Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

PERS and TRS

FUND(S):

PERS 2510; TRS 2601

Sources of Revenue:

Other Fund State & 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 benefit increases to retired members of PERS and TRS exceed the limitation contained in 2005 Pension Reform.
    
    For PERS, the Section 5-10-22h retiree increase limitation is $57,357,000. The increased benefits would increase the UAAL by $83,542,000.
    
    For TRS, the Section 18-7A-28e retiree increase limitation is $97,125,000. The increased benefits would increase the UAAL by $173,627,000.
    
    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 $257,169,000.00 $52,846,000.00 1.99 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $257,169,000.00 $52,846,000.00 1.99 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2019 N/A


Explanation of above estimates:


    The bill provides a 5% benefit increase to all PERS and TRS retirees as of July 1, 2013 who have been retired at least 5 years up to a maximum increase of $125 per month. Increased liabilities were valued applying actuarial software by CPRB. Amortization payments were funded over 6 years as provided in 2005 Pension Reform requirements for a qualifying improvement.
    
    The increases provided in this bill exceed the benefit improvement limitations as specified in 2005 Pension Reform for PERS and TRS retirees and qualifying beneficiaries.

Analysis of Impact on Public Pension Policy:


    The retiree increase for both PERS and TRS retirees exceeds the maximum one year retiree increase under 2005 Pension Reform limitations as set by the legislature.
    
    It is assumed that the eligibillity date will be amended from July 1, 2012 to July 1, 2013.



Fiscal Note Summary


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


    The benefit increases to retired members of PERS and TRS exceed the limitation contained in 2005 Pension Reform.
    
    For PERS, the Section 5-10-22h retiree increase limitation is $57,357,000. The increased benefits would increase the UAAL by $83,542,000.
    
    For TRS, the Section 18-7A-28e retiree increase limitation is $97,125,000. The increased benefits would increase the UAAL by $173,627,000.
    
    See the Pension Committee chairman for details.



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 52,846,000 52,846,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 52,846,000 52,846,000
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    The bill provides a 5% benefit increase to all PERS and TRS retirees as of July 1, 2013 who have been retired at least 5 years up to a maximum increase of $125 per month. Increased liabilities were valued applying actuarial software by CPRB. Amortization payments were funded over 6 years as provided in 2005 Pension Reform requirements for a qualifying improvement.
    
    The increases provided in this bill exceed the benefit improvement limitations as specified in 2005 Pension Reform for PERS and TRS retirees and qualifying beneficiaries.



Memorandum


    The retiree increase for both PERS and TRS retirees exceeds the maximum one year retiree increase under 2005 Pension Reform limitations as set by the legislature.
    
    It is assumed that the eligibillity date will be amended from July 1, 2012 to July 1, 2013.



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