Actuarial Fiscal Note

Date Requested:January 31, 2020
Time Requested:10:01 AM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
1525 Introduced HB4350
CBD Subject: Counties

Retirement Systems Impacted by Legislation:

PERS 2501 DSRS 2150

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

PERS and DSRS



Actuarial Note Summary

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


    HB 4350 allows any member of DSRS who was elected sheriff of a county of West Virginia to serve on or after January 1, 2013 and who has not commenced retirement in the DSRS or PERS, must notify the CPRB Board in writing by July 31, 2020, of his or her intent to pay the difference in the employee contributions between PERS and DSRS in order to transfer all service credit earned as a sheriff or purchased in accordance with Section 414(u) of the Internal Revenue Code and the federal Uniformed Services Employment and Reemployment Rights Act (USERRA) from PERS to DSRS. The CPRB Board shall compute the difference in employee contributions owed up through September 30, 2020, on the total compensation for which assets are being transferred and notify the sheriff of the amount owed in writing by letter mailed no later than August 21, 2020. This difference in employee contributions must be paid in full by the sheriff to DSRS no later than September 30, 2020. If timely paid, employee and employer contributions to DSRS shall commence October 1, 2020.
    
    In addition, the CPRB Board shall transfer assets from PERS to DSRS no later than November 30, 2020. The amount of assets transferred for each transferring sheriff shall be computed as of July 1, 2019, using the actuarial valuation assumptions in effect for the July 1, 2019 actuarial valuation of PERS, and updated with seven and one-half percent annual interest to the date of the actual asset transfer. The assets transferred from PERS to DSRS are calculated as the Entry Age Normal Actuarial Accrued Liability, as of July 1, 2019, for the transferring sheriff service under PERS, multiplied by the Active member funded percentage of PERS as of July 1, 2019.
    
    The amount of sheriff service transferring from PERS to DSRS is small, so we do not expect a material change in the PERS or DSRS unfunded actuarial accrued liability or the annual employer contribution requirement.
    



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 - N/A


Explanation of above Actuarial estimates:


    The amount of sheriff service transferring from PERS to DSRS is small, so we do not expect a material change in the PERS or DSRS unfunded actuarial accrued liability or the annual employer contribution requirement.
    
    Estimates given are based on actuarial results as of July 1, 2019, using the same assumptions and plan provisions from the July 1, 2018 funding valuation reports for PERS and DSRS. These estimates are based on assumptions of future events, which may not materialize. Future measurements may differ significantly due to plan experience differing from that anticipated by these assumptions, by the natural operation of the methodology used for these measurements, or by changes to plan provisions.
    

Analysis of Impact on Public Pension Policy:


    The amount of sheriff service transferring from PERS to DSRS is small, so we do not expect a material change in the PERS or DSRS unfunded actuarial accrued liability or the annual employer contribution requirement.



Fiscal Note Summary


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


    The Deputy Sheriffs Retirement System in not a liability of the State, and as such the cost to the system due to the proposed legislation would not affect the State’s costs.
    
    The amount of sheriff service transferring from PERS to DSRS is small, so we do not expect a material change in the PERS unfunded actuarial accrued liability or the annual employer contribution requirement.
    
    
    However, additional costs of approximately $1,000 would be incurred by the CPRB in making the required changes to the computer software used to administer pension benefits. The bill does not provide a source of funding for this additional cost.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 1,000 0
Personal Services 0 0 0
Current Expenses 0 1,000 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):


    The Deputy Sheriffs Retirement System in not a liability of the State, and as such the increased cost to the system due to the proposed legislation would not affect the State’s costs.
    
    However, additional costs of approximately $1,000 would be incurred by the CPRB in making the required changes to the computer software used to administer pension benefits. The bill does not provide a source of funding for this additional cost.
    



Memorandum


    Additional costs of approximately $1,000 would be incurred by the CPRB in making the required changes to the computer software used to administer pension benefits. The bill does not provide a source of funding for this additional cost.
    
    
    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.
    



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