Actuarial Fiscal Note
Date Requested:January 11, 2024
Time Requested:08:53 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1813 |
Introduced |
HB4330 |
|
|---|
| CBD Subject: |
|
|---|
|
Retirement Systems Impacted by Legislation:
PERS 2501
FUND(S):
Special Fund
Sources of Revenue:
Legislation creates:
PERS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
For current PERS retirees that are at least 65 years of age as of July 1, 2024, have been an annuitant for at least five consecutive years, and their retirement benefit is under $60,000 per year, HB 4330 would pay a one-time cost of living supplement equal to 5.0% of the retiree’s PERS annuity benefit.
HB 4330 would violate the West Virginia Statute §5-10-22h, known as “2005 Pension Reform”, which limits retiree increases to 1% of the PERS actuarial accrued liability (AAL) from the most recent funding valuation (July 1, 2023). From the July 1, 2023 funding valuation, this limit is currently $86,815,480. Based on an analysis of the existing PERS annuitants as of July 1, 2023, the increase in PERS AAL from the Bill exceeds the current 2005 Pension Reform limit above.
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 |
9.99 % |
| Normal Cost of System |
N/A |
$999,999,999.00 |
9.99 % |
| Past Service Liabilities |
$999,999,999.00 |
$999,999,999.00 |
9.99 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
9999 |
N/A |
Explanation of above Actuarial estimates:
HB 4330 would violate the West Virginia Statute §5-10-22h, known as “2005 Pension Reform”, which limits retiree increases to 1% of the PERS actuarial accrued liability (AAL) from the most recent funding valuation (July 1, 2023). From the July 1, 2023 funding valuation, this limit is currently $86,815,480. Based on an analysis of the existing PERS annuitants as of July 1, 2023, the increase in PERS AAL from the Bill exceeds the current 2005 Pension Reform limit above.
Note, the value $999,999,999 displayed above does not indicate an actuarial cost associated with the Bill, it only indicates the Bill violates West Virginia “2005 Pension Reform”.
Analysis of Impact on Public Pension Policy:
HB 4330 would violate the West Virginia Statute §5-10-22h, known as “2005 Pension Reform”, which limits retiree increases to 1% of the PERS actuarial accrued liability (AAL) from the most recent funding valuation (July 1, 2023). From the July 1, 2023 funding valuation, this limit is currently $86,815,480. Based on an analysis of the existing PERS annuitants as of July 1, 2023, the increase in PERS AAL from the Bill exceeds the current 2005 Pension Reform limit above.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
For current PERS retirees that are at least 65 years of age as of July 1, 2024, have been an annuitant for at least five consecutive years, and their retirement benefit is under $60,000 per year, HB 4330 would pay a one-time cost of living supplement equal to 5.0% of the retiree’s PERS annuity benefit.
HB 4330 would violate the West Virginia Statute §5-10-22h, known as “2005 Pension Reform”, which limits retiree increases to 1% of the PERS actuarial accrued liability (AAL) from the most recent funding valuation (July 1, 2023). From the July 1, 2023 funding valuation, this limit is currently $86,815,480. Based on an analysis of the existing PERS annuitants as of July 1, 2023, the increase in PERS AAL from the Bill exceeds the current 2005 Pension Reform limit above.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
999,999,999 |
999,999,999 |
999,999,999 |
| Personal Services |
999,999,999 |
999,999,999 |
999,999,999 |
| Current Expenses |
999,999,999 |
999,999,999 |
999,999,999 |
| Repairs and Alterations |
999,999,999 |
999,999,999 |
999,999,999 |
| Assets |
999,999,999 |
999,999,999 |
999,999,999 |
| Other |
999,999,999 |
999,999,999 |
999,999,999 |
| 2. Estimated Total Revenues |
999,999,999 |
999,999,999 |
999,999,999 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
HB 4330 would violate the West Virginia Statute §5-10-22h, known as “2005 Pension Reform”, which limits retiree increases to 1% of the PERS actuarial accrued liability (AAL) from the most recent funding valuation (July 1, 2023). From the July 1, 2023 funding valuation, this limit is currently $86,815,480. Based on an analysis of the existing PERS annuitants as of July 1, 2023, the increase in PERS AAL from the Bill exceeds the current 2005 Pension Reform limit above.
Note, the value $999,999,999 displayed above does not indicate an actuarial cost associated with the Bill, it only indicates the Bill violates West Virginia “2005 Pension Reform”.
Memorandum
HB 4330 would violate the West Virginia Statute §5-10-22h, known as “2005 Pension Reform”, which limits retiree increases to 1% of the PERS actuarial accrued liability (AAL) from the most recent funding valuation (July 1, 2023). From the July 1, 2023 funding valuation, this limit is currently $86,815,480. Based on an analysis of the existing PERS annuitants as of July 1, 2023, the increase in PERS AAL from the Bill exceeds the current 2005 Pension Reform limit above.
For the appropriate actuarial disclosures, see the July 1, 2023, funding valuation report for PERS, expected to be published on March 31, 2024.
In particular, future actuarial measurements may differ significantly from the current measurements shown in this actuarial/fiscal note due to plan experience differing from that anticipated by the economic and demographic assumptions, changes expected as part of the natural operation of the methodology used for these measurements, and changes in plan provisions, applicable law, and regulations.
This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by the CPRB Actuary. Both the Board and the CPRB Actuary are available upon request for questions.
Person submitting Fiscal Note: Kenneth M. Woodson Jr.
Email Address: kenneth.m.woodson@wv.gov