Actuarial Fiscal Note
Date Requested:February 13, 2024
Time Requested:03:34 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3447 |
Introduced |
SB670 |
|
|---|
| CBD Subject: |
Insurance |
|---|
|
Retirement Systems Impacted by Legislation:
TRS 2600
FUND(S):
Special Fund
Sources of Revenue:
Legislation creates:
TRS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
SB 670 would reallocate ten basis points of the one percent premium tax on fire insurance and casualty policies from the Teachers Retirement System (TRS) to the Municipal Pensions Security Fund and would decrease the amount of time in which a municipal policeman's or firefighter's pension and relief fund may be in noncompliance with the Municipal Pensions Oversight Board's investment requirements before it may be forced to invest with the state Investment Management Board.
In this actuarial/fiscal note we only consider the impact on TRS. We do not address the impact from the Bill on the plans administered by the Municipal Pensions Oversight Board or the impact from the Bill on the Municipal Pensions Security Fund.
SB 670 does not impact the TRS unfunded actuarial accrued liability or the TRS annual required employer contribution, because the loss of TRS funding, from reallocating the ten basis points of the one percent premium tax on fire insurance and casualty policies from TRS to the Municipal Pensions Security Fund, would need to be replaced by additional TRS funding from the State of West Virginia.
In the recent past, the amount of TRS funding received from the ten basis points of the one percent premium tax on fire insurance and casualty policies has been trending upward, where the most recent amount was approximately $3.58 million that would be applied to the TRS School Aid Formula Appropriation for Fiscal Year 2025.
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 |
2034 |
N/A |
Explanation of above Actuarial estimates:
SB 670 does not impact the TRS unfunded actuarial accrued liability or the TRS annual required employer contribution, because the loss of TRS funding, from reallocating the ten basis points of the one percent premium tax on fire insurance and casualty policies from TRS to the Municipal Pensions Security Fund, would need to be replaced by additional TRS funding from the State of West Virginia.
Analysis of Impact on Public Pension Policy:
SB 670 does not impact the TRS unfunded actuarial accrued liability or the TRS annual required employer contribution, because the loss of TRS funding, from reallocating the ten basis points of the one percent premium tax on fire insurance and casualty policies from TRS to the Municipal Pensions Security Fund, would need to be replaced by additional TRS funding from the State of West Virginia.
In the recent past, the amount of TRS funding received from the ten basis points of the one percent premium tax on fire insurance and casualty policies has been trending upward, where the most recent amount was approximately $3.58 million that would be applied to the TRS School Aid Formula Appropriation for Fiscal Year 2025.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
SB 670 would reallocate ten basis points of the one percent premium tax on fire insurance and casualty policies from the Teachers Retirement System (TRS) to the Municipal Pensions Security Fund and would decrease the amount of time in which a municipal policeman's or firefighter's pension and relief fund may be in noncompliance with the Municipal Pensions Oversight Board's investment requirements before it may be forced to invest with the state Investment Management Board.
In this actuarial/fiscal note we only consider the impact on TRS. We do not address the impact from the Bill on the plans administered by the Municipal Pensions Oversight Board or the impact from the Bill on the Municipal Pensions Security Fund.
SB 670 does not impact the TRS unfunded actuarial accrued liability or the TRS annual required employer contribution, because the loss of TRS funding, from reallocating the ten basis points of the one percent premium tax on fire insurance and casualty policies from TRS to the Municipal Pensions Security Fund, would need to be replaced by additional TRS funding from the State of West Virginia.
In the recent past, the amount of TRS funding received from the ten basis points of the one percent premium tax on fire insurance and casualty policies has been trending upward, where the most recent amount was approximately $3.58 million that would be applied to the TRS School Aid Formula Appropriation for Fiscal Year 2025.
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 |
3,580,000 |
3,580,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
3,580,000 |
3,580,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
SB 670 does not impact the TRS unfunded actuarial accrued liability or the TRS annual required employer contribution, because the loss of TRS funding, from reallocating the ten basis points of the one percent premium tax on fire insurance and casualty policies from TRS to the Municipal Pensions Security Fund, would need to be replaced by additional TRS funding from the State of West Virginia.
In the recent past, the amount of TRS funding received from the ten basis points of the one percent premium tax on fire insurance and casualty policies has been trending upward, where the most recent amount was approximately $3.58 million that would be applied to the TRS School Aid Formula Appropriation for Fiscal Year 2025.
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 TRS, expected to be published in March 2024.
In particular, future actuarial measurements may differ significantly from current measurements due to System 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 system provisions or applicable law or regulations. An analysis of the potential range of such future differences is beyond the scope of the request addressed here.
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