H. B.2457
(By Delegates Amores, Craig, Stalnaker, Browning,
Marshall, Morgan and G. White)
[Introduced February 17, 2005; referred to the
Committee on Pensions and Retirement then Finance.]
A BILL to amend and reenact §8-22-20 of the code of West
Virginia, 1931, as amended, relating to limiting the basis
for calculating the alternate method of annual contribution
required by municipalities into the Policemen's and
Firemen's Pension and Relief Fund.
Be it enacted by the Legislature of West Virginia:
That §8-22-20 of the code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
§8-22-20. Minimum standards for actuarial soundness.
The board of trustees for each pension and relief fund shall
have regularly scheduled actuarial valuation reports prepared by
a qualified actuary. All of the following standards must be met:
(a) An actuarial valuation report shall be prepared at least
once every three years commencing with the later of: (1) The
first day of July, one thousand nine hundred eighty-three; or (2)
three years following the most recently prepared actuarial
valuation report:
Provided, That this most recently prepared actuarial valuation report meets all of the standards of this
section.
(b) The actuarial valuation report shall consist of, but is
not limited to, the following disclosures: (1) The financial
objective of the fund and how the objective is to be attained;
(2) the progress being made toward realization of the financial
objective; (3) recent changes in the nature of the fund, benefits
provided, or actuarial assumptions or methods; (4) the frequency
of actuarial valuation reports and the date of the most recent
actuarial valuation report; (5) the method used to value fund
assets; (6) the extent to which the qualified actuary relies on
the data provided and whether the data was certified by the
fund's auditor or examined by the qualified actuary for
reasonableness; (7) a description and explanation of the
actuarial assumptions and methods; and (8) any other information
the qualified actuary feels is necessary or would be useful in
fully and fairly disclosing the actuarial condition of the fund.
(c) (1) After the thirtieth day of June, one thousand nine
hundred ninety-one, and thereafter, the financial objective of
each municipality shall not be less than to contribute to the
fund annually an amount which, together with the contributions
from the members and the allocable portion of the state premium
tax fund for municipal pension and relief funds established under
section fourteen-d, article three, chapter thirty-three of this
code and other income sources as authorized by law, will be sufficient to meet the normal cost of the fund and amortize any
actuarial deficiency over a period of not more than forty years:
Provided, That in the fiscal year ending the thirtieth day of
June, one thousand nine hundred ninety-one, the municipality may
elect to make its annual contribution to the fund utilizing an
alternative contribution in an amount not less than: (i) One
hundred seven percent of the amount contributed for the fiscal
year ending the thirtieth day of June, one thousand nine hundred
ninety; or (ii) an amount equal to the average of the
contribution payments made in the five highest fiscal years
beginning with the 1984 fiscal year whichever is greater:
Provided, however, That contribution payments in subsequent
fiscal years under this alternative contribution method may not
be less than one hundred seven percent of the amount contributed
in the prior fiscal year:
Provided further, That in order to
avoid penalizing municipalities for contributions made in any one
year that are more than the minimum required by this section, if
a municipality using the alternate method contributes more than
one hundred seven percent of the prior year's contribution in any
given year, then such excess above the required one hundred seven
percent shall not be included when calculating the one hundred
seven percent minimum contribution for the following year:
Provided further, That prior to utilizing this alternative
contribution methodology the actuary of the fund shall certify in
writing that the fund is projected to be solvent under the alternative contribution method for the next consecutive
fifteen-year period. For purposes of determining this minimum
financial objective: (1) The value of the fund's assets shall be
determined on the basis of any reasonable actuarial method of
valuation which takes into account fair market value; and (2) all
costs, deficiencies, rate of interest, and other factors under
the fund shall be determined on the basis of actuarial
assumptions and methods which, in aggregate, are reasonable
(taking into account the experience of the fund and reasonable
expectations) and which, in combination, offer the qualified
actuary's best estimate of anticipated experience under the fund:
And provided further, That any municipality which elected the
alternative funding method under this section and which has an
unfunded actuarial liability of not more than twenty-five percent
of fund assets, may, beginning the first day of September, two
thousand three, elect to revert back to the standard funding
method, which is to contribute to the fund annually an amount
which is not less than an amount which, together with the
contributions from the members and the allocable portion of the
state premium tax fund
for municipal pension and relief funds
established under section fourteen-d, article three, chapter
thirty-three of this code and other income sources as authorized
by law, will be sufficient to meet the normal cost of the fund
and amortize any actuarial deficiency over a period of not more
than forty years, beginning from the first day of July, one thousand nine hundred ninety-one.
