Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

Judges Retirement System

FUND(S):

JRS 2140

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).


    The Committee Substitute for the Committee Substitute for Senate Bill 486 reduces the Member Contribution requirement for all judges from 10.5% down to 7% effective July 1, 2012.
    
    Future years Member Contributions may be adjusted by the CPRB Board based on the Actuarial Valuation for JRS with the recommendation of the Actuary. The Member Contribution range shall not be less than 7% nor more than 10.5% for years starting July 1, 2013.
    
    There is no impact on the Actuarial Accrued Liabilities of JRS.
    
    The JRS employer Normal Cost increases by 3.5% of payroll due to the reduction in the Member Contribution rate to 7%. The increase in the FY2013 contribution based on mid year funding is $324,000.
    
    It is noted that the Member Contribution rate shall be actuarially adjusted, if necessary, after July 1, 2013 by the CPRB Board which could reduce or eliminate the additional 3.5% NC increase in any future year.



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 $324,000.00 3.50 %
Normal Cost of System N/A $324,000.00 3.50 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/S N/A


Explanation of above Actuarial estimates:


    An analysis of the changes in AAL and NC was completed by the Board Actuary based on the July 1, 2011 Actuarial Valuation..
    
    There is no change in AAL.
    
    The ARC for JRS is equal to a payment of the employer NC, without offset for any overfunding of the AAL. The increase in NC is a result of a reduction in the Member Contribution rate. This resulted in an increase in the ARC of $324,000 for FY2013.

Analysis of Impact on Public Pension Policy:


    The Bill transfers part of the total JRS NC from members to the Judiciary by a reduction in the Member Contribution Rate. The Member Contribution Rate shall be actuarially reviewed annually and increased if JRS funded position should deteriorate in the future.



Fiscal Note Summary


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


    The Committee Substitute for the Committee Substitute for Senate Bill 486 reduces the Member Contribution requirement for all judges from 10.5% down to 7% effective July 1, 2012.
    
    Future years Member Contributions may be adjusted by the CPRB Board based on the Actuarial Valuation for JRS with the recommendation of the Actuary. The Member Contribution range shall not be less than 7% nor more than 10.5% for years starting July 1, 2013.
    
    There is no impact on the Actuarial Accrued Liabilities of JRS.
    
    The JRS employer Normal Cost increases by 3.5% of payroll due to the reduction in the Member Contribution rate to 7%. The increase in the FY2013 contribution based on mid year funding is $324,000.
    
    It is noted that the Member Contribution rate shall be actuarially adjusted, if necessary, after July 1, 2013 by the CPRB Board which could reduce or eliminate the additional 3.5% NC increase in any future year.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 324,000 324,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 324,000 324,000
2. Estimated Total Revenues 0 0 0


Explanation of above Fiscal Note estimates (include possible long-range effect):


    An analysis of the changes in AAL and NC was completed by the Board Actuary based on the July 1, 2011 Actuarial Valuation..
    
    There is no change in AAL.
    
    The ARC for JRS is equal to a payment of the employer NC, without offset for any overfunding of the AAL. The increase in NC is a result of a reduction in the Member Contribution rate. This resulted in an increase in the ARC of $324,000 for FY2013.



Memorandum


    The Bill transfers part of the total JRS NC from members to the Judiciary by a reduction in the Member Contribution Rate. The Member Contribution Rate shall be actuarially reviewed annually and increased if JRS funded position should deteriorate in the future.



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