Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

Public Employees Retirement System / Teachers Retirement System

FUND(S):

PERS 2510 / TRS 2601

Sources of Revenue:

General Fund,Other Fund State and Local Govts

Legislation creates:

Neither Program nor Fund



Actuarial Note Summary


Impact this measure will have on the liabilities and contributions associated with the retirement system(s).


    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation.
    
    Benefits provided under the bill are prohibited under WV Code Section 5-10-22h for PERS and under WV Code Section 18-7A-28e for TRS.
    
     See the Pension Committee chairman for details.



Fiscal Detail of Actuarial Impact

Impact on current benefit costs, prior service benefit costs and ongoing contribution requirements following full implementation.


Impact On Following Full Implementation
Increase in Unfunded Actuarial Accrued Liability Initial Impact on Annual Contribution Requirement of System(s) Contribution Increase as a Percentage of Annual Payroll
Total Annual Costs $999,999,999.00 $999,999,999.00 99.99 %
Normal Cost of System N/A $999,999,999.00 99.99 %
Past Service Liabilities $999,999,999.00 $999,999,999.00 99.99 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/A


Explanation of above estimates:


    For both PERS and TRS, the bill provides a 3% increase in retirement benefits to all current and future retirees after they reach age 70. Beneficiaries of deceased members receive the 3% increase after the deceased member would have attained age 70.
    
    The Actuary has not determined the actual costs of the bill since it is prohibited under Pension Reform for both PERS and TRS. The bill would increase both the Normal Cost and Actuarial Accrued Liabilities for active members and the Actuarial Accrued Liabilities for those receiving annuity payments.
    
    If actual costs are needed, please contact the CPRB Board Actuary.

Analysis of Impact on Public Pension Policy:


    The benefits provided to active members of PERS and TRS are in violation of 2005 Pension Reform restrictions on benefit improvements.



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation.
    
    Benefits provided under the bill are prohibited under WV Code Section 5-10-22h for PERS and under WV Code Section 18-7A-28e for TRS.
    
     See the Pension Committee chairman for details.



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 999,999,999 999,999,999 999,999,999
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):


    For both PERS and TRS, the bill provides a 3% increase in retirement benefits to all current and future retirees after they reach age 70. Beneficiaries of deceased members receive the 3% increase after the deceased member would have attained age 70.
    
    The Actuary has not determined the actual costs of the bill since it is prohibited under Pension Reform for both PERS and TRS. The bill would increase both the Normal Cost and Actuarial Accrued Liabilities for active members and the Actuarial Accrued Liabilities for those receiving annuity payments.
    
    If actual costs are needed, please contact the CPRB Board Actuary.



Memorandum


    The benefits provided to active members of PERS and TRS are in violation of 2005 Pension Reform restrictions on benefit improvements.



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