Actuarial Fiscal Note

Date Requested:February 13, 2021
Time Requested:11:53 AM

1125	Introduced	SB98
Agency:	Consolidated Public Retirement Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:

Retirement Systems Impacted by Legislation:

PERS 2501, TRS 2600

FUND(S):

General Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

PERS and TRS

Actuarial Note Summary

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

    For PERS, the bill provides a bonus payment of $1,000 to current retirees and beneficiaries effective on or before June 30, 2022. However, a beneficiary receiving a benefit based on the original retiree benefit form of payment Joint and Survivor 50% would receive a bonus payment of $500. Bonus payments totaling $27,731,000 are expected to be paid to 28,203 retirees and beneficiaries, where the headcounts are based on the July 1, 2020 PERS actuarial funding valuation data. The required 6-year amortization of the bonus payment is $5,698,000 annually for FY 2022 – FY 2027. Note, when the actual number of bonus eligible PERS retirees and beneficiaries are determined the total bonus payments and the 6-year amortization of the total bonus payments may change.

    For TRS, the bill provides a bonus payment of $1,000 to current retirees and beneficiaries effective on or before June 30, 2022. However, a beneficiary receiving a benefit based on the original retiree benefit form of payment Joint and Survivor 50% would receive a bonus payment of $500. Bonus payments totaling $36,155,000 are expected to be paid to 36,586 retirees and beneficiaries, where the headcounts are based on the July 1, 2020 TRS actuarial funding valuation data. The required 6-year amortization of the bonus payment is $7,429,000 annually for FY 2022 – FY 2027. Note, when the actual number of bonus eligible TRS retirees and beneficiaries are determined the total bonus payments and the 6-year amortization of the total bonus payments may change.

    The estimated total retirement impact of the bill is an increase in the Unfunded Actuarial Accrued Liability of $63,886,000. Funding is required over 6 years at an estimated total of $13,127,000 annually.

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	$63,886,000.00	$13,127,000.00	0.41 %
Normal Cost of System	N/A	$0.00	0.00 %
Past Service Liabilities	$63,886,000.00	$13,127,000.00	0.41 %
Fiscal Year Past Service Amortization Period Ends	N/A	2027	N/A

Explanation of above Actuarial estimates:

    The number of bonus eligible retirees and beneficiaries was derived from the July 1, 2020 actuarial funding valuation data for PERS and TRS.

    Note, regarding the impact from SB 98 for PERS and TRS, when the actual number of bonus eligible retirees and beneficiaries are determined, the increase in unfunded actuarial accrued liability and the increase in the annual employer contribution requirement may change.

    Based on the estimated total bonus payments, the annual employer contributions for PERS and TRS combined will increase by $13,127,000 each year for FY 2022 through FY 2027. A special appropriation of approximately $63,886,000 is required to retire the liability increase from SB 98 in a single payment during FY 2022.

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	2021 Increase/Decrease (use"-")	2022 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	63,886,000	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	63,886,000	0
2. Estimated Total Revenues	0	0	0

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

    The number of bonus eligible retirees and beneficiaries was derived from the July 1, 2020 actuarial valuation data for PERS and TRS.

    Note, regarding the impact from SB 98 for PERS and TRS, when the actual number of bonus eligible retirees and beneficiaries are determined, the increase in unfunded actuarial accrued liability and the increase in the annual employer contribution may change.

    A special appropriation of approximately $63,886,000 is required to retire the liability increase from SB 98 in a single payment during FY 2022.

Memorandum

    The estimated retiree bonus payment is a one-time payment totaling approximately $63,886,000. A special appropriation of approximately $63,886,000 is required to retire the liability increase from SB 98 in a single payment during FY 2022.

    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.
Email Address: kenneth.m.woodson@wv.gov