Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

PERS and TRS

FUND(S):

PERS 2510; TRS 2601

Sources of Revenue:

General Fund,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 active members of PERS violates Pension Reform restrictions for PERS under Section 5-10-22h due to PERS funded percentage being under 85% funded (currently 77.6%).
    
    TRS Section 18-7A-28e Pension Reform provisions prohibit the increase to active members of TRS.
    
    The benefit increases to retired members of PERS and TRS meet 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 $18,625,000.
    
    For TRS, the Section 18-7A-28e retiree increase limitation is $97,125,000. The increased benefits would increase the UAAL by $27,555,000.
    
    Actuarial Costs for actives and retirees have been provided for informational purposes Only.
    
    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 $67,148,000.00 $12,919,000.00 0.35 %
Normal Cost of System N/A $483,000.00 0.10 %
Past Service Liabilities $67,148,000.00 $12,436,000.00 0.25 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2023 N/A


Explanation of above estimates:


    The bill provides an annual bonus to all current and future retirees commencing July 2013. The bonus is $300 if retired before 1960, $150 if retired in 1960 through 1980, and $100 for retirees after 1980, including future retirees.
    
    Costs shown were calculated applying actuarial software and certain projections for both retirees and active members.
    
    The increases provided in this bill violate 2005 Pension Reform for PERS and TRS active members.

Analysis of Impact on Public Pension Policy:


    The increase for both PERS and TRS violates 2005 Pension Reform for active members.



Fiscal Note Summary


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


    The benefit increases to active members of PERS violates Pension Reform restrictions for PERS under Section 5-10-22h due to PERS funded percentage being under 85% funded (currently 77.6%).
    
    TRS Section 18-7A-28e Pension Reform provisions prohibit the increase to active members of TRS.
    
    The benefit increases to retired members of PERS and TRS meet 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 $18,625,000.
    
    For TRS, the Section 18-7A-28e retiree increase limitation is $97,125,000. The increased benefits would increase the UAAL by $27,555,000.
    
    Actuarial Costs for actives and retirees have been provided for informational purposes Only.
    
    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 12,919,000 12,919,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 12,919,000 12,919,000
2. Estimated Total Revenues 0 0 0


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


    The bill provides an annual bonus to all current and future retirees commencing July 2013. The bonus is $300 if retired before 1960, $150 if retired in 1960 through 1980, and $100 for retirees after 1980, including future retirees.
    
    Costs shown were calculated applying actuarial software and certain projections for both retirees and active members.
    
    The increases provided in this bill violate 2005 Pension Reform for PERS and TRS active members.



Memorandum


    The increase for both PERS and TRS violates 2005 Pension Reform for active members.



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