|
Home |
|
About Us |
|
Contact Us |
|
Workshops |
|
Retirement Policy |
|
News for NHRS Members |
|
Support Our Service Members |
|
Retirement Policy Topics in the 2009 Legislative Session |
|
Effective 7/1/09, new Group I State employees are contributing 7% of their pay to NHRS, without any increase in benefits. All other Group I members contribute 5%.
The Commission to Study the Long-term Viability of NHRS recommended that Group I contributions increase from 5% to 7%, in order to fund future Cost of Living Adjustments (COLAs). It is inappropriate for the new hires to pay more for the same benefits received by others. Rates should increase for all Group I members, applying the additional 2% to a new COLA benefit. Requiring the members to fund their own future COLAs is reasonable and appropriate – NHRS benefits are too low as they are and the Special Account is expected to be depleted shortly. It will become harder and harder for retirees to survive on pensions don’t keep up with inflation.
NHRS benefits for Group I employees are already less than the national median for employees.
· Employees in New Hampshire contribute the same 5% median as employees in other states, while receiving a lower level of benefit. According to the National Association of Retirement System Administrators, the median benefit multiplier 1.85% of final average salary while; NH’s is 1.67. For example:
$30,000 AFC x 1.85% = 555 x 30 years = $16,650 annual pension
$30,000 AFC x 1.67 = 501 x 30 years = $15,030 annual pension
· At age 65, the multiplier is reduced to 1.5% and employees’ pensions are reduced by about 10%. · The average pension for NH employees was $11,380 as of 6/30/08.
HB 2 should be amended to specify how the additional contributions will be applied, for example: · Prefund a 2% COLA, as recommended by the HB 876 Commission on the Long-term Viability of the New Hampshire Retirement System for Group I state employees hired on or after 7/1/09. · If actuarially supportable, the additional contributions may be sufficient to pay for the COLA and end the age 65 reduction for Group I state employees hired on or after 7/1/09.
Even better: · Increase the contributions for new hires in all groups, implementing the Commission’s recommendation for a member-funded COLA for all new hires. · Include language permitting employer contributions to enhance the COLA above 2%, if negotiated. This would also provide a vehicle for current employees to negotiate these benefits.
Passage of a prefunded COLA for new hires might also encourage current employees to support a rate increase, so they can be included in the additional benefit.
============================================================================
Just before the end of the 2008 session, the New Hampshire Legislature enacted HB 1645, implementing 4 out of 6 of the priority recommendations of the Commission to Study the Long-term Viability of the New Hampshire Retirement System.
HB 1645 created two study commissions to propose legislation to implement the remaining two priorities.
1. A member-funded Cost of Living Adjustment (COLA) 2. A new medical subsidy plan which would include members not eligible for the existing plans
Legislation based on the work of these commissions may be ready for consideration this session. The legislative website includes updates on the progress of the study commissions: Click here
-------------------------------------------------------------------------- HB 1645s most notable accomplishments were The preservation of the medical subsidy program for eligible members, including the following: Group II members hired as of 6/30/00, who subsequently retire on service or disability retirement; Group I state employees who retired by 7/1/04 with at least 20 years of service; and Group I teachers and political subdivision employees who retire by 7/1/09 with at least 21 years of service The establishment of an investment committee for NHRS, including non-board members with investment expertise. The effectiveness of this approach was supported by a recent report by the Center for Retirement Research, which found that With regard to governance, having employees and/or retirees on the board does not appear to affect the level of funding, while having a separate investment council improves funding status by 4-9 percentage points. (Munnell, Haverstick & Aubry, 2008): Click here |
