Bill Text: NH HB449 | 2023 | Regular Session | Introduced
Bill Title: Relative to the calculation of group II retirement benefits in the retirement system.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2023-09-18 - Executive Session: 11/08/2023 10:00 am Legislative Office Building 306-308 [HB449 Detail]
Download: New_Hampshire-2023-HB449-Introduced.html
HB 449-FN - AS INTRODUCED
2023 SESSION
23-0398.1
10/08
HOUSE BILL 449-FN
AN ACT relative to the calculation of group II retirement benefits in the retirement system.
SPONSORS: Rep. Goley, Hills. 21; Rep. Proulx, Hills. 15; Rep. Bordes, Belk. 5; Rep. O'Brien, Hills. 10
COMMITTEE: Executive Departments and Administration
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ANALYSIS
This bill increases the service retirement and disability retirement annuity multiplier for the first 20 years of service of group II retirement system members under the transition provisions adopted in 2011.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
23-0398.0
10/
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Three
AN ACT relative to the calculation of group II retirement benefits in the retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Service Retirement; Group II. Amend RSA 100-A:5, II(b)(2) to read as follows:
(2) For members who are in vested status before January 1, 2012, a state annuity which, together with his or her member annuity, shall be equal to 2- 1/2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service not in excess of 40 years, or for members who commenced service on or after July 1, 2011 [, a state annuity which, together with his or her member annuity, shall be equal to 2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service not in excess of 42.5 years, and group II members] or who have not attained vested status prior to January 1, 2012 shall be as provided in the transition provisions in RSA 100-A:5, II(d) with the maximum number of years of creditable service not in excess of 40.5 years.
2 Retirement System; Service Retirement; Group II; Transition Provision. RSA 100-A:5, II(d) is repealed and reenacted to read as follows:
(d) Active group II members who commenced service prior to July 1, 2011 and who have not attained vested status prior to January 1, 2012, or members who commenced service on or after July 1, 2011 shall be subject to the following transition provisions for years of service required for regular service retirement, the minimum age for regular service retirement, and the multiplier used to calculate the retirement annuity, which shall be applicable on or after January 1, 2012 according to the following:
(1) Commenced service on or after July 1, 2011: 2.5 percent for first 20 years of service, 2.0 percent for subsequent years.
(2) Less than 4 years of service on July 1, 2011: minimum 24 years of service; minimum age 49; 2.5 percent for first 20 years of service, 2.1 percent for subsequent years.
(3) At least 4 years but less than 6 on July 1, 2011: minimum 23 years of service; minimum age 48 ; 2.5 percent for first 20 years of service, 2.2 percent for subsequent years.
(4) At least 6 years but less than 8 years on July 1, 2011: minimum 22 years of service; minimum age 47; 2.5 percent for first 20 years of service, 2.3 percent for subsequent years.
(5) At least 8 years but less than 10 years on July 1, 2011: minimum 21 years of service; minimum age 46; 2.5 percent for first 20 years of service, 2.4 percent for subsequent years
3 Retirement System; Disability Retirement; Group II. Amend RSA 100-A:6, II(b) to read as follows:
(b) Upon ordinary disability retirement, the group II member shall receive an ordinary disability retirement allowance which shall consist of: a member annuity which shall be the actuarial equivalent of his or her accumulated contributions at the time of his or her ordinary disability retirement; and a state annuity which, together with his or her member annuity, for members who are in vested status before January 1, 2012, shall be equal to 2 1/2 percent of his or her average final compensation at the time of ordinary disability retirement multiplied by the number of years of his or her creditable service not in excess of 40 at the time of ordinary disability retirement, or for members who commenced service on or after July 1, 2011, [shall be equal to 2 percent of his or her average final compensation at the time of ordinary disability retirement multiplied by the number of years of his or her creditable service not in excess of 42.5 at the time of ordinary disability retirement, and group II members] or who have not attained vested status prior to January 1, 2012 shall be as provided in the transition provisions in RSA 100-A:5, II(d) with the maximum number of years of creditable service not in excess of 40.5 years provided, however, that such allowance shall not be less than 25 percent of the member's final compensation at the time of his or her disability retirement.
