Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
Public Employees Retirement System
FUND(S):
PERS 2510
Sources of Revenue:
General Fund,Other Fund local governments
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).
The bill reduces from 55 to 50 the number of days worked a temporary legislative employee must work to receive full time PERS service credits. All other requirement for PERS participation and service remain the same. Employees effected by the bill who have not already paid member contributions for the days worked must contribute both the member and employer contributions for such service (a total of 15% of pay).
The net cost to PERS for an average member is $1,000. Based on 40 active members eligible for an average of two additional years, the UAAL in PERS will increase by $40,000. The PERS contribution requirement is level dollar funding over 10 years, or $6,000 per year through FY2018.
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 |
$40,000.00 |
$6,000.00 |
0.00 % |
| Normal Cost of System |
N/A |
$0.00 |
0.00 % |
| Past Service Liabilities |
$40,000.00 |
$6,000.00 |
0.00 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
FY2018 |
N/A |
Explanation of above Actuarial estimates:
The estimates are based on the July 1, 2007 Actuarial Valuation for PERS. Temporary legislative employees are classified as either legal ($175 per day worked) or clerical ($55 to $60 per day worked). It is assumed that 1 out of 10 employees are legal. It is also assumed that half of the members have already contributed into PERS. It is assumed that a maximum of 40 temporary employees will fit into the tight requirements of working 50 days but less than 55 days in an average of two years legislative employment.
Analysis of Impact on Public Pension Policy:
It is noted that when a legislative employee with PERS service credits transfers to full time PERS covered employment prior to retirement, that their benefits can be greatly increased due to the higher average full time pay prior to retirement. This provision is unchanged from current law and is not recognized as a cost under this Actuarial/Fiscal note.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The bill reduces from 55 to 50 the number of days worked a temporary legislative employee must work to receive full time PERS service credits. All other requirement for PERS participation and service remain the same. Employees effected by the bill who have not already paid member contributions for the days worked must contribute both the member and employer contributions for such service (a total of 15% of pay).
The net cost to PERS for an average member is $1,000. Based on 40 active members eligible for an average of two additional years, the UAAL in PERS will increase by $40,000. The PERS contribution requirement is level dollar funding over 10 years, or $6,000 per year through FY2018.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
6,000 |
6,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
6,000 |
6,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
The estimates are based on the July 1, 2007 Actuarial Valuation for PERS. Temporary legislative employees are classified as either legal ($175 per day worked) or clerical ($55 to $60 per day worked). It is assumed that 1 out of 10 employees are legal. It is also assumed that half of the members have already contributed into PERS. It is assumed that a maximum of 40 temporary employees will fit into the tight requirements of working 50 days but less than 55 days in an average of two years legislative employment.
Memorandum
It is noted that when a legislative employee with PERS service credits transfers to full time PERS covered employment prior to retirement, that their benefits can be greatly increased due to the higher average full time pay prior to retirement. This provision is unchanged from current law and is not recognized as a cost under this Actuarial/Fiscal note.
Person submitting Fiscal Note: Harry W. Mandel, MAAA, MSPA, EA, Board Actuary
Email Address: Harry.W.Mandel@wv.gov