HB 360-FN – AS INTRODUCED
2011 SESSION
10/03
HOUSE BILL 360-FN
AN ACT establishing a state defined contribution retirement plan for state and political subdivision members of the retirement system and establishing a committee to study the transition of current employees into the new plan and administration of the new plan.
SPONSORS: Rep. D. McGuire, Merr 8; Rep. Reagan, Rock 1; Sen. White, Dist 9
COMMITTEE: Special Committee on Public Employee Pensions Reform
This bill establishes a state retirement plan for new members of retirement system employers which is structured as a defined contribution plan. All new group I and group II members of the retirement system employed by the state and political subdivision employers after the effective of the act will be required to be in the defined contribution plan. The bill also establishes a committee to study the transition of current and other employees into the plan and examine issues in the administration of the plan.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0293
10/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT establishing a state defined contribution retirement plan for state and political subdivision members of the retirement system and establishing a committee to study the transition of current employees into the new plan and administration of the new plan.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Participation by Members; Retirement System. Amend the introductory paragraph of RSA 100-A:3, I(a) to read as follows:
I.(a) Any person who becomes an employee, teacher, permanent policeman, or permanent fireman [after the date of establishment] prior to January 1, 2012 working in a position for an employer under this chapter as determined by common law standards, shall become a member of the defined benefit retirement system as a condition of employment; except that membership shall be optional in the case of elected officials, officials appointed for fixed terms, unclassified state employees, or those employees of the general court who are eligible for membership in the retirement system. Employees, teachers, permanent policemen, and permanent firemen beginning service on or after January 1, 2012 shall as a condition of employment participate in the retirement system defined contribution plan established under RSA 100-A:58 through RSA 100-A:70. Elected officials and officials appointed for fixed terms shall, however, be eligible for membership in the retirement system only under the following conditions:
2 New Subdivision; Retirement System Defined Contribution Plan. Amend RSA 100-A by inserting after section 57 the following new subdivision:
Retirement System Defined Contribution Plan
100-A:58 Definitions. In this subdivision:
I. “Committee” means the benefits advisory committee established in RSA 100-A:61.
II. “Member” means a person employed by the state or a political subdivision who is required to or chooses to participate in the plan established in this subdivision.
III. “Plan” means the retirement system defined contribution plan established for members who began service on and after January 1, 2012, and who transfer funds to the defined contribution plan pursuant to procedures adopted by the state treasurer with the advice of the committee. The defined contribution retirement plan is a plan in which savings are accumulated in an individual account for the exclusive benefit of the member or beneficiaries. The plan is established effective January 1, 2012, at which time contributions by members begin.
100-A:59 Defined Contribution Plan Established. There is hereby established a retirement benefit plan for members required to be or voluntarily enrolled in the retirement system who began service on or after January 1, 2012. The defined contribution retirement plan is intended to qualify under 26 U.S.C. section 401(a) and section 414(d), the Internal Revenue Code, as a qualified retirement plan established and maintained by the state for its employees and for the employees of political subdivision employers in the state. All qualifying contributions shall be held and invested by the state treasurer. All such contributions and all investments, reinvestments, interest, or other moneys held by the treasurer shall not be assets of the retirement system administered by the board of trustees or subject to control of the board of trustees of the retirement system. All assets received by the plan shall be held for the exclusive benefit of plan participants and their beneficiaries and applied solely as provided by the plan.
100-A:60 Membership. Any person who is first employed, or reemployed after leaving service, by an employer and entered on the payroll on a full-time or eligible part-time basis on or after January 1, 2012 shall be a member of the retirement system defined contribution plan established in this subdivision; except that membership shall be optional in the case of elected officials, officials appointed for fixed terms, unclassified state employees, or those employees of the general court who are eligible for membership in the retirement system.
100-A:61 Benefits Advisory Committee Established.
I. A retirement benefits advisory committee is hereby established consisting of the following members:
(a) The state treasurer, who shall be a nonvoting member.
(b) The commissioner of administrative services or designee.
(c) The insurance commissioner or designee.
(d) The banking commissioner or designee.
(e) The director of the office of securities regulation, department of state.
(f) The attorney general or designee.
(g) Two members of the New Hampshire retirement system board of trustees, appointed by the board.
II. Five members shall constitute a quorum for the transaction of business and may act on behalf of the committee.
100-A:62 Administration; Rulemaking.
I. The administrator of the plan shall be the state treasurer, who shall have the assistance and services of the department of administrative services for all duties and responsibilities under this subdivision.
II. The state treasurer, with the advice of the committee, shall adopt rules, pursuant to RSA 541-A, relative to the procedure for administration of the investment choices of members and beneficiaries, and forms necessary for the administration of this subdivision.
100-A:63 Administration of Plan.
I. The state treasurer shall have the authority to contract with a third-party administrator for the retirement system defined contribution plan for the administration of assets accumulated under each participant’s account.
