Fiscal/Actuarial Note
Date Requested:February 17, 2013
Time Requested:01:55 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2013R1680 Introduced HB2203
CBD Subject: ONE TIME
Retirement Systems Impacted by Legislation:
PERS and TRS
FUND(S)
PERS 2510; TRS 2601
Sources of Revenue
You must select Revenue Source(s)!
Other Fund State & Local Govts
Does the proposed legislation create:
You must make a selection(s)!
Neither Program nor Fund

    This Bill provides a one time 3% lifetime benefit increase on July 1, 2013 for retirees and beneficiaries under PERS and TRS. To be eligible, the retiree must be 60 or older with at least 5 years of retirement but not be age 77 and older with 12 or more years of retirement.
    
    For PERS, the UAAL increases by $16,488,000 with a 6 year amortization requirement of $3,388,000 per year through FY 2019.
    
    For TRS, the UAAL increases by $31,000,000 with a 6 year amortization requirement of $6,370,000 per year through FY 2019
    
    The retiree improvement is allowable under 2005 Pension Reform.
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 $47,488,000.00 $9,758,000.00 0.36 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $47,488,000.00 $9,758,000.00 0.36 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2019 N/A
Explanation of above estimates
    Retirees and beneficiaries who meet the age 70 and 5 year requirement and were not in the 2006 retiree increase, receive a 3% increase in their monthly benefit starting July 1, 2013.
    
    The UAAL amount was calculated through actuarial software by CPRB actuarial staff.
Analysis of Impact on Public Pension Policy
    Provides a retiree increase to a limited number of PERS and TRS retirees. The amount is allowable under 2005 Pension Reform limitations and therefore is within current legislative policy limitations.
Fiscal Note Summary

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

    This Bill provides a one time 3% lifetime benefit increase on July 1, 2013 for retirees and beneficiaries under PERS and TRS. To be eligible, the retiree must be 60 or older with at least 5 years of retirement but not be age 77 and older with 12 or more years of retirement.
    
    For PERS, the UAAL increases by $16,488,000 with a 6 year amortization requirement of $3,388,000 per year through FY 2019.
    
    For TRS, the UAAL increases by $31,000,000 with a 6 year amortization requirement of $6,370,000 per year through FY 2019
    
    The retiree improvement is allowable under 2005 Pension Reform.

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
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 9758000 9758000
Personal Services
Current Expenses
Repairs and Alterations
Assets
Other 9758000 9758000
2. Estimated Total Revenues
3. Explanation of above estimates (including long-range effect):
    Retirees and beneficiaries who meet the age 70 and 5 year requirement and were not in the 2006 retiree increase, receive a 3% increase in their monthly benefit starting July 1, 2013.
    
    The UAAL amount was calculated through actuarial software by CPRB actuarial staff.


Memorandum
    Provides a retiree increase to a limited number of PERS and TRS retirees. The amount is allowable under 2005 Pension Reform limitations and therefore is within current legislative policy limitations.
Person Submitting Fiscal Note
Harry W. Mandel, MAAA, MSPA, EA, Board Actuary
Email
harry.w.mandel@wv.gov