Actuarial Fiscal Note

Date Requested:February 12, 2026
Time Requested:04:54 PM

4007	Introduced	HB5457
Agency:	Consolidated Public Retirement Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Workers Compensation

Retirement Systems Impacted by Legislation:

Plan B 2393

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

Plan B

Actuarial Note Summary

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

    HB 5457 would allow half-time service credits from the disability date to the recalculation date for duty-related partial disability benefits and nonduty-related disability benefits in Plan B.

    HB 5457 would increase the Plan B Unfunded Actuarial Accrued Liability (UAAL) by around $1.184 million ($139,000 for active members impacted by the bill and $1.045 million for Plan B participants currently in-pay that are impacted by the bill). Amortizing the $139,000 over ten years on a level dollar basis would increase the estimated FY 2026 Plan B recommended annual employer (ER) contribution by $19,000 and amortizing the $1.045 million over six years on a level dollar basis would increase the FY 2026 Plan B recommended annual ER contribution by $213,000.

    Moreover, HB 5457 would increase the Plan B ER normal cost by about $56,000, or 0.13% of Plan B base payroll. Therefore, measured as of July 1, 2026, the total Plan B recommended annual ER contribution would increase by approximately $288,000, or 0.69% of Plan B base payroll, due to HB 5457.

    It is important to note that the actuarial costs displayed in this actuarial/fiscal note are based on a middle-of-the-road future path, where all the assumptions are met with no experience gains or losses in the future. The actual cost from HB 5457 may be different from the expected path results presented in this actuarial/fiscal note.

    Currently, Plan B provides the following disability related benefits:
    A member disabled in the line of duty and rendered unable to perform their duties is eligible for a duty related disability retirement. If they can hold other employment, then they are partially disabled. If they are unable to work, then they are totally disabled.

    The Plan B disability benefit provisions are currently separated into three groups:
    Duty-Related Total Disability, and Duty-Related Partial Disability, and Nonduty-Related Disability.

    The disability benefits under Plan B for these three groups are:

    Duty-Related – Total Disability
    An annual disability benefit equal to 100% of the member’s base salary received during the last 12 months prior to disability, payable for life or until recovery from the disability.

    Duty-Related – Partial Disability
    An annual disability benefit equal to 60% of the member’s base salary received during the last 12 months prior to disability, but not less than $6,000 annually. This benefit is payable until age 55, or until recovery from the disability. At age 55, a retirement pension is substituted, equal to their Normal Retirement Benefit based on their Final Average Salary and Credited Service at the time of disablement.

    Non-Duty-Related
    An annual disability benefit equal to 50% of the member’s base salary received during the last 12 months prior to disability. This benefit is payable until age 55, or until recovery from the disability. At age 55, a retirement pension is substituted, equal to their Normal Retirement Benefit based on their Final Average Salary and Credited Service at the time of disablement.

    HB 5457 would modify the Plan B Duty-Related Partial Disability and Non-Duty Related Disability recalculated benefit at age 55 to include half-time disability service credits for the period between the date of disability and age 55.

    This change would apply to existing disabled participants and participants that become disable in the future.

    Plan B disabled members who are in receipt of disability benefits and are under age 55 (other than those who are totally duty-related disabled) have been valued assuming a re-calculation of their benefits at age 55 using the additional half-credit service for the period between their initial disability date and the date they attain age 55.

    Moreover, for Plan B disabled members who are in receipt of disability benefits and are over age 55 (other than those who are totally duty-related disabled) have been valued assuming a re-calculation of their age-55 benefit using the additional half-credit service for the period between their initial disability dates and the date they attain age 55. Importantly, their monthly payments are adjusted from July 1, 2025, onward. Changes to Plan B that would be made under HB 5457 are prospective, so there would be no retroactive payments to current disabled members.

    The analysis for HB 5457 was performed by Gallagher Benefit Services, Inc. (Gallagher) as of July 1, 2025.

    Gallagher has provided the following disclosures.