(2) No municipality may anticipate or use in any manner any
state funds accruing to the police or firemen's pension fund to
offset the minimum required funding amount for any fiscal year.
(3) Notwithstanding any other provision of this section or
article to the contrary, each municipality shall contribute
annually to the fund an amount which may not be less than the
normal cost, as determined by the actuarial report.
(d) For purposes of this section the term "qualified
actuary" means only an actuary who is a member of the society of
actuaries or the American academy of actuaries. The qualified
actuary shall be designated a fiduciary and shall discharge his
or her duties with respect to a fund solely in the interest of
the members and member's beneficiaries of that fund. In order
for the standards of this section to be met, the qualified
actuary shall certify that the actuarial valuation report is
complete and accurate and that in his or her opinion the
technique and assumptions used are reasonable and meet the
requirements of this section of this article.
(e) The cost of the preparation of the actuarial valuation
report shall be paid by the fund.
(f) Notwithstanding any other provision of this section, for
the fiscal year ending the thirtieth day of June, one thousand
nine hundred ninety-one, the municipality may calculate its
annual contribution based upon the provisions of the supplemental benefit provided for in this article enacted during the one
thousand nine hundred ninety-one regular session of the
Legislature.
Finance Committee Title amendment Pending
H. B. 2457 -- "A BILL to amend and reenact §8-22-20 of the code
of West Virginia, 1931, as amended, relating to modifying the
basis for calculating the alternate method of annual contribution
required by municipalities into the Policemen's and Firemen's
Pension and Relief Fund in certain circumstances.".
Finance Committee amendment Pending
The Committee on Finance moves to amend the bill on page one,
following the enacting section, by striking out the remainder of
the bill and inserting in lieu thereof the following:
"ARTICLE 22. RETIREMENT BENEFITS GENERALLY; POLICEMEN'S PENSION
AND RELIEF FUND; FIREMEN'S PENSION AND RELIEF
FUND; PENSION PLANS FOR EMPLOYEES OF WATERWORKS
SYSTEM, SEWERAGE SYSTEM OR COMBINED WATERWORKS
AND SEWERAGE SYSTEM.
§8-22-20. Minimum standards for actuarial soundness.
The board of trustees for each pension and relief fund shall
have regularly scheduled actuarial valuation reports prepared by
a qualified actuary. All of the following standards must be met:
(a) An actuarial valuation report shall be prepared at least
once every three years commencing with the later of: (1) The first day of July, one thousand nine hundred eighty-three; or (2)
three years following the most recently prepared actuarial
valuation report:
Provided, That this most recently prepared
actuarial valuation report meets all of the standards of this
section.
(b) The actuarial valuation report shall consist of, but is
not limited to, the following disclosures: (1) The financial
objective of the fund and how the objective is to be attained;
(2) the progress being made toward realization of the financial
objective; (3) recent changes in the nature of the fund, benefits
provided, or actuarial assumptions or methods; (4) the frequency
of actuarial valuation reports and the date of the most recent
actuarial valuation report; (5) the method used to value fund
assets; (6) the extent to which the qualified actuary relies on
the data provided and whether the data was certified by the
fund's auditor or examined by the qualified actuary for
reasonableness; (7) a description and explanation of the
actuarial assumptions and methods; and (8) any other information
the qualified actuary feels is necessary or would be useful in
fully and fairly disclosing the actuarial condition of the fund.
