Date Requested: February 05, 2015
Time Requested: 01:10 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
1735 Introduced HB2620
CBD Subject: Retirement


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 impacts members first hired on or after July 1, 2015. It reduces the final average pay applied to determine PERS retirement benefits from a three year average to a 10 year average in the last 15 years of employment. This is effectively a reduction in future benefits for those hired July 1, 2015 and after. The employer Normal Cost is reduced by 1.40% of payroll. Actual saving phases in over time as the nuber of new hires grows each year. The estimated initial year savings is $500,000 with the ultimate savings at $20,000,000 at current pay and inflation.
    
    There is no impact on the current Normal Cost nor Actuarial Accrued Liabilities for those members hired before July 1, 2015.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 -500,000 -20,000,000
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 bill reduces benefits under PERS for future hires. Savings is realized through the Normal Cost which is expected to decrease by about 1.4% of payrolll. Savings will incease each year as more new hires increase the savings.



Memorandum


    The Bill effectively lowers benefits by 14 % for newly hired members. Certain adjustments in the PERS vesting provisions should be considered to line up with the longer averaging period.



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