    The results were developed for the West Virginia Consolidated Public Retirement Board by Gallagher using generally accepted actuarial principles and techniques in accordance with all applicable Actuarial Standards of Practice (ASOPs). The purpose of analysis is to provide an estimated cost impact of provisions of HB 5457 based on the July 1, 2025, valuation results for Plan B. Use of the results for any other purpose may not be appropriate and may result in mistaken conclusions due to failure to understand applicable assumptions, methodologies, or inapplicability of the results for that purpose. Because of the risk of misinterpretation of actuarial results, you should ask Gallagher to review any statement you wish to make on the results contained in this analysis. Gallagher will not accept any liability for any such statement made without prior review. No third-party recipient of Gallagher’s work product should rely upon Gallagher’s work product absent involvement of Gallagher or without our approval.


    Interested parties may refer to the forthcoming July 1, 2025, actuarial valuation report for Plan B for a detailed explanation regarding data, assumptions, methods, and plan provisions that underlie the results herein. The valuation report also provides the risk information required under ASOP 51 and ASOP 4, the use-of-models disclosures required under ASOP 56, and the statements regarding the reasonableness of the assumptions adopted by the Board required under ASOP 27.

    Future actuarial measurements may differ significantly from the current measurement presented in this report due to such factors as: plan experience different from that anticipated by the economic and demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements; and changes in plan provisions or applicable law. An analysis of the potential range of such future measurements is beyond the scope of this assignment.


    Elizabeth Hoalt and David Driscoll meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this actuarial/fiscal note. They are available to answer any questions about the material contained in this analysis, or to provide explanations or further details as may be appropriate.

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
Impact On	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	$1,184,000.00	$288,000.00	0.69 %
Normal Cost of System	N/A	$56,000.00	0.13 %
Past Service Liabilities	$1,184,000.00	$232,000.00	0.56 %
Fiscal Year Past Service Amortization Period Ends	N/A	2035	N/A

Explanation of above Actuarial estimates:

    HB 5457 would increase the Plan B Unfunded Actuarial Accrued Liability (UAAL) by around $1.184 million ($139,000 for active members impacted by the bill and $1.045 million for Plan B participants currently in-pay that are impacted by the bill). Amortizing the $139,000 over ten years on a level dollar basis would increase the estimated FY 2026 Plan B recommended annual employer (ER) contribution by $19,000 and amortizing the $1.045 million over six years on a level dollar basis would increase the FY 2026 Plan B recommended annual ER contribution by $213,000.

    Moreover, HB 5457 would increase the Plan B ER normal cost by about $56,000, or 0.13% of Plan B base payroll. Therefore, measured as of July 1, 2026, the total Plan B recommended annual ER contribution would increase by approximately $288,000, or 0.69% of Plan B base payroll, due to HB 5457.

Analysis of Impact on Public Pension Policy:

Fiscal Note Summary

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

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2026 Increase/Decrease (use"-")	2027 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	298,000	288,000	288,000
Personal Services	0	0	0
Current Expenses	10,000	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	288,000	288,000	288,000
2. Estimated Total Revenues	0	0	0

Explanation of above Fiscal Note estimates (include possible long-range effect):

    In addition to the increase in the Plan B annual employer cost of $288,000, or 0.69% of base payroll for FY 2026, there is a one-time $10,000 expense to set up the administrative software to modify the disability calculation for Plan B, as outlined above.

    It is important to note that the actuarial costs displayed in this actuarial/fiscal note are based on a middle-of-the-road future path, where all the assumptions are met with no experience gains or losses in the future. The actual cost from HB 5457 may be different from the expected path results presented in this actuarial/fiscal note.

Memorandum

    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.

    For the appropriate actuarial disclosures, see the July 1, 2025, funding valuation report for Plan B, expected to be published in April 2026.

    In particular, future actuarial measurements may differ significantly from current measurements due to System experience differing from that anticipated by the economic and demographic assumptions, changes expected as part of the natural operation of the methodology used for these measurements, and changes in system provisions or applicable law or regulations. An analysis of the potential range of such future differences is beyond the scope of the request addressed here.

    Regarding Actuarial Standards of Practice 51, the risk assessment for Plan B is not expected to change materially due to HB 5457.

    Actuarial Standard of Practice No. 56 provides guidance to actuaries when performing actuarial services with respect to designing, developing, selecting, modifying, using, reviewing, or evaluating models. Gallagher uses third-party software in the performance of annual actuarial valuations and projections.

    Kenneth Woodson Jr., the CPRB Board Actuary, is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this Actuarial/Fiscal Note.

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