Actuarial Fiscal Note

Date Requested:February 19, 2026
Time Requested:12:12 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
4230 Introduced SB978
CBD Subject: Retirement

Retirement Systems Impacted by Legislation:

PERS 2501 and MPFRS 2390

FUND(S):

Other Fund

Sources of Revenue:

Local Governments Creates New Expense

Legislation creates:

PERS and MPFRS


Actuarial Note Summary

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


    It is our understanding that SB 978 would allow PERS Tier 2 police officers and firefighters to transfer from PERS to MPFRS, in a similar window like the one in the Committee Substitute for HB 2026 that was passed into law during the West Virginia 2023 Regular Legislative Session. We have analyzed SB 978 based on this understanding.
    
    There are currently 18 PERS Tier 2 police officers and firefighters, and SB 978 would give these members the option to transfer all their PERS service to MPFRS.
    
    We assume all 18 PERS Tier 2 police officers and firefighters would elect to transfer all their service from PERS to MPFRS and based on the transfer calculation outlined in §8-22A-33b, as of July 1, 2025, the estimated assets that would transfer from PERS to MPFRS is $978,000. The actual assets that would transfer according to §8-22A-33b from PERS to MPFRS depend on the PERS market value of assets, the PERS active and inactive actuarial accrued liability, and the PERS actuarial accrued liability for the transferring police officers and firefighters, all quantities measured as of July 1, 2026.
    
    It is important to note that the estimated asset transfer amount is based on PERS liabilities, calculated as of July 1, 2025, using the data, assumptions, and plan provisions from the July 1, 2025, funding valuation for PERS. Moreover, the PERS market value of assets, as of July 1, 2025, is provided by the West Virginia Investment Management Board (WVIMB). The actual assets transferred in the future from PERS to MPFRS may be different from the estimated asset transfer amount.
    
    In addition to the assets that would transfer according to §8-22A-33b, each
    transferring PERS Tier 2 police officer and PERS Tier 2 firefighter would be required to contribute a make-up contribution to MPFRS. According to §8-22A-33b, the make-up contribution shall be calculated as four percent of the PERS member’s total earnings for which assets are transferred, plus interest of seven and one-half percent accumulated from the date of the police officer’s or firefighter’s initial participation in the Public Employees Retirement System through the calculation date, assumed to be July 1, 2025. If all 18 PERS Tier 2 police officers and firefighters elect to transfer their PERS service to MPFRS, the total make-up contributions would increase MPFRS assets by approximately $356,000.
    
    Measured as of July 1, 2025, the estimated PERS actuarial accrued liability for the 18 PERS Tier 2 police officers and firefighters is $828,000. Therefore, as of July 1, 2025, SB 978 would increase the PERS Unfunded Actuarial Accrued Liability, based on market value of assets, by about $150,000 ($978,000 – $828,000). The impact from SB 978 on the PERS employer Normal Cost and the PERS Unfunded Actuarial Accrued Liability is immaterial.
    
    Measured as of July 1, 2025, the estimated MPFRS actuarial accrued liability for the 18 PERS Tier 2 police officers and firefighters is $1.426 million. This liability was calculated as of July 1, 2025, using the data, assumptions, and plan provisions from the July 1, 2025, funding valuation for MPFRS. The results will change if the liabilities are calculated at a different date in the future.
    
    Measured as of July 1, 2025, the estimated MPFRS market value of assets would increase by $1.334 million ($978,000 transferred assets from §8-22A-33b plus $356,000 make-up contributions) if all 18 PERS Tier 2 police officers and firefighters transfer their PERS service to MPFRS. The increase in MPFRS assets will change if the transfer date is different from the assumed transfer date, July 1, 2025.
    
    Therefore, as of July 1, 2025, the Unfunded Actuarial Accrued Liability for MPFRS would increase by approximately $92,000 ($1.426 million – $1.334 million) if 18 PERS Tier 2 police officers and firefighters transfer from PERS to MPFRS. Amortizing this amount over 10 years on a level dollar basis would increase the annual MPFRS amortization of the Unfunded Actuarial Accrued Liability by about $13,000 or 0.02% of MPFRS payroll (including transfers).
    
    Moreover, SB 978 would increase the MPFRS employer normal cost by about $98,000 per year, or 0.18% of MPFRS payroll (including transfers). Therefore, the total MPFRS annual required employer contribution would increase by approximately $111,000 or 0.20% of MPFRS payroll (including transfers) if 18 PERS Tier 2 police officers and firefighters transfer from PERS to MPFRS.
    
