FISCAL NOTE



FUND(S):

PERS 2510

Sources of Revenue:

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 bill provides for a window from July 1, 2013 through June 1, 2014 during which PERS members may elect to repurchase previously forfeited service. This window would apply to members who failed to repurchase the forfeited service under the normal repurchase provisions of PERS. The benefit created under the window will not directly impact the Normal Cost nor Actuarial Accrued Liabilities of PERS.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
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 estimates (including long-range effect):


The repurchase window will not increase either the Normal Cost nor Actuarial Accrued Liabilities under PERS. Possible costs are dependent on usage of the window. Since the window still requires the repayment of previously withdrawn contributions, the benefit is the same as the benefit normally provided under standard repayment provisions. Each repurchase is expected to result in an actuarial loss of the employer paid liabilities. Such losses could be in the range of $1,000 to $25,000 per electing member.



Memorandum


PERS provides a set period of time following rehire for the repurchase of previously withdrawn service. The actuarial loss due to employer paid liabilities are therefore currently covered under the normal PERS repurchase provisions. The set time period is intended to prevent the adverse selection by members of the repurchase. The window provides the opportunity for members who elected not to repurchase to change their minds. This opportunity results in “adverse selection” of the member against the Plan.



    Person submitting Fiscal Note: Harry W. Mandel, MAAA, MSPA, EA, Board Actuary
    Email Address: harry.w.mandel@wv.gov