Actuarial Fiscal Note
Date Requested:January 09, 2019
Time Requested:02:56 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1371 |
Introduced |
HB2041 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
TRS 2600
FUND(S):
General Fund
Sources of Revenue:
Increases Existing Expenses
Legislation creates:
TRS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
HB 2041 would add subsection (g) to the West Virginia Statute §18-7A-25. On or after June 30, 2019, this new subsection would allow teacher members of the Teachers’ Retirement System (TRS) with at least 25 years of contributory service to retire regardless of age.
This new subsection §18-7A-25 (g) would violate the West Virginia Statute §18-7A-28e (c), known as “2005 Pension Reform”, which prohibits the increase of existing benefits or the creation of new benefits for active members of the Teachers’ Retirement System until the limitation sunsets on July 1, 2034.
Under current West Virginia State Law, a member of TRS with membership date before July 1, 2015 can retire with an unreduced benefit if the member meets any of the following conditions:
- Age 60 and 5 years of service
- Age 55 and 30 years of service
- Any age with 35 years of service.
For TRS members with a membership date on or after July 1, 2015, the member can retire at age 62 with 10 years of service.
The new subsection §18-7A-25 (g) outlined in HB 2041 would allow TRS teacher members to retire with 25 years of contributory service regardless of age, which is currently not permitted in the West Virginia Code. Adding this provision would create a new unreduced retirement benefit and would increase the unfunded actuarial liability for TRS.
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 |
9.99 % |
| Normal Cost of System |
N/A |
$999,999,999.00 |
9.99 % |
| Past Service Liabilities |
$999,999,999.00 |
$999,999,999.00 |
9.99 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
9999 |
N/A |
Explanation of above Actuarial estimates:
HB 2041 would create a new subsection §18-7A-25 (g) in the West Virginia Code. However, this new subsection violates the West Virginia Statute §18-7A-28e (c), known as “2005 Pension Reform”, which prohibits the increase of existing benefits or the creation of new benefits for active members of the Teachers’ Retirement System until the limitation sunsets on July 1, 2034.
HB 2041 would allow teacher members of TRS with at least 25 years of contributory service to retire. Adding this new provision would create a new unreduced retirement benefit in TRS and would increase the unfunded liability for TRS.
Analysis of Impact on Public Pension Policy:
HB 2041 would create a new subsection §18-7A-25 (g) in the West Virginia Code. However, this new subsection violates the West Virginia Statute §18-7A-28e (c), known as “2005 Pension Reform”, which prohibits the increase of existing benefits or the creation of new benefits for active members of the Teachers’ Retirement System until the limitation sunsets on July 1, 2034.
HB 2041 would allow teacher members of TRS with at least 25 years of contributory service to retire. Adding this new provision would create a new unreduced retirement benefit in TRS and would increase the unfunded liability for TRS.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
HB 2041 would add subsection (g) to the West Virginia Statute §18-7A-25. On or after June 30, 2019, this new subsection would allow teacher members of the Teachers’ Retirement System (TRS) with at least 25 years of contributory service to retire regardless of age.
This new subsection §18-7A-25 (g) would violate the West Virginia Statute §18-7A-28e (c), known as “2005 Pension Reform”, which prohibits the increase of existing benefits or the creation of new benefits for active members of the Teachers’ Retirement System until the limitation sunsets on July 1, 2034.
Under current West Virginia State Law, a member of TRS with membership date before July 1, 2015 can retire with an unreduced benefit if the member meets any of the following conditions:
- Age 60 and 5 years of service
- Age 55 and 30 years of service
- Any age with 35 years of service.
For TRS members with a membership date on or after July 1, 2015, the member can retire at age 62 with 10 years of service.
The new subsection §18-7A-25 (g) outlined in HB 2041 would allow TRS teacher members to retire with 25 years of contributory service regardless of age, which is currently not permitted in the West Virginia Code. Adding this provision would create a new unreduced retirement benefit and would increase the unfunded actuarial liability for TRS.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
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):
HB 2041 would create a new subsection §18-7A-25 (g) in the West Virginia Code. However, this new subsection violates the West Virginia Statute §18-7A-28e (c), known as “2005 Pension Reform”, which prohibits the increase of existing benefits or the creation of new benefits for active members of the Teachers’ Retirement System until the limitation sunsets on July 1, 2034.
HB 2041 would allow teacher members of TRS with at least 25 years of contributory service to retire. Adding this new provision would create a new unreduced retirement benefit in TRS and would increase the unfunded liability for TRS.
Memorandum
HB 2041 would create a new subsection §18-7A-25 (g) in the West Virginia Code. However, this new subsection violates the West Virginia Statute §18-7A-28e (c), known as “2005 Pension Reform”, which prohibits the increase of existing benefits or the creation of new benefits for active members of the Teachers’ Retirement System until the limitation sunsets on July 1, 2034.
HB 2041 would allow teacher members of TRS with at least 25 years of contributory service to retire. Adding this new provision would create a new unreduced retirement benefit in TRS and would increase the unfunded liability for TRS.
Person submitting Fiscal Note: Kenneth M. Woodson Jr., Board Actuary, CPRB
Email Address: kenneth.m.woodson@wv.gov