,982,000 annually for six years, FY2013 through FY2018. |
| 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 | ||
|---|---|---|---|
| 2012 Increase/Decrease (use"-") |
2013 Increase/Decrease (use"-") |
Fiscal Year (Upon Full Implementation) | |
| 1. Estmated Total Cost | 29504000 | 29504000 | |
| Personal Services | |||
| Current Expenses | |||
| Repairs and Alterations | |||
| Assets | |||
| Other | 29504000 | 29504000 | |
| 2. Estimated Total Revenues | |||
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3. Explanation of above estimates (including long-range effect):
Retirees and beneficiaries receiving retirement benefits on July 1, 2012 would receive an annual increase of $12.00 time years of benefit service, payable monthly under their current benefit option. Since increased benefits are for retirees only, there is no increase in the Normal Cost for either plan.
The benefit increase was run as of the latest actuarial valuation date of July 1, 2011 using ProVal actuarial software used by the CPRB. The increase is representative of the increase on the actual payment effective date under the bill. |
| The retiree benefit increase provided under the Senate Pensions Committee Substitute for Bill No. 163 meets 2005 Pension Reform limitations.
It is noted that under 2005 Pension Reform provisions, the retiree increase may be amortized over 6 years at $29,504,000 per year. Alternatively, to fully fund the increase in current appropriations this legislative session would require a combined $143,583,000 appropriation dedicated to the increase in the bill. |
| Person Submitting Fiscal Note |
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| Harry W. Mandel, Board Actuary, MAAA, MSPA, EA |
| harry.w.mandel@wv.gov |