Actuarial Fiscal Note
Date Requested:February 24, 2015
Time Requested:02:26 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3258 |
Introduced |
HB2929 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
PERS
FUND(S):
PERS 2510
Sources of Revenue:
Other Fund State and Local Govt's
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 active members when PERS Actuarial Accrued Liabilities are less than 85% funded as determined in the last actuarial valuation for PERS. The funded percentage of the Actuarial Accrued Liabilities for PERS is 83.1% funded as of the latest actuarial valuation date of July 1, 2014. See the Pension Committee chairman for details.
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:
The bill provides additional military service credits for certain West Virginia National Guard members based on both hours servced and years of National Guard service at retirement. This provides an increase in National Guard service military retirement benefits under PERS provided free to the member.
This active benefit improvement is not currently allowed under 2005 Pension Reform
Analysis of Impact on Public Pension Policy:
The benefit improvements provided in the Bill are a violation of 2005 Pension Reform benefit improvement limitations for PERS due to a funded ratio below 85.0%.
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 active members when PERS Actuarial Accrued Liabilities are less than 85% funded as determined in the last actuarial valuation for PERS. The funded percentage of the Actuarial Accrued Liabilities for PERS is 83.1% funded as of the latest actuarial valuation date of July 1, 2014. See the Pension Committee chairman for details.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2015
Increase/Decrease
(use"-") |
2016
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):
The bill provides additional military service credits for certain West Virginia National Guard members based on both hours servced and years of National Guard service at retirement. This provides an increase in National Guard service military retirement benefits under PERS provided free to the member.
This active benefit improvement is not currently allowed under 2005 Pension Reform
Memorandum
This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 5-10-22h (c ) which prohibits increases to active members as provided under the Bill since the Actuarial Accrued Liabilities are less than 85.0% funded. The percentage funded is currently 83.1%. The Bill as drafted violates this limitation. See the Pension Committee chairman.
To be considered, the bill requires amendment to the 2005 Pension Reform statutes to allow the benefits provided under the bill. Such a change could impact the State’s credit rating and should not be approved without careful annalyis.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv,gov