FISCAL NOTE
FUND(S):
PERS 2510 / TRS 2601
Sources of Revenue:
General Fund,Other Fund State and Local Govts
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The benefits provided under the Bill for certain PERS and TRS retirees have been checked against the limitations under 2005 Pension Reform. The requirement for PERS under Section 5-10-22h and TRS under Section 18-7A-28e are both met.
The bill provides for a one time permanent increase of 3% to retirees effective July 1, 2011. Retirees must be age 70 or older and have been retired for 5 or more years to be eligible. Retirees who received a 3% increase on July 1, 2006 are not eligible for this increase.
For PERS, there are 3693 eligible retirees. The increase in UAAL is $11,448,000 requiring a six year amortization payment of $2,352,000 per year through FY2017. An increase in the employer contribution rate from 14.5% to 14.7% is required.
For TRS, there are 4696 eligible retirees. The increase in UAAL is $19,688,000 requiring a six year amortization payment of $4,045,000 through FY2017.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2011
Increase/Decrease
(use"-") |
2012
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
6,397,000 |
6,397,000 |
| 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 estimates (including long-range effect):
The actuarial analysis of the bill is based on the July 1, 2010 actuarial valuation data projected to July 1, 2011 and run on ProVal actuarial valuation software.
There is no increase in Normal Cost since active members are not included in the increased benefits. The value of the 3% benefit increase for life is the basis for the increase of $31,136,000 of Actuarial Accrued Liabilities. The AAL must be amortized over 6 years from July 1, 2011 through June 30, 2017 at $6,397,000 annually.
Memorandum
The increase has been priced as effective July 1, 2011 and payable for the remaining life of the member (with possible options survivor benefits as applicable to each retiree.) Retirees who were eligible for the 3% increase July 1, 2006 are excluded from this 3% increase.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov