Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

Public Employees Retirement System

FUND(S):

2510

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).


    The bill opens a special window from 3/1/2011 through 12/31/2012 for rehired members who cashed out their previous service credits to commence repurchase of those credits.
    
    This provision will not impact either the Normal Cost nor the Actuarial Accrued Liabilities of PERS. This bill allows the recapture of previous benefits through the new window.



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 $0.00 $0.00 0.00 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/A


Explanation of above estimates:


    This bill will not result in an increase in either the Normal Cost nor the Actuarial Accrued Liabilities of the Plan in the regular valuation process.
    
    Certain service amounts may be repurchased that are not now eligible for repurchase, that will increase the total benefits due at retirement for such members on an experience basis. The repurchase amounts fund a significant portion of the benefits being purchased.

Analysis of Impact on Public Pension Policy:


    The continuous opening of windows for the repurchase of benefits results in adverse selection of repurchased amounts. Without windows, members would be more likely to complete purchases during their normal time frame following rehire. Continuous windows are not in the best interests of PERS and public pension policy.



Fiscal Note Summary


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


    The bill opens a special window from 3/1/2011 through 12/31/2012 for rehired members who cashed out their previous service credits to commence repurchase of those credits.
    
    This provision will not impact either the Normal Cost nor the Actuarial Accrued Liabilities of PERS. This bill allows the recapture of previous benefits through the new window.



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 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):


    This bill will not result in an increase in either the Normal Cost nor the Actuarial Accrued Liabilities of the Plan in the regular valuation process.
    
    Certain service amounts may be repurchased that are not now eligible for repurchase, that will increase the total benefits due at retirement for such members on an experience basis. The repurchase amounts fund a significant portion of the benefits being purchased.



Memorandum


    The continuous opening of windows for the repurchase of benefits results in adverse selection of repurchased amounts. Without windows, members would be more likely to complete purchases during their normal time frame following rehire. Continuous windows are not in the best interests of PERS and public pension policy.



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