HB 562-FN – AS INTRODUCED
2007 SESSION
10/09
HOUSE BILL 562-FN
AN ACT excluding extra or special duty pay from earnable compensation in the retirement system.
SPONSORS: Rep. Hawkins, Hills 18
COMMITTEE: Executive Departments and Administration
This bill removes extra or special duty pay from the definition of earnable compensation used in the calculation of retirement system benefits.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07-0074
10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seven
AN ACT excluding extra or special duty pay from earnable compensation in the retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Earnable Compensation; Extra or Special Duty Pay Removed. Amend RSA 100-A:1, XVII to read as follows:
XVII. “Earnable compensation” shall mean for all members the full base rate of compensation paid plus any overtime pay, holiday and vacation pay, sick pay, longevity or severance pay, cost of living bonus, additional pay for extracurricular and instructional activities [or for other extra or special duty], and other compensation paid to the member by the employer, plus the fair market value of non-cash compensation such as meals or living quarters if subject to federal income tax. However, earnable compensation in the final 12 months of creditable service prior to termination of employment shall be limited to 1½ times the higher of the earnable compensation in the 12-month period preceding the final 12 months or the highest compensation year as determined for the purpose of calculating average final compensation, but excluding the final 12 months. Any compensation received in the final 12 months of employment in excess of such limit shall not be subject to member or employer contributions to the retirement system and shall not be considered in the computation of average final compensation. Provided that, the annual compensation limit for members of governmental defined benefit pension plans under section 401(a)(17) of the United States Internal Revenue Code of 1986, as amended, shall apply to earnable compensation for all employees, teachers, permanent firemen, and permanent policemen who first become eligible for membership in the system on or after July 1, 1996. Earnable compensation shall not include compensation in any form paid later than 120 days after the member’s termination of employment from a retirement eligible position, with the limited exceptions of disability related severance pay paid to a member or retiree no later than 120 days after a decision by the board of trustees granting the member or retiree disability retirement benefits pursuant to RSA 100-A:6 and of severance pay which a member was entitled to be paid within 120 days after termination but which, without the consent of the member and not through any fault of the member, was paid more than 120 days after the member’s termination. The member shall have the burden of proving to the board of trustees that any severance payment paid later than 120 days after the member’s termination of employment is earnable compensation and meets the requirements of an asserted exception to the 120-day post-termination payment requirement.
2 Effective Date. This act shall take effect 60 days after its passage.
LBAO
07-0074
01/26/07
HB 562-FN - FISCAL NOTE
AN ACT excluding extra or special duty pay from earnable compensation in the retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill may decrease state, county, and local expenditures by an indeterminable amount in FY 2008 and each year thereafter. This bill will have no fiscal impact on state, county, and local revenue.
METHODOLOGY:
The New Hampshire Retirement System states this bill removes extra or special duty pay from the definition of earnable compensation used in the calculation of retirement system benefits. The System states this change will only affect the approximate 4,573 police members. However, no data exists to determine what portion of compensation is attributable to extra or special duty pay. Due to the lack of data, the actuary shows the affect of reducing final average pays by 1 percent. Wage inflation is assumed at 5.5 percent per year and the assumed rate of return on investments is 8.5 percent. The table below shows the effect if final pays are lower by 1 percent. The exact fiscal impact cannot be determined at this time.
|
Current Employer Contribution |
Estimated Change in Contribution Rate and Dollars Due to Proposal |
New Employer Contribution | |||||
Police |
Payroll |
% of Pay |
Dollars |
% of Pay |
Dollars |
% of Pay |
Dollars |
Year 1 |
$221.5 |
18.21 |
$40.3 |
(0.24) |
$(0.5) |
17.97 |
$39.8 |
Year 2 |
$233.6 |
18.21 |
$42.5 |
(0.24) |
$(0.6) |
17.97 |
$41.9 |
Biennium Total |
$82.8 |
$(1.1) |
$81.7 | ||||