Actuarial Fiscal Note
Date Requested:March 06, 2018
Time Requested:04:05 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2770 |
Amendment - HJUD AM #1 |
SB632 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
PERS 2501, JRS 2140
FUND(S):
General Fund
Sources of Revenue:
Legislation creates:
PERS, JRS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
SB 632, with the amendment made in House Judiciary, would provide that judges who are retired from PERS would be permitted to be reemployed on a temporary basis and earn compensation in excess of $20,000 per year without interruption or suspension of his or her PERS annuity, if the Chief Justice has certified by Administrative Order that exigent circumstances exist. In addition, this legislation would permit that judges retired from JRS would be permitted to be reemployed on a temporary basis as a Senior Status Judge and earn per diem and retirement compensation in excess of the compensation earned by a sitting judge if the Chief Justice has certified by Administrative Order that exigent circumstances exist. Current statute limits compensation of retired PERS members to $20,000 annually as a temporary employee, and limits additional compensation of retired JRS members to the salary of a sitting judge.
The provisions of this legislation which allow a JRS retiree to return to employment and receive per diem and retirement compensation in excess of the compensation earned by a sitting judge violate §51-9-6c, subsection (c), known as “2005 Pension Reform”, which prohibits increases to benefits for active members of JRS. This bill provides that retirees of JRS shall be permitted to return to work in limited circumstances without affecting his or her retirement benefit, which is not a benefit currently available to retired JRS members. The provisions of §51-9-6c sunset on July 1, 2019, per subsection (d).
The provisions of the bill which allow judges who are retired from PERS to return to work and earn up to $20,000 without loss or suspension of PERS benefits is also an increase to the benefit of PERS members, but the “2005 Pension Reform” provisions of §5-10-22h, subsection (c), are not in effect because the Actuarial Accrued Liabilities of PERS are currently funded above the 85% threshold required in that subsection.
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 |
9999 |
N/A |
Explanation of above Actuarial estimates:
The bill as amended violates §51-9-6c, subsection (c), known as “2005 Pension Reform”, which prohibits increases to benefits for active members of JRS. Current retirees of JRS are prohibited from returning to employment and earning per diem and retirement compensation which together would be greater than the salary of a currently sitting judge. Thus, allowing retirees to return to work with no limit on the number of hours allowed is providing an additional benefit that is not currently available. The provisions of §51-9-6c will sunset on July 1, 2019, per subsection (d).
Analysis of Impact on Public Pension Policy:
The bill as amended violates §51-9-6c, subsection (c), known as “2005 Pension Reform”, which prohibits increases to benefits for active members of JRS. Current retirees of JRS are prohibited from returning to employment and earning per diem and retirement compensation which together would be greater than the salary of a currently sitting judge. Thus, allowing retirees to return to work with no limit on the number of hours allowed is providing an additional benefit that is not currently available. The provisions of §51-9-6c will sunset on July 1, 2019, per subsection (d).
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
SB 632, with the amendment made in House Judiciary, would provide that judges who are retired from PERS would be permitted to be reemployed on a temporary basis and earn compensation in excess of $20,000 per year without interruption or suspension of his or her PERS annuity, if the Chief Justice has certified by Administrative Order that exigent circumstances exist. In addition, this legislation would permit that judges retired from JRS would be permitted to be reemployed on a temporary basis as a Senior Status Judge and earn per diem and retirement compensation in excess of the compensation earned by a sitting judge if the Chief Justice has certified by Administrative Order that exigent circumstances exist. Current statute limits compensation of retired PERS members to $20,000 annually as a temporary employee, and limits additional compensation of retired JRS members to the salary of a sitting judge.
The provisions of this legislation which allow a JRS retiree to return to employment and receive per diem and retirement compensation in excess of the compensation earned by a sitting judge violate §51-9-6c, subsection (c), known as “2005 Pension Reform”, which prohibits increases to benefits for active members of JRS. This bill provides that retirees of JRS shall be permitted to return to work in limited circumstances without affecting his or her retirement benefit, which is not a benefit currently available to retired JRS members. The provisions of §51-9-6c sunset on July 1, 2019, per subsection (d).
The provisions of the bill which allow judges who are retired from PERS to return to work and earn up to $20,000 without loss or suspension of PERS benefits is also an increase to the benefit of PERS members, but the “2005 Pension Reform” provisions of §5-10-22h, subsection (c), are not in effect because the Actuarial Accrued Liabilities of PERS are currently funded above the 85% threshold required in that subsection.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
999,999,999 |
999,999,999 |
999,999,999 |
| Personal Services |
999,999,999 |
999,999,999 |
999,999,999 |
| Current Expenses |
999,999,999 |
999,999,999 |
999,999,999 |
| Repairs and Alterations |
999,999,999 |
999,999,999 |
999,999,999 |
| Assets |
999,999,999 |
999,999,999 |
999,999,999 |
| Other |
999,999,999 |
999,999,999 |
999,999,999 |
| 2. Estimated Total Revenues |
999,999,999 |
999,999,999 |
999,999,999 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
The bill as amended violates §51-9-6c, subsection (c), known as “2005 Pension Reform”, which prohibits increases to benefits for active members of JRS. Current retirees of JRS are prohibited from returning to employment and earning per diem and retirement compensation which together would be greater than the salary of a currently sitting judge. Thus, allowing retirees to return to work with no limit on the number of hours allowed is providing an additional benefit that is not currently available. The provisions of §51-9-6c will sunset on July 1, 2019, per subsection (d).
Memorandum
The bill as amended violates §51-9-6c, subsection (c), known as “2005 Pension Reform”, which prohibits increases to benefits for active members of JRS. Current retirees of JRS are prohibited from returning to employment and earning per diem and retirement compensation which together would be greater than the salary of a currently sitting judge. Thus, allowing retirees to return to work with no limit on the number of hours allowed is providing an additional benefit that is not currently available. The provisions of §51-9-6c will sunset on July 1, 2019, per subsection (d).
Person submitting Fiscal Note: Melody Bailey, Actuarial Analyst, WV CPRB
Email Address: melody.j.bailey@wv.gov