HB 591-FN - AS INTRODUCED
2009 SESSION
10/01
HOUSE BILL 591-FN
AN ACT relative to the maximum initial retirement benefit for retirees in the New Hampshire retirement system.
SPONSORS: Rep. Hawkins, Hills 18; Rep. Reagan, Rock 1
COMMITTEE: Executive Departments and Administration
This bill limits the initial retirement benefit for retirees in the retirement system to 100 percent of his or her highest base rate of annual compensation.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0205
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT relative to the maximum initial retirement benefit for retirees in the New Hampshire retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Maximum Retirement Benefit. Amend RSA 100-A:6-a to read as follows:
100-A:6-a Maximum Retirement Benefit. Notwithstanding any other provision of this chapter to the contrary, for members who commenced service before July 1, 2009, a member’s initial calculation of the retirement benefit granted under the provisions of RSA 100-A:5 or RSA 100-A:6 shall not exceed 100 percent of the member’s highest year of earnable compensation. For members who commenced service on or after July 1, 2009, a member’s maximum retirement benefit granted under the provisions of RSA 100-A:5 or RSA 100-A:6 shall not exceed [$120,000] 100 percent of the member’s highest year of base rate of compensation. Nothing in this section shall affect the ability of a member to receive disability benefits pursuant to RSA 100-A:6, II(b) and (c). This provision shall not limit the application of supplemental allowances under RSA 100-A:41-a.
2 Effective Date. This act shall take effect July 1, 2009, at 12:01 a.m.
LBAO
09-0205
Revised 02/12/09
HB 591 FISCAL NOTE
AN ACT relative to the maximum initial retirement benefit for retirees in the New Hampshire retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill may decrease state expenditures by $900,586 in FY 2012, $1,222,853 in FY 2013, and an indeterminable amount each year thereafter, and decrease county and local expenditures by an indeterminable amount in FY 2012 and each year thereafter. There will be no fiscal impact on state, county, or local revenue.
METHODOLOGY:
The New Hampshire Retirement System states this bill would redefine the maximum initial retirement benefit granted to retirees who commenced service on or after July 1, 2009, changing the cap from $120,000 to 100% of the member’s highest year of base rate of compensation. The cap for those employees commencing service before July 1, 2009 is not affected by this bill and remains at 100% of the member’s highest year of earnable compensation. The System states that the proposed changes would have no effect on the current benefit obligation or current employer contributions. According to a supplemental valuation performed by the System actuary based on June 30, 2008 data and factoring in the proposed change, the bill would reduce the long-term cost of providing benefits to members commencing service after July 1, 2009. The System anticipates that this reduction would emerge slowly over a twenty year period. Precise base pay data was not available. However, for a sample of members, base pay data from a recent study was compared to member benefits as of June 30, 2008 to calculate a weighted average relationship between base pay and current benefit amounts. Based on this calculation, the actuary estimates that the bill would lead to long-term benefits payable of 6% less than that under current law. Because the change would only affect those commencing service after July 1, 2009 and rates for FY 2010 and FY 2011 have already been set, decreased employer contribution rates because of the change would not begin until FY 2012. The actuary estimates a decline in employer contributions for the state of $900,586 in FY 2012 and $1,222,853 in FY 2013 and for the political subdivisions (counties and municipalities) of $1,173,615 in FY 2012 and $1,592,974 in FY 2013. The actuary could not break down the political subdivision amount further into the county and local portions, so those amounts are reported as one number. From then on, as the number of Group II members commencing service before July 1, 2009 decreases and the number of Group II members commencing service after July 1, 2009 increases, employer contributions should slowly decline, with the actuary’s projected savings on employer contribution amounts in FY 2031 reaching $11,115,537 for the state and $14,405,105 for the political subdivisions.