Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
PERS
FUND(S):
PERS 2510
Sources of Revenue:
Other Fund State and 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 as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 5-10-22h ( c ) prohibits increases to new or existing active members if PERS funding percentage is under 85% funded. The current PERS funded percentage as of its latest July 1, 2013 Actuarial Valuation is 79.7%. Active benefits may not be adopted until after the restriction is met. See the Pension Committee chairman for details.
PERS is a public cost sharing employers retirement plan subject to the restrictions of public plans. Mental Hygiene Commissioners in West Virginia work either for private employers or are self employed. As such, Mental Hygiene Commissioners ARE NOT ELIGIBLE FOR COVERAGE UNDER PERS DUE TO THE EMPLOYMENT RELATIIONSHIP. Coverage under PERS would result in PERS losing its public plan eligibility and subject PERS to the private plan rules of the Internal Revenue Code and ERISA. Such a change would significantly increase the funding costs under PERS.
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 |
$999,999,999.00 |
$999,999,999.00 |
99.99 % |
Normal Cost of System |
N/A |
$999,999,999.00 |
99.99 % |
Past Service Liabilities |
$999,999,999.00 |
$999,999,999.00 |
99.99 % |
Fiscal Year Past Service Amortization Period Ends |
N/A |
|
N/A |
Explanation of above Actuarial estimates:
Cost would increase significantly due to PERS losing its public plan protections.
Analysis of Impact on Public Pension Policy:
It is against West Virginia pension policy to cover private employers or businesses under a West Virgia public pension plan such as PERS.
It is against West Virginia public pension policy to violate the 2005 Pension Reform restrictions. The changes is the Bill would violate 2005 Pension Reform restrcictions for PERS if allowed.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 5-10-22h ( c ) prohibits increases to new or existing active members if PERS funding percentage is under 85% funded. The current PERS funded percentage as of its latest July 1, 2013 Actuarial Valuation is 79.7%. Active benefits may not be adopted until after the restriction is met. See the Pension Committee chairman for details.
PERS is a public cost sharing employers retirement plan subject to the restrictions of public plans. Mental Hygiene Commissioners in West Virginia work either for private employers or are self employed. As such, Mental Hygiene Commissioners ARE NOT ELIGIBLE FOR COVERAGE UNDER PERS DUE TO THE EMPLOYMENT RELATIIONSHIP. Coverage under PERS would result in PERS losing its public plan eligibility and subject PERS to the private plan rules of the Internal Revenue Code and ERISA. Such a change would significantly increase the funding costs under PERS.
Fiscal Note Detail
Effect of Proposal |
Fiscal Year |
2014 Increase/Decrease (use"-") |
2015 Increase/Decrease (use"-") |
Fiscal Year (Upon Full Implementation) |
1. Estmated Total Cost |
999,999,999 |
999,999,999 |
999,999,999 |
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):
Cost would increase significantly due to PERS losing its public plan protections.
Memorandum
It is against West Virginia pension policy to cover private employers or businesses under a West Virgia public pension plan such as PERS.
It is against West Virginia public pension policy to violate the 2005 Pension Reform restrictions. The changes is the Bill would violate 2005 Pension Reform restrcictions for PERS if allowed.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov