Actuarial Fiscal Note

Date Requested:February 05, 2016
Time Requested:03:29 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2335 Introduced HB4425
CBD Subject: Health, Retirement

Retirement Systems Impacted by Legislation:

Emergency Medical Services Retirement System

FUND(S):

EMSRS

Sources of Revenue:

Other Fund 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 Bill increases the retirement formula credit for service in excess of 25 years at retirement to 1.5% of average pay to a maximum credit of 90% of pay for the full plan benefit.
    
    The improvement would result in an increase in the Actuarial Accrued Liabilities of $1,357,000. The Normal Cost would increase by 0.13% of payroll.
    
    The contribution increase in the current year would be an additional Normal Cost of $35,000 plus additional amortization payement of $121,000 for a total incease in contribution of $156,000, increaasing annually at a 3% assumed inflation rate through FY2039.
    
    The current member and employer contribution rates of 8.5% member and 10.5% employer are sufficient to meet the increased funding requirement. There would be no increase in funding rates as a percentage of payroll.



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 $1,357,000.00 $156,000.00 0.60 %
Normal Cost of System N/A $121,000.00 0.13 %
Past Service Liabilities $1,357,000.00 $35,000.00 0.47 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2039 N/A


Explanation of above Actuarial estimates:


    Cost estimate is based on the July 1, 2015 Actuarial Valuation for funding of the increased benefit formula resulting from the bill. Amortization payment increase is required for FY2016 through FY2039. The employer contribution rate of 10.5% of payrollis expected to be sufficient through FY2039.

Analysis of Impact on Public Pension Policy:


    It should be noted that the employer contribution rate of 10.5% of payroll exceeds the minimum contribution required to attain a 100% funded ratio by June 30,2039. Although the contribution rate will not be increased, an additional $1,357,000 of UAAL must be amortized during the period.
    
    Benefit improvements are for those first retiring on and after July 1, 2016 and are not retroactive to prior retirees.



Fiscal Note Summary


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


    EMSRS is a local govenmental plan and does not cover any state employees. All funding for EMSRS is through 8.5% member contributions and 10.5% local employer contributions.
    
    EMSRS does not impact the costs nor revenues of state government.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
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):


    EMSRS is a local govenmental plan and does not cover any state employees. All funding for EMSRS is through 8.5% member contributions and 10.5% local employer contributions.
    
    EMSRS does not impact the costs nor revenues of state government.



Memorandum


    EMSRS is a local govenmental plan and does not cover any state employees. All funding for EMSRS is through 8.5% member contributions and 10.5% local employer contributions.
    
    EMSRS does not impact the costs nor revenues of state government.



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