    For fiscal 2026, the current MPFRS employer contribution rate of 8.5% of payroll and the current MPFRS employee contribution rate of 8.5% of payroll are not expected to change as result of SB 978.
    
    
    In the future the experience of the group of police and firefighters transferring may be different from the existing MPFRS active group experience and may lead to plan gains or losses in the future.
    


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 $92,000.00 $111,000.00 0.20 %
Normal Cost of System N/A $98,000.00 0.18 %
Past Service Liabilities $92,000.00 $13,000.00 0.02 %
Fiscal Year Past Service
Amortization Period Ends		 N/A 2035 N/A


Explanation of above Actuarial estimates:


    The impact from SB 978 on the PERS employer Normal Cost and the PERS Unfunded Actuarial Accrued Liability is immaterial.
    
    As of July 1, 2025, the Unfunded Actuarial Accrued Liability for MPFRS would increase by approximately $92,000 ($1.426 million – $1.334 million) if 18 PERS Tier 2 police officers and firefighters transfer from PERS to MPFRS. Amortizing this amount over 10 years on a level dollar basis would increase the annual MPFRS amortization of the Unfunded Actuarial Accrued Liability by about $13,000 or 0.02% of MPFRS payroll (including transfers).
    
    Moreover, SB 978 would increase the MPFRS employer normal cost by about $98,000 per year, or 0.18% of MPFRS payroll (including transfers). Therefore, the total MPFRS annual required employer contribution would increase by approximately $111,000 or 0.20% of MPFRS payroll (including transfers) if 18 PERS Tier 2 police officers and firefighters transfer from PERS to MPFRS.
    
    For fiscal 2026, the current MPFRS employer contribution rate of 8.5% of payroll and the current MPFRS employee contribution rate of 8.5% of payroll are not expected to change as SB 978.
    
    In the future the experience of the group of police and firefighters transferring may be different from the existing MPFRS active group experience and may lead to plan gains or losses in the future.
    
    Note, future actuarial measurements may differ significantly from the current measurements shown in this actuarial/fiscal note due to plan 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 plan provisions, applicable law, and regulations.
    

Analysis of Impact on Public Pension Policy:


    All costs associated with this legislation are based on the July 1, 2025, Actuarial Funding Valuations for PERS and MPFRS and assume that all relevant assumptions will be met in all future years. If those assumptions are not met, costs could fluctuate resulting in a potential increase or decrease in costs.
    
    If all 18 PERS Tier 2 police officers and firefighters transfer to MPFRS, the experience of this transferring group may be different from the current active population of MPFRS, which could lead to gains or losses in the future for the group of 18 PERS Tier 2 police officers and firefighters, assumed to join MPFRS.
    


Fiscal Note Summary


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


    The impact from SB 978 on the PERS employer Normal Cost and the PERS Unfunded Actuarial Accrued Liability is immaterial.
    
    MPFRS consists of local municipalities and does not cover any state employees. For fiscal 2026, funding for MPFRS is through member contributions of 8.50% of payroll and employer contributions of 8.50% of payroll.
    
    MPFRS does not impact the costs or revenues of state government.
    


Fiscal Note Detail


Effect of Proposal Fiscal Year
2026
Increase/Decrease
(use"-")		 2027
Increase/Decrease
(use"-")		 Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 25,000 0
Personal Services 0 0 0
Current Expenses 0 25,000 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 impact from SB 978 on the PERS employer Normal Cost and the PERS Unfunded Actuarial Accrued Liability is immaterial.
    
    MPFRS consists of local municipalities and does not cover any state employees. Funding for MPFRS is through member contributions of 8.50% of payroll and employer contributions of 8.50% of payroll.
    
    MPFRS does not impact the costs or revenues of state government. However, additional costs of approximately $25,000 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


    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 reports for PERS and MPFRS, 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.
    
    Regarding Actuarial Standards of Practice 51, the risk assessment for MPFRS may be affected by allowing PERS Tier 2 police officers and firefighters to transfer to MPFRS to the extent the experience of this transferring group may be different from the current active population of MPFRS, which could lead to gains or losses in the future for the group of 18 PERS Tier 2 police officers and firefighters, assumed to join MPFRS.
    
    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