Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
PERS and TRS
FUND(S):
PERS 2510; TRS 2601
Sources of Revenue:
Other Fund State & Local Govts
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 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 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 |
$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 Actuarial 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
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
| Effect of Proposal |
Fiscal Year |
2013
Increase/Decrease
(use"-") |
2014
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
9,758,000 |
9,758,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
9,758,000 |
9,758,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above Fiscal Note estimates (include possible 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 Address: harry.w.mandel@wv.gov