Actuarial Fiscal Note

Date Requested:February 22, 2017
Time Requested:08:34 AM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2630 Introduced HB2600
CBD Subject: Retirement

Retirement Systems Impacted by Legislation:

MPFRS

FUND(S):

MPFRS 2390

Sources of Revenue:

Other Fund Local governments

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).


    This bill clarifies that vesting occurs after 5 years of contributory service, and that the salary on which disability benefits are based shall only include months in which the member received full compensation. In addition, this bill requires that in order to be eligible to receive a nonduty disability retirement, a member must have completed at least ten years of contributory service.
    
    The administrative provisions make no changes to the cost of the plan, but the ten-year service requirement for nonduty disability would result in a decrease in the Actuarial Accrued Liabilities of $2,000. The Normal Cost would decrease by 0.33%. This savings will not result in any required change in contribution rate for either members or employers, whose contribution rates would remain at 8.5% each.
    



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 ($2,000.00) ($27,000.00) -0.34 %
Normal Cost of System N/A ($27,000.00) -0.34 %
Past Service Liabilities ($2,000.00) $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2040 N/A


Explanation of above estimates:


    Cost estimate of the additional ten-year contributory service requirement is based on the July 1, 2016, Actuarial Valuation for funding. The cost savings result in no additional amortization payment of the unfunded liability, and normal cost would decrease by 0.33% of payroll. Contribution rates would remain unchanged.

Analysis of Impact on Public Pension Policy:


    Current employer contribution rate of 8.50% exceeds the minimum contribution required to attain a 100% funding ratio by June 30, 2040, but is designed to anticipate future costs as members become eligible for regular and disability retirement beginning in January 2017. This bill would not require any change to the current contribution rate.



Fiscal Note Summary


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


    MPFRS is a local government plan and does not cover any state employees. All funding for MPFRS is through member contributions of 8.50% and employer contributions of 8.50%.
    
    MPFRS does not impact the costs nor revenues of state government.
    
    Necessary changes to CPRB’s computer system would be required, with administrative costs estimated at approximately $5500.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 5,500 0
Personal Services 0 5,500 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 estimates (including long-range effect):


    MPFRS is a local government plan and does not cover any state employees. All funding for MPFRS is through member contributions of 8.50% and employer contributions of 8.50%.
    
    MPFRS does not impact the costs nor revenues of state government.
    
    Necessary changes to CPRB’s computer system would be required, with administrative costs estimated at approximately $5500.
    



Memorandum


    MPFRS is a local government plan and does not cover any state employees. All funding for MPFRS is through member contributions of 8.50% and employer contributions of 8.50%.
    
    MPFRS does not impact the costs nor revenues of state government.
    
    Necessary changes to CPRB’s computer system would be required, with administrative costs estimated at approximately $5500.
    
    This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by a qualified actuary, and a letter of certification is available from the CPRB upon request.
    



    Person submitting Fiscal Note: Melody Bailey, Actuarial Analyst, WVCPRB
    Email Address: melody.j.bailey@wv.gov