2016 REGULAR SESSION
ACTUARIAL NOTE H B 53
Page 1 of 2
House Bill 53 HLS 16RS-316
Original
Author: Representative Franklin J.
Foil
Date: April 6, 2016
LLA Note H B 53.01
Organizations Affected:
Parochial Employees’ Retirement
System
OR NO IMPACT APV
This Note has been prepared by the Actuarial Services Department of the Office of
the Legislative Auditor. The attachment of this Note to H B 53 provides
compliance with the requirements of R.S. 24:52 1
Bill Header: RETIREMENT/PAROCHIAL EMP: Provides relative to Deferred Retirement Option Plan accounts in the Parochial
Employees' Retirement System and interest on such accounts
Cost Summary:
The estimated actuarial and fiscal impact of the proposed legislative is summarized below. Actuarial costs pertain to changes in the
actuarial present value of future benefit payments. A cost is denoted by “Increase” or a positive number. Savings are denoted by
“Decrease” or a negative number.
Actuarial Cost to Retirement Systems $0
Total Five Year Fiscal Cost
Expenditures $0
Revenues $0
Estimated Actuarial Impact:
The chart below shows the estimated change in the actuarial present value of future benefit payments, if any, attributable to the
proposed legislation. A cost is denoted by “Increase” or a positive number. Savings are denoted by “Decrease” or a negative number.
Present value costs associated with administration or other fiscal concerns are not included in these values.
Change in the
Actuarial Cost to: Actuarial Present Value
All Louisiana Public Retirement Systems $0
Other Post Retirement Benefits $0
Total $0
Estimated Fiscal Impact:
The chart below shows the estimated fiscal impact of the proposed legislation. This represents the effect on cash flows for the
retirement systems and other government entities. Fiscal costs include estimated administrative costs and costs associated with other
fiscal concerns. A fiscal cost is denoted by “Increase” or a positive number. Actuarial or fiscal savings are denoted by “Decrease” or
a negative number.
EXPENDITURES 2016-17 2017-18 2018-19 2019-2020 2020-2021 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 0 0 0 0 0
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2016-17 2017-18 2018-19 2019-2020 2020-2021 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 0 0 0 0 0
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
2016 REGULAR SESSION
ACTUARIAL NOTE H B 53
Page 2 of 2
Bill Information:
Current Law
Under current law, the Parochial Employees’ Retirement System (PERS) may select a third party provider to invest and
administer DROP accounts for participants who continue to be employed after exiting DROP. However, the PERS’ board of
trustees has never elected to engage a third party provider. All DROP account s are credited with interest annually based on the
investment return associated with J. P. Morgan’s prime money market inst itutional shares. J. P. Morgan is PERS’ custodial bank.
Proposed Law
HB 53 removes the authority of the PERS’ board to engage a third party provider and codifies current administrative practices for
granting interest credits on DROP accounts.
Implications of the Proposed Changes
HB 53 has no effect on plan benefits or plan costs. It merely codifies current practices. The Internal Revenue Service requested
this change as a condition for the issuance of a favorable determination letter on the qualified status of the retirement system.
Cost Analysis:
Analysis of Actuarial Costs
HB 53 does not contain any benefit provisions having an actuarial cost .
Retirement Systems
There are no actuarial costs associated with HB 53.
Other Post-Employment Benefits
There are no actuarial costs associated with HB 53 for post-employment benefits other than pensions.
Analysis of Fiscal Costs
HB 53 has no effect on fiscal costs.
Actuarial Data, Methods and Assumptions
This actuarial note was prepared using actuarial data, methods, and assumptions as disclosed in the most recent actuarial valuation
report adopted by PRSAC. These assumptions and methods are in compliance with actuarial standards of practice. This data,
methods and assumptions are being used to provide consistency with the actuary for the retirement system who may also be providing testimony to the Senate and House retirement committees.
Actuarial Caveat
There is nothing in H B 53 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
Actuarial Credentials:
Paul T. Richmond is the Manager of Actuarial Services for the Louisiana Legislative Auditor. He is an Enrolled Actuary, a member of the American Academy of Actuaries, a member of the Society of Actuaries and has met the Qualification Standards of
the American Academy of Actuaries necessary to render the actuarial opinion contained herein.
Dual Referral:
Senate House
13.5.1: Annual Fiscal Cost ≥ $100,000 6.8(F)(1): Annual Fiscal Cost ≥ $100,000
13.5.2: Annual Tax or Fee Change ≥ $500,000 6.8(F)(2): Annual Revenue Reduction ≥ $100,000
6.8(G): Annual Tax or Fee Change ≥ $500,000