4 Supplemental Disability Retirement Allowance; Group II; Transition provisions. Amend RSA 100-A:6, II(d)(2) to read as follows:
(2) For members who commenced service on or after July 1, 2011, any group II member who has more than 33 1/3 years of service, a supplemental disability retirement allowance shall be paid. Such supplement shall be equal to [2 percent] the corresponding multiplier as provided in the transition provisions in RSA 100-A:5, II(d) of his or her average final compensation multiplied by the number of years of his or her creditable service in excess of 33 1/3 but not in excess of 42.5 years.
5 Effective Date. This act shall take effect 60 days after its passage.
23-0398
1/6/23
HB 449-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to the calculation of group II retirement benefits in the retirement system.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
|
| |||
| Estimated Increase / (Decrease) | |||
STATE: | FY 2023 | FY 2024 | FY 2025 | FY 2026 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $2,940,000 | $3,010,000 | $3,090,000 |
Funding Source: | [ X ] General [ ] Education [ ] Highway [ ] Other | |||
|
|
|
|
|
POLITICAL SUBDIVISIONS: |
|
|
|
|
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $10,980,000 | $11,280,000 | $11,590,000 |
*The New Hampshire Retirement System states it is not able to separate the fiscal impact of this legislation between county and local government, therefore the fiscal impact is shown together as political subdivisions. | ||||
METHODOLOGY:
This bill increases the service retirement and disability retirement annuity multiplier for the first 20 years of service of group II retirement system members under the transition provisions adopted in 2011.
The New Hampshire Retirement System's actuary provided valuations based upon data used in the annual actuarial valuation as of June 30, 2021. The valuation assumes an annual rate of interest of 6.75 percent, wage inflation of 2.75 percent per year and uses the entry-age actuarial cost valuation method. Actual FY 2024-2025 employer rates will be based on the actuarial valuation of June 30, 2021. The allocation of this benefit is estimated as follows:
State
Employer Pension Rates as a Percent of Payroll | ||||
| Current 2024-2025 Rates |
| Impact of Proposal | Proposed 2024-2025 Rates |
Employees | 13.27% | 0.00% | 13.27% | |
Police | 28.68% | 2.84% | 31.52% | |
Fire | 27.75% | 2.41% | 30.16% | |
Expected Employer Dollar Increase (Decrease) Due to Proposal | ||||||
|
| FY 2023 | FY 2024 | FY 2025 | FY 2026 | |
Employees |
| - | - |
| - | - |
Police |
| - | $2,830,000 | $2,900,000 | $2,980,000 | |
Fire |
| - | $110,000 | $110,000 | $110,000 | |
TOTAL |
| $0 | $2,940,000 | $3,010,000 | $3,090,000 | |
Political Subdivisions
Employer Pension Rates as a Percent of Payroll | |||||
| Current 2024-2025 Rates |
| Impact of Proposal | Proposed 2024-2025 Rates | |
Employees | 13.27% |
|
| 0.00% | 13.27% |
Teachers | 18.51% |
|
| 0.00% | 18.51% |
Police | 28.68% |
|
| 2.84% | 31.52% |
Fire | 27.75% |
|
| 2.41% | 30.16% |
Expected Employer Dollar Increase (Decrease) Due to Proposal |
| |||
| FY 2023 | FY 2024 | FY 2025 | FY 2026 |
Employees | - | - |
| $0 |
Teachers | - | - |
|
|
Police | - | $7,260,000 | $7,460,000 | $7,660,000 |
Fire | - | $3,720,000 | $3,820,000 | $3,930,000 |
TOTAL | $0 | $10,980,000 | $11,280,000 | $11,590,000 |
The NHRS actuary projects an increase in the actuarial accrued liability by $82.2 million based on the provisions in the bill.
The NHRS states the proposed changes in the bill will involve significant administrative costs relating to reprogramming of the pension administration system, revisions to administrative procedures and staff training which will result in an indeterminable increase in expenditures. The NHRS also states they are currently in the process of upgrading the pension administration system and the proposed changes would require updates to the current and future systems and procedures increasing administrative costs and challenges.
AGENCIES CONTACTED:
New Hampshire Retirement System