II. The committee shall provide advice to the state treasurer on the provision of investment options and services by an administrator under a plan contract.
100-A:64 Contributions by Member. The member participating under this subdivision shall contribute at a minimum the percentage of earnable compensation as follows:
I. For group I members, 5 percent.
II. For group II members, 9.3 percent.
100-A:65 Limitations on Contributions. Notwithstanding any other provisions of this plan, the annual additions to each member’s individual account under this plan may not exceed, for any limitation year, the amount permitted under 26 U.S.C. section 415 at any time. If the amount of a member’s defined contribution plan contributions exceeds the limitation of 26 U.S.C. section 415(c) for any limitation year, the administrator shall take any necessary remedial action to correct an excess contribution. The provisions of 26 U.S.C. section 415, and the regulations adopted under that statute, as applied to qualified defined contribution plans of governmental employees are incorporated as part of the terms and conditions of the plan.
100-A:66 Investment of Individual Accounts.
I. The administrator shall provide a range of investment options and permit a participant to exercise investment control over the participant’s assets in the member’s individual account as provided in this section. If a participant exercises control over the assets in the individual account, the participant is not considered a fiduciary for any reason on the basis of exercising that control.
II. A participant may direct investment of plan funds held in an account among available investment funds in accordance with rules established by the administrator.
III. A participant may elect to change or transfer all or a portion of the participant’s existing account balance among available investment funds not more often than once each day in accordance with the rules established by the administrator. Only the last election received by the administrator before the transmittal of contributions to the trust fund for allocation to the individual account will be used to direct the investment of the contributions received.
IV. Except to the extent clearly set out in the terms of the investment plans offered by the employer to the employee, the employer is not liable to the participant for investment losses if the prudent investment standard has been met.
V. The employer, administrator, state, or board, or a person or entity who is otherwise a fiduciary, is not liable for any participant’s investment loss that results from the participant’s directing the investment of plan assets allocated to the participant’s account.
100-A:67 Contributions by State. Employers under the plan may contribute to member accounts as a match to the contributions by the member.
100-A:68 Vesting. Member contributions and investment return attributable to member contributions shall be 100 percent vested as of the date of contribution or accrual. Employer contributions, if any, and investment return attributable to employer contributions held in an account of a member by the administrator shall be vested under this subdivision according to the following schedule:
I. 20 percent of funds in an account after one year of continuous participation by a member.
II. 40 percent of funds in an account after 2 years of continuous participation by a member.
III. 60 percent of funds in an account after 3 years of continuous participation by a member.
IV. 80 percent of funds in an account after 4 years of continuous participation by a member.
V. 100 percent of funds in an account after 5 years of continuous participation by a member.
100-A:69 Withdrawal of Funds. Distributions from an account of a member shall be permitted in the following circumstances, subject to applicable limitations under federal regulations:
I. Termination of employment.
II. Retirement.
III. Upon turning age 59-½ and still employed as limited by federal regulations.
IV. If the member becomes disabled.
V. If the member dies.
VI. Based on financial hardship as defined in applicable federal regulations.
100-A:70 Health Insurance Group Insurance Inclusion. Any retired member and his or her beneficiaries shall be eligible to participate in the group hospitalization, hospital medical care, surgical care, and other medical and surgical benefits provided under RSA 100-A:50 through RSA 100-A:55.
3 Committee Established. There is established a committee to study the administration and expansion of the retirement system defined contribution plan for employees.
4 Membership and Compensation.
I. The members of the committee shall be as follows:
(a) Four members of the house of representatives, appointed by the speaker of the house of representatives.
(b) Two members of the senate, appointed by the president of the senate.
II. Members of the committee shall receive mileage at the legislative rate when attending to the duties of the committee.
5 Duties. The committee shall study the retirement system defined contribution plan established in this act as RSA 100-A:58 through RSA 100-A:70 and examine procedures for the transition from the defined benefit plan to a defined contribution plan, buyout options including tax consequences, issues related to vesting, and any other matters deemed relevant by the committee.
6 Chairperson; Quorum. The members of the study committee shall elect a chairperson from among the members. The first meeting of the committee shall be called by the first-named house member. The first meeting of the committee shall be held within 45 days of the effective date of this section. Four members of the committee shall constitute a quorum.
7 Report. The committee shall report its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the president of the senate, the house clerk, the senate clerk, the governor, and the state library on or before November 1, 2011.
8 Effective Date.
I. Sections 3-8 of this act shall take effect upon its passage.
II. The remainder of this act shall take effect January 1, 2012.
LBAO
11-0293
01/18/11
HB 360-FN - FISCAL NOTE
AN ACT establishing a state defined contribution retirement plan for state and political subdivision members of the retirement system and establishing a committee to study the transition of current employees into the new plan and administration of the new plan.
FISCAL IMPACT:
Due to time constraints, the Office of Legislative Budget Assistant is unable to provide a fiscal note for this bill at this time. When completed, the fiscal note will be forwarded to the House Clerk's Office.