Actuarial Fiscal Note

Date Requested:February 01, 2022
Time Requested:01:43 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2232 Introduced SB486
CBD Subject: Retirement

Retirement Systems Impacted by Legislation:

PERS 2501

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

PERS



Actuarial Note Summary

Impact this measure will have on the liabilities and contributions associated with the retirement system(s).


    SB 486 allows PERS retirants to designate a special needs trust as beneficiary.
    
    More specific, SB 486 modifies the definition of “Annuity reserve” in West Virginia Statute §5-10-2(5) to include a special needs trust as that term is defined in West Virginia Statute §44D-8B-13 for the benefit of a single individual beneficiary and which trust terminates upon the death of the beneficiary.
    
    SB 486 add a new section to West Virginia Statute §5-10-24(e) which allows a PERS retirant to change a beneficiary designation from the named beneficiary to a special needs trust, as that term is defined in West Virginia Statute §44D-8B-13, if the special needs trust is for the benefit of the same beneficiary. No further annuity payments shall be payable or paid from and after the later of the death of the retirant or the death of the beneficiary of the special needs trust.
    
    SB 486 is not expected to materially impact the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS.
    



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 2035 N/A


Explanation of above Actuarial estimates:


    SB 486 is not expected to materially impact the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS.

Analysis of Impact on Public Pension Policy:


    SB 486 is not expected to materially impact the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS.
    
    The Consolidated Public Retirement Board (CPRB) in-house legal counsel recommends amending the bill by adding the term "irrevocable" before "special needs trust"; striking the reference to §44D-8B-13 and replacing it with "as that term is defined in section two of this article of the code ....."; and, also adding an additional term - "special needs trust" - to the definitions section in §5-10-2 which defines "special needs trust" as "a trust established pursuant to §44D-8B-13 of the code for an individual beneficiary with a disability that is or will become irrevocable at the time of the retiree's death and terminates upon the death of the beneficiary with no further annuity benefits being payable." The additional language to SB 486 to only allow irrevocable special needs trust avoids scenarios where special needs trust are revoked and a new beneficiary is named under a different special needs trust.
    



Fiscal Note Summary


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


    SB 486 allows PERS retirants to designate a special needs trust as beneficiary.
    
    More specific, SB 486 modifies the definition of “Annuity reserve” in West Virginia Statute §5-10-2(5) to include a special needs trust as that term is defined in West Virginia Statute §44D-8B-13 for the benefit of a single individual beneficiary and which trust terminates upon the death of the beneficiary.
    
    SB 486 add a new section to West Virginia Statute §5-10-24(e) which allows a PERS retirant to change a beneficiary designation from the named beneficiary to a special needs trust, as that term is defined in West Virginia Statute §44D-8B-13, if the special needs trust is for the benefit of the same beneficiary. No further annuity payments shall be payable or paid from and after the later of the death of the retirant or the death of the beneficiary of the special needs trust.
    
    SB 486 is not expected to materially impact the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2022
Increase/Decrease
(use"-")
2023
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):


    SB 486 is not expected to materially impact the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS.



Memorandum


    This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by the CPRB Actuary. Both the Board and the CPRB Actuary are available upon request for questions.
    
    For the appropriate actuarial disclosures, see the July 1, 2021, funding valuation report for PERS, expected to be published on March 31, 2022.
    
    In particular, future actuarial measurements may differ significantly from the current measurements shown in this actuarial/fiscal note due to plan experience differing from that anticipated by the economic and demographic assumptions, changes expected as part of the natural operation of the methodology used for these measurements, and changes in plan provisions, applicable law, and regulations.
    
    Kenneth Woodson Jr., the CPRB Board Actuary, is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this Actuarial/Fiscal Note.
    



    Person submitting Fiscal Note: Kenneth M. Woodson Jr.
    Email Address: kenneth.m.woodson@wv.gov