Actuarial Fiscal Note

Date Requested:February 12, 2016
Time Requested:12:00 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2655 Introduced HB4519
CBD Subject: Retirement

Retirement Systems Impacted by Legislation:

MPFRS and PERS

FUND(S):

MPFRS amd PERS

Sources of Revenue:

Other Fund 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 for a window of time during which transfers will be allowed from PERS employers into the Municipal Police and Fire Fighters Retirement System hired on or after July 1, 2015 (Tier 2) and participating in PERS to join the MPFRS. The PERS employers must elect to join the MPFRS plan during the transfer window for Tier 2 Police and Firefighters employees only.
    
    For any service credited under PERS from July 1, 2015 to the transfer date will be credited under MPFRS. Assets held by PERS for transferring members shall be transferred to MPFRS. Transferring members must also make up member contributions of 4.0% of payroll for the transferring service from PERS within the window.
    
    MPFRS has a member contribution rate of 8.5% of pay and an employer contribution rate of 8.5% of pay. The transfers shall be subject to these rates and are subject to any future contibution rate changes as may be authorized by the CPRB Board as required to fund the MPFRS.
    
    Based on the limited membership and past service, it is expected that the current contributiion rates are sufficient to fund MPFRS. The employer contribution rate of 8.5% is less than the current PERS contibution rate of 13.5% (reducing to 12.0% effective July 1, 2016).



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 $0.00 $0.00 0.00 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/A


Explanation of above Actuarial estimates:


    This bill provides for a transfer window between PERS and MPFRS for Tier 2 PERS qualifying employees whose employer elects the transfer for its Tier 2 Police and Firefighters. The transfer is for participation only and does not provide for an increase in the current benefit formulas.
    
    Costs are administrative in nature and the level of costs will be dependent on the number of members electing to complete the transfer.

Analysis of Impact on Public Pension Policy:


    The bill allows certain PERS employers to provide Municipal Police and Firefigters Retirement System benefits to their quallifying Police and Firefighter employees.



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    This Bill provides for a window of time during which transfers will be allowed from PERS employers into the Municipal Police and Fire Fighters Retirement System hired on or after July 1, 2015 (Tier 2) and participating in PERS to join the MPFRS. The PERS employers must elect to join the MPFRS plan during the transfer window for Tier 2 Police and Firefighters employees only.
    
    For any service credited under PERS from July 1, 2015 to the transfer date will be credited under MPFRS. Assets held by PERS for transferring members shall be transferred to MPFRS. Transferring members must also make up member contributions of 4.0% of payroll for the transferring service from PERS within the window.
    
    MPFRS has a member contribution rate of 8.5% of pay and an employer contribution rate of 8.5% of pay. The transfers shall be subject to these rates and are subject to any future contibution rate changes as may be authorized by the CPRB Board as required to fund the MPFRS.
    
    Based on the limited membership and past service, it is expected that the current contributiion rates are sufficient to fund MPFRS. The employer contribution rate of 8.5% is less than the current PERS contibution rate of 13.5% (reducing to 12.0% effective July 1, 2016).



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
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):


    This bill provides for a transfer window between PERS and MPFRS for Tier 2 PERS qualifying employees whose employer elects the transfer for its Tier 2 Police and Firefighters. The transfer is for participation only and does not provide for an increase in the current benefit formulas.
    
    Costs are administrative in nature and the level of costs will be dependent on the number of members electing to complete the transfer.



Memorandum


    The bill allows certain PERS employers to provide Municipal Police and Firefigters Retirement System benefits to their quallifying Police and Firefighter employees.



    Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
    Email Address: harry.w.mandel@wv.gov