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.

 

 

FY 2015

FY 2016

FY 2017

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Revenue Increase:

 

 

 

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.  

 

 

 

FY 2015

FY 2016

FY 2017

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Expenditure (Decrease):

 

 

 

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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