Actuarial Fiscal Note

Date Requested:February 01, 2022
Time Requested:01:10 PM

2062	Introduced	SB454
Agency:	Consolidated Public Retirement Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Retirement

Retirement Systems Impacted by Legislation:

PERS 2501

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

PERS

Actuarial Note Summary

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

    SB 454 allows PERS retirants to accept legislative per diems, temporary full-time, or temporary part-time employment from a participating employer in PERS without suspending their retirement annuity provided they do not receive annual compensation in excess of $30,000.

    Costs for “double dipping” benefits of this nature are recognized through earlier retirement usage. Such usage is studied as part of the PERS Experience Studies completed every 5 years. At this point in time, the CPRB Board Actuary will not change the current retirement usage assumption due to this bill, however, consideration of the impact on retirement usage from SB 454 will be reviewed at the next PERS Experience Study, scheduled to be completed by August 2024. Therefore, there is no increase in the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS at this time.

    This bill enhances the “double dipping” allowable for PERS retirees who take temporary employment with either the legislature, state agencies or local government agencies. SB 454 limits the level of “double dipping” to $30,000 of temporary wages each year, or about 66% of the average PERS compensation for active members. Allowable “double dipping” will have a long- term impact on retirement usage.

    The annual compensation limit in the West Virginia Statute §5-10-48(c) historically has been approximately 50% of the average salary of PERS active members. As of July 1, 2021, the average salary of PERS active members is $45,300. Based on this metric, the current annual compensation limit in West Virginia Statute §5-10-48(c), $20,000, would be increased to approximately $22,500.

    The legislature should consider its position on “double dipping” when considering the adoption of this bill.

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	$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	2035	N/A

Explanation of above Actuarial estimates:

    Costs for “double dipping” benefits of this nature are recognized through earlier retirement usage. Such usage is studied as part of the PERS Experience Studies completed every 5 years. At this point in time, the CPRB Board Actuary will not change the current retirement usage assumption due to this bill, however, consideration of the impact on retirement usage from SB 454 will be reviewed at the next PERS Experience Study, scheduled to be completed by August 2024. Therefore, there is no increase in the PERS unfunded actuarial accrued liability (UAAL) or the contribution requirements of PERS at this time.

    Any actual cost impact from SB 454 will be incorporated as part of future experience studies for PERS.

Analysis of Impact on Public Pension Policy:

    This bill enhances the “double dipping” allowable for PERS retirees who take temporary employment with either the legislature, state agencies or local government agencies. SB 454 limits the level of “double dipping” to $30,000 of temporary wages each year, or about 66% of the average PERS compensation for active members. Allowable “double dipping” will have a long- term impact on retirement usage.

    The annual compensation limit in the West Virginia Statute §5-10-48(c) historically has been approximately 50% of the average salary of PERS active members. As of July 1, 2021, the average salary of PERS active members is $45,300. Based on this metric, the current annual compensation limit in West Virginia Statute §5-10-48(c), $20,000, would be increased to approximately $22,500.

    The legislature should consider its position on “double dipping” when considering the adoption of this bill.

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	2022 Increase/Decrease (use"-")	2023 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	0
Personal Services	0	0	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 Fiscal Note estimates (include possible long-range effect):

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, 2021, funding valuation report for PERS, expected to be published on March 31, 2022.

    In particular, 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.

    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