|Date Requested:February 24, 2005
Time Requested:01:56 PM
| FUND(S) |
PERS fund 2510 / TRS fund 2601
Sources of Revenue
Legislation creates:Neither Program nor Fund
Effect this measure will have on costs and revenues of state government.
| Actuarial Note Regarding Pension Legislation
The Bill provides a retiree increase in PERS and in TRS.
PERS: Retiree must have been under age 65 on July 1, 2002 and have been retired by January 1, 1999 and still be retired. An increase in retirement benefit of 5% on the first $30,000 of annual pension is provided.
PERS UAAL is increased by $11,228,000. The 30 year funding requirement for the improvement is $917,000 per year for FY 2006 through FY 2035. The employer contribution rate for PERS should be increased by 0.1% of payroll from 10.5% to 10.6% to provide funding for the improvement.
TRS: Retiree must have been under age 65 on July 1, 2002 and have been retired by July 1, 1999 and still be retired. An increase in retirement benefit of 5% on the first $30,000 of annual pension is provided.
TRS UAAL is increased by $31,263,000. The current amortization of retiree increases under TRS is 7 year level dollar amortization in the School Aid Formula. The increase in the SAF for FY2006 through FY2012 is $5,693,000 per year.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||0||6,610,000||6,610,000|
|Repairs and Alterations||0||0||0|
|2. Estimated Total Revenues||0||0||0|
3. Explanation of above estimates (including long-range effect):
The Bill provides retiree increases under both PERS and TRS.
For PERS, the increased UAAL must be amortized over 30 years, and requires the PERS employer contribution rate to be increased by 0.1% of payroll to 10.6%.
For TRS, the increased UAAL must be amortized over 7 years under the SAF. The increase represents the additional contributions necessary through FY 2012 to pay for the retiree increase.
The amounts shown above are for the combined PERS and TRS increased amortization payments. The breakdown is detailed in Section 1.
| TRS is currently subject to legislation regarding the possible issuance of Pension Obligation Bonds. The retiree increase may be subject to faster amortization requirements under the terms of the bond sale enabling legislation. If the current 5 year amortization requirement were to apply to this improvement, then the TRS contribution would increase the SAF by an additional $1,760,000, up to $7,453,000 per year for FY2006 through FY2010.
For PERS, the Bill should be amended to include an increase in the maximum employer contribution rate to 10.6%.