Firemen's pension plan benefits. |
14LSO-0071.C2 |
FISCAL NOTE
This bill contains an appropriation of $38,200,000 from the GENERAL FUND to the fireman's pension account created by W.S. 15-5-202 (firemen's pension plan A).
DETAIL OF APPROPRIATION
Agency #: 072 Agency Name: Retirement System
Unit: (new) Paid firefighter A plan
EXPENDITURE BY SERIES AND YEAR FY 2014 FY 2015 FY 2016
0800 Non-Operating Expenditures $19,100,000 $19,100,000
Total Expenditure Per Year: $19,100,000 $19,100,000
Grand Total Expenditure: $38,200,000
Total Appropriated to account: $38,200,000
Total Appropriated by Fund
GENERAL FUND: $38,200,000
Description of appropriation:
Based on the assumptions in the January 2, 2014 actuarial study by Gabriel Roeder Smith & Company (GRS), this bill would result in 100% funding for this plan over 10 years by reducing the COLA to 2.1% simple, having the state make two $19.1 million deposits (one on July 1, 2014 and one on July 1, 2015), and having the nine employers pay roughly $11.1 million (projected) over ten years.
These projections are dependent upon the 1/1/2013 actuarial valuation and related projections made by Gabriel Roeder Smith & Company (GRS). The assumptions adopted by the board in February 2013, which include a ten year closed amortization period for this plan, were used in this projection. The board updated demographic assumptions relating to retirement, disability and withdrawal rates to coincide with actual experience of the plan population for the period 2007-2012. Mortality assumptions were changed to reflect generational changes. Most significantly, future investment returns are assumed to be 7.75% annually.
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FY 2015 |
FY 2016 |
FY 2017 |
NON-ADMINISTRATIVE IMPACT |
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Anticipated Revenue Increase: |
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PAID FIREMEN PENSION A |
1,136,000 |
1,120,000 |
1,154,000 |
Source of revenue increase:
Payment from employers to paid fireman's pension plan A fund
Assumptions:
The nine employers would be projected to pay roughly $11.1 million to the paid fireman's pension plan A fund over ten years.
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The State Treasurer shall withhold severance taxes due to a city or county an amount equal to any delinquent payment owed by a city or county to the paid fireman's pension plan A fund. The withheld amount shall be deposited to the paid fireman's pension plan A fund. The potential amount of delinquent payments is unknown and cannot be determined.
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FY 2015 |
FY 2016 |
FY 2017 |
NON-ADMINISTRATIVE IMPACT |
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Anticipated Expenditure (Decrease): |
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PAID FIREMEN PENSION A |
(3,479,000) |
(3,477,000) |
(3,471,000) |
Source of expenditure decrease:
Decrease in cost of living adjustment (COLA) payments to retirees
Assumptions:
Retirees of the fund are projected to receive $34.7 million less in COLA payments over their lifetimes due to the reduction from an annual 3.0% compounded COLA to an annual 2.1% simple COLA. The annual amounts presented above are based on the actuarial studies prepared by Gabriel Roeder Smith & Company (GRS). These amounts were calculated by subtracting column 8 of the 2.1% simple study provided in the January 2, 2014 memorandum by GRS from column 8 of study 1 in the GRS memorandum dated November 18, 2013.
While projections show the unfunded liability for the COLA would be paid off in ten years, the reduced COLA amount of 2.1% simple will be paid annually as long as there are retirees living.
The 2.1% simple COLA will be applied to a retiree’s 2013 benefit, which includes past COLA awards, or benefit at retirement date if later.
Prepared by: Dean Temte, LSO Phone: 777-7881
(Information provided by Ruth Ryerson, Wyoming Retirement System; 777-5994:
Sharon Garland, Treasurer's Office; 777-7475)
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