HB 456-FN – AS INTRODUCED
2011 SESSION
10/09
HOUSE BILL 456-FN
AN ACT relative to the calculation of average final compensation for the purpose of determining retirement system benefits.
COMMITTEE: Special Committee on Public Employee Pensions Reform
This bill changes the method for determining average final compensation for the purpose of determining retirement system benefits by using all years of creditable service rather than the 3 highest years. The change applies to persons who began service on or after July 1, 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0321
10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to the calculation of average final compensation for the purpose of determining retirement system benefits.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Definitions; Average Final Compensation. Amend RSA 100-A:1, XVIII to read as follows:
XVIII. “Average final compensation” shall mean, for members who began service prior to July 1, 2011, the average annual earnable compensation 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. For members who began service on or after July 1, 2011, “average final compensation” shall mean the average annual earnable compensation of a member during all of the years in his or her creditable service.
2 Effective Date. This act shall take effect July 1, 2011.
LBAO
11-0321
Revised 01/27/11
HB 456 FISCAL NOTE
AN ACT relative to the calculation of average final compensation for the purpose of determining retirement system benefits.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill will reduce state expenditures by $6,900,000 in FY 2014 and $9,420,000 in FY 2015, and will reduce county and local expenditures by $8,450,000 in FY 2014 and $11,510,000 in FY 2015. There will be no fiscal impact on state, county, or local revenues.
METHODOLOGY:
The New Hampshire Retirement System states this bill would define average final compensation for members who began service on or after July 1, 2011 as a member’s earnable compensation average over all years of credible service, rather than the highest three years as currently in statute. The System states if enacted, this bill would not affect employer contribution rates for FY 2011, FY 2012, or FY 2013 as rates for those fiscal years have already been established. However, the System states their actuaries project the following reductions in state and political subdivision employer contributions in FY 2014 and FY 2015:
Fiscal Year 2014
Classification |
State |
Political Subdivisions |
Total |
Employees |
($2,830,000) |
($3,180,000) |
($6,010,000) |
Teachers |
($1,520,000) |
($2,820,000) |
($4,340,000) |
Police |
($2,080,000) |
($1,710,000) |
($3,790,000) |
Fire |
($470,000) |
($740,000) |
($1,210,000) |
Total |
($6,900,000) |
($8,450,000) |
($15,350,000) |
Fiscal Year 2015
Classification |
State |
Political Subdivisions |
Total |
Employees |
($3,880,000) |
($4,300,000) |
($8,180,000) |
Teachers |
($2,090,000) |
($3,880,000) |
($5,970,000) |
Police |
($2,810,000) |
($2,310,000) |
($5,120,000) |
Fire |
($640,000) |
($1,020,000) |
($1,660,000) |
Total |
($9,420,000) |
($11,510,000) |
($20,930,000) |
The New Hampshire Retirement System does not anticipate incurring any additional administrative costs in implementing this bill.