Actuarial Fiscal Note
Date Requested:February 10, 2016
Time Requested:01:40 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2515 |
Introduced |
HB4479 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
Deputy Sherriff Retirement System (DSRS)
FUND(S):
DSRS
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 amends the DSRS with the addition of a 1% annual cola incease each July 1, commencing July 1, 2016. The cola is limited to retirees age 60 and older on each increase date and for disabled retirees and beneficiaries.
The cola will increase the Unfunded Actuarial Accrued Liabilities by $17,136,000. The Normal Cost is increased by $520,000. Amortization of the increase in UAL will increase the funding requirement by 1,490,000. The total increase in employer contributions is $2,010,000. Contributions inrease annually to remain a level percentage of payroll. The UAL will be fully amortized in 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 |
$17,136,000.00 |
$2,010,000.00 |
4.10 % |
| Normal Cost of System |
N/A |
$520,000.00 |
1.02 % |
| Past Service Liabilities |
$17,136,000.00 |
$1,490,000.00 |
3.08 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
FY2029 |
N/A |
Explanation of above Actuarial estimates:
The cost increase is based on the latest actuarial valuation for DSRS as of July 1, 2015 as addopted by the CPRB Board. The new UAL is amortized over 13 years through FY2029.
The increase in contribution requirement is 4.10% of payroll. The total contribution requirement including the improvement is 11.22% of payroll. This amount is less than the current employer contribution rate of 12.0% as approved by the Board through FY2017.
The current funding policy is sufficient to fund the improved benefits without increasing the employer contribution rate.
Analysis of Impact on Public Pension Policy:
The DSRS does not have a cola and has not adopted any ad hoc increases to retirees. State Police Plan A has a 3.5% cola and Plan B a 1% cola. The cola included in this Bill provides for a consistent cola benefit as for Plan B.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
DSRS is a local governmental plan and does not impact the liabililties nor contribution requirements funded by 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 |
25,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
25,000 |
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 does not impact the liabililties nor contribution requirements funded by State government.
Other costs represent a one-time implementation administrative cost to update CPRB systems to provide the cola.
Memorandum
DSRS is a local governmental plan and does not impact the liabililties nor contribution requirements funded by State government.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov