Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
Public Employees Retirement System
FUND(S):
PERS 2510
Sources of Revenue:
General Fund
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 unless the PERS funded ratio equals or exceeds 85.0%. As of the latest Actuarial Valuation on July 1, 2008, the funded percentage of PERS was 84.2%.
Based on prior actuarial studies, the Bill would be expected to increase PERS Unfunded Actuarial Accrued Liabilities in excess of $100,000,000.
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 that up to 5 years of military service can be claimed under PERS for any federal military service. The bill removes the current restriction that free military service is only provided for “armed conflict” service. It further removes all armed conflict references as to conflicts and dates credited.
The modification is expected to greatly increase the amount of military service to be credited under PERS. Based on previous actuarial studies, the increase in Unfunded Actuarial Accrued Liabilities is expected to exceed $100,000,000. A new actuarial study was not completed for this bill.
Analysis of Impact on Public Pension Policy:
The Bill as drafted violates the 2005 Pension Reform restrictions for benefit increases under PERS for current and future active members. To be allowable, the Bill would need to amend or modify the 2005 Pension Reform restrictions. Such change would be contrary to public pension policy set when the 2005 Pension Reform statutes were passed by the WV Legislature.
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 unless the PERS funded ratio equals or exceeds 85.0%. As of the latest Actuarial Valuation on July 1, 2008, the funded percentage of PERS was 84.2%.
Based on prior actuarial studies, the Bill would be expected to increase PERS Unfunded Actuarial Accrued Liabilities in excess of $100,000,000.
See the Pension Committee chairman for details.
Fiscal Note Detail
Effect of Proposal |
Fiscal Year |
2009 Increase/Decrease (use"-") |
2010 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 that up to 5 years of military service can be claimed under PERS for any federal military service. The bill removes the current restriction that free military service is only provided for “armed conflict” service. It further removes all armed conflict references as to conflicts and dates credited.
The modification is expected to greatly increase the amount of military service to be credited under PERS. Based on previous actuarial studies, the increase in Unfunded Actuarial Accrued Liabilities is expected to exceed $100,000,000. A new actuarial study was not completed for this bill.
Memorandum
The Bill as drafted violates the 2005 Pension Reform restrictions for benefit increases under PERS for current and future active members. To be allowable, the Bill would need to amend or modify the 2005 Pension Reform restrictions. Such change would be contrary to public pension policy set when the 2005 Pension Reform statutes were passed by the WV Legislature.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov