Actuarial Fiscal Note
Date Requested:February 06, 2024
Time Requested:09:31 AM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3414 |
Introduced |
SB606 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
NRPORS 2397
FUND(S):
Special Fund
Sources of Revenue:
Legislation creates:
NRPORS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
SB 606 replaces the employer contribution rate cap of 12% of payroll and replaces it with the amount set actuarially by the Consolidated Public Retirement Board (CPRB).
SB 606 also clarifies that a member with less than 10 years of contributory service who dies prior to retirement, from a non-duty related cause, may name a beneficiary to receive a return of his or her accumulated contributions; deletes obsolete provisions; clarifies that the 12 month compensation period to be used in calculating a surviving spouses benefit will be from the last 12 “full” months in which compensation was received and retirement contributions were made (therefore, a month in which member only was paid 2 days would not be used in the average); adds a new subsection to address what a surviving spouse will receive if the member dies while receiving a non-duty disability, had 10 or more years of contributory service and had not obtained the revert age of 60.
Removing the employer contribution rate cap of 12% of payroll and replacing it with the amount set actuarially by the CPRB is required to assure adequate long-term funding for NRPORS by contributing no less than the annual employer Normal Cost plus the amount necessary to amortize the Unfunded Actuarial Accrued Liability (UAAL) by June 30 2051, on a level dollar basis.
The other updates to the West Virginia Statute from SB 606 are not expected to materially impact the unfunded actuarial accrued liability (UAAL) or the contribution requirements for NRPORS.
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 |
2051 |
N/A |
Explanation of above Actuarial estimates:
Removing the employer contribution rate cap of 12% of payroll and replacing it with the amount set actuarially by the CPRB is required to assure adequate long-term funding for NRPORS by contributing no less than the annual employer Normal Cost plus the amount necessary to amortize the Unfunded Actuarial Accrued Liability (UAAL) by June 30 2051, on a level dollar basis.
The other updates to the West Virginia Statute from SB 606 are not expected to materially impact the unfunded actuarial accrued liability (UAAL) or the contribution requirements for NRPORS.
Analysis of Impact on Public Pension Policy:
Removing the employer contribution rate cap of 12% of payroll and replacing it with the amount set actuarially by the CPRB is required to assure adequate long-term funding for NRPORS by contributing no less than the annual employer Normal Cost plus the amount necessary to amortize the Unfunded Actuarial Accrued Liability (UAAL) by June 30 2051, on a level dollar basis.
The other updates to the West Virginia Statute from SB 606 are not expected to materially impact the unfunded actuarial accrued liability (UAAL) or the contribution requirements for NRPORS.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
SB 606 replaces the employer contribution rate cap of 12% of payroll and replaces it with the amount set actuarially by the Consolidated Public Retirement Board (CPRB).
SB 606 also clarifies that a member with less than 10 years of contributory service who dies prior to retirement, from a non-duty related cause, may name a beneficiary to receive a return of his or her accumulated contributions; deletes obsolete provisions; clarifies that the 12 month compensation period to be used in calculating a surviving spouses benefit will be from the last 12 “full” months in which compensation was received and retirement contributions were made (therefore, a month in which member only was paid 2 days would not be used in the average); adds a new subsection to address what a surviving spouse will receive if the member dies while receiving a non-duty disability, had 10 or more years of contributory service and had not obtained the revert age of 60.
Removing the employer contribution rate cap of 12% of payroll and replacing it with the amount set actuarially by the CPRB is required to assure adequate long-term funding for NRPORS by contributing no less than the annual employer Normal Cost plus the amount necessary to amortize the Unfunded Actuarial Accrued Liability (UAAL) by June 30 2051, on a level dollar basis.
The other updates to the West Virginia Statute from SB 606 are not expected to materially impact the unfunded actuarial accrued liability (UAAL) or the contribution requirements for NRPORS.
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 |
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):
Removing the employer contribution rate cap of 12% of payroll and replacing it with the amount set actuarially by the CPRB is required to assure adequate long-term funding for NRPORS by contributing no less than the annual employer Normal Cost plus the amount necessary to amortize the Unfunded Actuarial Accrued Liability (UAAL) by June 30 2051, on a level dollar basis.
The other updates to the West Virginia Statute from SB 606 are not expected to materially impact the unfunded actuarial accrued liability (UAAL) or the contribution requirements for NRPORS.
Memorandum
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.
For the appropriate actuarial disclosures, see the July 1, 2023 funding valuation report for NRPORS, 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.
Kenneth Woodson Jr., the CPRB Board Actuary, is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this Actuarial/Fiscal Note.
Person submitting Fiscal Note: Kenneth M. Woodson Jr.
Email Address: kenneth.m.woodson@wv.gov