(c) (1) After the thirtieth day of June, one thousand nine
hundred ninety-one, and thereafter, the financial objective of
each municipality shall not be less than to contribute to the
fund annually an amount which, together with the contributions
from the members and the allocable portion of the state premium tax fund for municipal pension and relief funds established under
section fourteen-d, article three, chapter thirty-three of this
code and other income sources as authorized by law, will be
sufficient to meet the normal cost of the fund and amortize any
actuarial deficiency over a period of not more than forty years:
Provided, That in the fiscal year ending the thirtieth day of
June, one thousand nine hundred ninety-one, the municipality may
elect to make its annual contribution to the fund utilizing an
alternative contribution in an amount not less than: (i) One
hundred seven percent of the amount contributed for the fiscal
year ending the thirtieth day of June, one thousand nine hundred
ninety; or (ii) an amount equal to the average of the
contribution payments made in the five highest fiscal years
beginning with the 1984 fiscal year whichever is greater:
Provided, however, That contribution payments in subsequent
fiscal years under this alternative contribution method may not
be less than one hundred seven percent of the amount contributed
in the prior fiscal year:
Provided further, That in order to
avoid penalizing municipalities and to provide flexibility when
making contributions, municipalities using the alternative
contribution method may exclude a contribution made in any one
year in excess of the minimum required by this section to
amortize any actuarial deficiency over a period not to exceed the
forty-year period described in this subsection when calculating
the one hundred seven percent minimum contribution for the following year: Provided further, That prior to utilizing this
alternative contribution methodology the actuary of the fund
shall certify in writing that the fund is projected to be solvent
under the alternative contribution method for the next
consecutive fifteen-year period. For purposes of determining
this minimum financial objective: (1) The value of the fund's
assets shall be determined on the basis of any reasonable
actuarial method of valuation which takes into account fair
market value; and (2) all costs, deficiencies, rate of interest,
and other factors under the fund shall be determined on the basis
of actuarial assumptions and methods which, in aggregate, are
reasonable (taking into account the experience of the fund and
reasonable expectations) and which, in combination, offer the
qualified actuary's best estimate of anticipated experience under
the fund:
And provided further, That any municipality which
elected the alternative funding method under this section and
which has an unfunded actuarial liability of not more than
twenty-five percent of fund assets, may, beginning the first day
of September, two thousand three, elect to revert back to the
standard funding method, which is to contribute to the fund
annually an amount which is not less than an amount which,
together with the contributions from the members and the
allocable portion of the state premium tax fund
for municipal
pension and relief funds established under section fourteen-d,
article three, chapter thirty-three of this code and other income sources as authorized by law, will be sufficient to meet the
normal cost of the fund and amortize any actuarial deficiency
over a period of not more than forty years, beginning from the
first day of July, one thousand nine hundred ninety-one.
(2) No municipality may anticipate or use in any manner any
state funds accruing to the police or firemen's pension fund to
offset the minimum required funding amount for any fiscal year.
(3) Notwithstanding any other provision of this section or
article to the contrary, each municipality shall contribute
annually to the fund an amount which may not be less than the
normal cost, as determined by the actuarial report.
(d) For purposes of this section the term "qualified
actuary" means only an actuary who is a member of the society of
actuaries or the American academy of actuaries. The qualified
actuary shall be designated a fiduciary and shall discharge his
or her duties with respect to a fund solely in the interest of
the members and member's beneficiaries of that fund. In order
for the standards of this section to be met, the qualified
actuary shall certify that the actuarial valuation report is
complete and accurate and that in his or her opinion the
technique and assumptions used are reasonable and meet the
requirements of this section of this article.
(e) The cost of the preparation of the actuarial valuation
report shall be paid by the fund.
(f) Notwithstanding any other provision of this section, for the fiscal year ending the thirtieth day of June, one thousand
nine hundred ninety-one, the municipality may calculate its
annual contribution based upon the provisions of the supplemental
benefit provided for in this article enacted during the one
thousand nine hundred ninety-one regular session of the
Legislature.".