Bill Text: NH HB462 | 2011 | Regular Session | Amended
Bill Title: Relative to the determination of employer assessments for excess benefits paid by employers in the retirement system.
Spectrum: Moderate Partisan Bill (Republican 6-1)
Status: (Passed) 2011-07-11 - House II. Remainder Effective 06/30/2011 [HB462 Detail]
Download: New_Hampshire-2011-HB462-Amended.html
HB 462-FN – AS AMENDED BY THE SENATE
05/11/11 1772s
05/11/11 1814s
06/01/11 2211s
2011 SESSION
10/04
HOUSE BILL 462-FN
AN ACT relative to the determination of employer assessments for excess benefits paid by employers in the retirement system.
SPONSORS: Rep. Hawkins, Hills 18; Rep. Reagan, Rock 1; Rep. Harding, Graf 11; Rep. Kurk, Hills 7; Sen. Bradley, Dist 3; Sen. Boutin, Dist 16; Sen. White, Dist 9
COMMITTEE: Special Committee on Public Employee Pensions Reform
This bill:
I. Modifies the method of calculation of the retirement system employer assessment under RSA 100-A:16, III-a for excess benefits paid to retirees.
II. Phases in the required payments over 4 years.
III. Extends the effective date of the implementation of employer assessments to July 1, 2012.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05/11/11 1772s
05/11/11 1814s
06/01/11 2211s
11-0365
10/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to the determination of employer assessments for excess benefits paid by employers in the retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Employer Assessment for Excess Benefits. Amend RSA 100-A:16, III-a to read as follows:
III-a. Upon the retirement of a member:
(a) The retirement system shall:
(1) Calculate average base pay of a member during his or her highest 3 years of creditable service, or during all of the years in his or her creditable service if less than 3 years;
(2) Multiply the average base pay determined in subparagraph (1) above by 125 percent;
(3) Subtract the result from subparagraph (2) from the member’s average final compensation.
(b) If the calculation in subparagraph (a)(3) is greater than zero, the employer shall be assessed the cost of the excess benefit provided by:
(1) Multiplying the present value of the member’s retirement benefit by the amount determined in subparagraph (a)(3) divided by the [amount in subparagraph (a)(2).] member’s average final compensation; and
(2) Subtracting from that amount a credit to account for the portion of the present value of the member’s retirement benefit attributable to the compensation above base pay, as determined by the retirement system, that has been funded through the normal employer contributions.
(c) The employer shall certify to the accuracy of each member’s base pay.
(d)(1) The retirement system shall certify to the cost determined in subparagraph (b) to the employer and assess upon the employer such cost for payment to the retirement system at such times and in such manner as the board of trustees may prescribe.
(2) The assessments upon employers determined in subparagraph (b) shall be phased-in over a 4-year period as follows:
(A) Until the end of state fiscal year 2013, the retirement system shall assess and collect 25 percent of the amount determined in subparagraph (b).
(B) For state fiscal year 2014, the retirement system shall assess and collect 50 percent of the amount determined in subparagraph (b).
(C) For state fiscal year 2015, the retirement system shall assess and collect 75 percent of the amount determined in subparagraph (b).
(D) For all state fiscal years thereafter, the retirement system shall assess and collect the full amount determined in subparagraph (b).
(3) Each such employer is hereby authorized to appropriate the sums necessary for payment of such assessments.
2 Application. The provisions of RSA 100-A:16, III-a as inserted by section 1 of this act shall not apply to a binding contract or a binding collective bargaining agreement in effect on the effective date of this section, to the extent required by the contract or agreement, before the termination of such contract or the date on which the collective bargaining agreement terminates, or while the terms of the existing contract remain in force as a result of either the operation of law or the status quo doctrine, or a provision in the existing contract because the parties have failed to agree to a new contract or a contract extension, on or after the effective date of this section.
3 Retirement System; Effective Date; Employer Assessments. Amend 2008,300:35, VII as amended by 2009, 4:1 and 2010, 357:1, to read as follows:
VII. Sections 33 and 34 of this act shall take effect July 1, [2011] 2012.
4 Retirement System; Interactive Estimator. The retirement system shall develop and implement on the retirement system’s website, within 30 days after the effective date of this section, an interactive estimator for a retirement system employer to evaluate its probable costs under RSA 100-A:16, III-a, as amended by this act, for individual members.
5 Effective Date.
I. Section 1 of this act shall take effect July 1, 2012 at 12:01 a.m.
II. The remainder of this act shall take effect upon its passage.
LBAO
11-0365
Amended 06/13/11
HB 462 FISCAL NOTE
AN ACT relative to the determination of employer assessments for excess benefits paid by employers in the retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill, as amended by the Senate (Amendment #2011-2211s), will have an indeterminable fiscal impact on state, county, and local expenditures in FY 2014 and each fiscal year thereafter. There will be no fiscal impact on state, county and local revenues.
METHODOLOGY:
This bill modifies the method of calculation of the retirement system employer assessment for excess benefits paid to retirees and phases in the required payment over a four year period. The New Hampshire Retirement System states this bill changes the manner in which existing pension costs are allocated amongst employers but will not alter, in the aggregate, the total employer contributions required by the System. The System notes those employers subject to the employer assessment for excess benefits paid will contribute, over time, a greater percentage of payroll costs than those which are not subject to the assessment. The System states the proposed legislation phases in the assessment over a four year period and will have an indeterminable fiscal impact on state, county, and local expenditures in FY 2014 and each fiscal year thereafter. The System has estimated the surcharge will be assessed on employers of approximately 30% of retiring members and the amount of the surcharge could be as much as $600,000 per retiring member included in the 30%. The System states this bill would postpone the so-called “spiking charge” in the case of members employed under a binding contract or a binding collective bargaining agreement in effect as of 12:01AM on July 1, 2012 until the expiration of said contract or bargaining agreement or the expiration of any evergreen provisions contained therein. The System is unable to determine the fiscal impact on state, county, and local expenditures as the System is unable to determine which employers will be assessed the surcharge, the fiscal year in which the surcharge will apply, and the amount of the surcharge. The System also notes the impact of the assessments levied against employers as a result of the proposed legislation may, over time, reduce the loading factors currently in use to account for severance pay at retirement.
The New Hampshire Retirement System states under this bill it is required to develop and implement on its website, within thirty days of the bill’s passage, an interactive estimator for employers to evaluate probable spiking charges costs for individual members. The System estimates an administrative cost between $7,500 and $8,500 to develop and implement said estimator.
