Actuarial Fiscal Note
Date Requested:February 24, 2015
Time Requested:03:20 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3294 |
Introduced |
HB2995 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
Deputy Sherriff Retirement System
FUND(S):
DSRS 2150
Sources of Revenue:
Other Fund Local Governments
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 Deputy Sherriff Retirement System covers Deputy Sherriffs working for local governments in WV. The bill adds an annual 1% post retirement COLA increase to retirees and beneficiaries commencing July 1, 2015.
The addition of the annual COLA increase is limited to retirees age 60 or older on the increase date plus all disabled retirees and beneficiaries.
The COLA benefit will increase the Unfunded Actuarial Accrued Liabilities by $14,403,000. The Noraml Cost would incease by $380,000. The total annual contribution requirement would increase by $2,077,000, or 4.45% of payroll. Funding is targeted for completion by FY2029.
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 |
$14,402,000.00 |
$2,077,000.00 |
4.45 % |
| Normal Cost of System |
N/A |
$380,000.00 |
1.07 % |
| Past Service Liabilities |
$14,403,000.00 |
$1,697,000.00 |
3.38 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
2029 |
N/A |
Explanation of above Actuarial estimates:
The addition of the COLA benefit was valued through the Actuarial System Software applied in completing the annual actuarial valuations for DSRS as of July 1, 2014. Additional UAAL is amortized over 14 years through FY 2029.
The improvement requires an additional 4.45% of payroll for 14 years. Based on the current contribution level, the employer contribtuion rate is sufficient to cover the increased contribution amount if current funding levels are maintained for DSRS by the Board.
Analysis of Impact on Public Pension Policy:
Since inception, the DSRS has not granted any retiree icnreases, either single one time nor automatic COLA. Both WV State Police plans provide an automatic COLA increase annually. Plan A provides 3.75% while Plan B is 1%. The DSRS Bill is consistent with the current Plan B amount.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
DSRS is a local governmental plan and therefore does not impact either costs nor revenues of state government.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2015
Increase/Decrease
(use"-") |
2016
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 Fiscal Note estimates (include possible long-range effect):
DSRS is a local governmental plan and therefore does not impact either costs nor revenues of state government.
Memorandum
Since DSRS covers only local governmental members there is no impact on State Government for this improvement
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov