FOR IMMEDIATE RELEASE

March 18, 2008

Rep. Marjorie Smith, (603) 271-3164

Rep Anne-Marie Irwin, (603) 271-3065

Retirement System Viability Legislation

Passes New Hampshire House

CONCORD – The New Hampshire House voted 259-60 today to protect the state retirement system for past, current and future public employees.

Over the past 10 years, the NH Retirement System has gone from one of the nation’s highest funded public pensions in the country to one of the lowest.   It is currently underfunded by $2.7 billion.  Last year the Legislature passed legislation to address this underfunding and to protect the pension guaranteed to retirees.

“The legislature has a legal and moral obligation to ensure that the strongest possible retirement system is in place for all public employees in New Hampshire, both now and in the future,” said Rep. Anne-Marie Irwin (D-Peterborough), Chair of the Joint Committee that examined the legislation. “The retirement system guarantees a pension when a public employee retires, and it is the state’s duty to protect that.”

This legislation, HB 1645, shores up the funding for Cost of Living Adjustments (COLAs) and retiree health care subsidies, benefits that go beyond the general pension.  It reforms COLAs so that more money goes to those with the lowest pensions by ensuring everyone gets at least a minimum amount, while making sure that higher income pension earners will get extra payments equal to the average employee in their retirement group that receives a pension.

This bill also strengthens the financial health of the State Retirement Board by adding two new trustee positions for financial and investment experts, and reducing the duplicate representation of two member trustees from retiree groups.

The New Hampshire Retirement System does not guarantee COLAs or money for health care, known as medical subsidies. But even though the retirement system does not guarantee these benefits, retirees across the state rely on them -- and the program is under-funded by $822 million.   In order to develop a new medical subsidy program to assist the 48,000 active workers who do not now qualify, this legislation creates a commission to design and recommend a new medical subsidy program to the legislature for action next year and to investigate the best way to provide COLAs. 

“We want to strengthen the health of the pension system without changing the rules for existing employees,” said Rep. Marjorie Smith (D-Durham), Chair of the House Finance Committee.

This bill accomplishes that goal by making changes in how benefits are calculated for new hires only. This will increase the long term financial health of the system.  For new hires, maximum retirement benefits are capped at 100 percent of the member’s final year full base rate of compensation before retirement. The number of years of service and age requirements for police and firefighter groups is increased from 20 years of service and age 45 to 25 years of service and age 50.

“In considering this age cutoff, we listened to concerns of New Hampshire employees and compared our pension plans to other states – in Massachusetts, for example, police and firefighters are required to work until they are 65,” continued Smith.

Without the changes made by this legislation, the contributions to the retirement system from local and county government, school districts and the state are expected to increase by as much as 53 percent in July 2009, and would be unsustainable. Without this legislation, state expenditures will increase by about $125 million and county and local expenditures by about $161 million in the next biennium as compared to the current biennium. 

HB1645 now goes to the New Hampshire Senate.