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Actuaries tell work group moving employees to a new plan could leave a multimillion‑dollar liability
Summary
Actuarial presenters outlined two methods for measuring withdrawal liability if a group leaves the general plan, and illustrated an outcome described as roughly a $33 million adverse impact under one framing; members discussed amortization, who would pay, and legislative options to spread or offset the cost.
In a technical session, actuarial staff told the Legislative Commission work group that taking a group — probation officers and 911 telecommunicators — out of the MSRS general plan would create an unfunded‑benefit gap under standard measurement approaches.
Doug Anderson explained two common ways actuaries measure that gap: a present‑value approach (comparing the present value of future accrued benefits to the present value of future contributions that would be lost) and a percent‑of‑pay framing (showing how much of current contribution rates are servicing unfunded liability). He used both approaches to illustrate the same problem: under one set of assumptions the general plan could be roughly $33 million worse off if the covered group departed, while the same effect could be expressed as an additional roughly 5% of pay that would be required for a defined period (for example, nine years) to restore parity.
Work group members and MSRS staff emphasized the difference is largely methodological. As Doug said in explaining the options, "...we look at with raw liability is that we don't want the remaining group of members to be adversely affected..." The presenters and attendees noted that the liability can be amortized (spread over a longer period) or allocated among employers and employees in several ways; amortizing the cost over a longer period substantially lowers the near‑term percent‑of‑pay impact.
PAR and MSRS staff repeatedly cautioned that the legal and tax framework matters for any mitigation approach. Several members suggested options for addressing the gap: (1) employer/employee contribution adjustments, (2) legislative transition aid targeted to past‑service buybacks, or (3) a mix of amortized charges and employer reallocation. No final allocation decision was made; attendees asked actuaries for additional scenarios (different amortization periods, separate subplans for different employee groups, and demographic sensitivity tests) before the group drafts legislative language.
