Revision: March 28, 2011, midnight
HB 580-FN-LOCAL – AS INTRODUCED
2011 SESSION
10/09
HOUSE BILL 580-FN-LOCAL
AN ACT relative to the New Hampshire retirement system.
SPONSORS: Rep. Kurk, Hills 7; Rep. Hawkins, Hills 18; Sen. White, Dist 9
COMMITTEE: Special Committee on Public Employee Pensions Reform
This bill makes various changes to the state retirement system including:
I. Increasing retirement ages of group I and group II members for service retirement, disability retirement, vested deferred retirement, and split benefits.
II. Changing the definitions of earnable compensation and average final compensation used in calculating retirement benefits.
III. Changing the composition of the board of trustees.
IV. Eliminating the special account.
V. Eliminating the retirement system funding of medical benefits premium payments.
VI. Increasing contribution rates.
VII. Establishing a voluntary defined contribution plan administered by the board of trustees.
VIII. Prohibiting a member in service from concurrently receiving 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0488
10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to the New Hampshire retirement system.
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 retire prior to July 1, 2016, 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 retire on or after July 1, 2016, “average final compensation” shall mean the average annual earnable compensation of a member during his or her highest 5 years of creditable service, or during all of the years in his or her creditable service if less than 5 years.
2 Retirement System; Definition of Earnable Compensation. Amend RSA 100-A:1, XVII to read as follows:
XVII. “Earnable compensation’’ shall mean:
(a) For all members in service on or before June 30, 2011 and who retire prior to before July 1, 2016, 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 any military differential pay, plus the fair market value of non-cash compensation paid to, or on behalf of, the member for meals or living quarters if subject to federal income tax, but excluding other compensation except cash incentives paid by an employer to encourage members to retire, supplemental pay paid by the employer while the member is receiving workers’ compensation, and teacher development pay that is not part of the contracted annual salary. However, earnable compensation in the final 12 months of creditable service prior to termination of employment shall be limited to 1- 1/2 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.
(b) For any member in active service on and after July 1, 2011 and who retires after July 1, 2016, the full base rate of compensation paid plus any compensation for mandatory training and any military differential pay. However, earnable compensation in the final 2 12-month periods of creditable service prior to termination of employment shall each be limited to 1-1/2 times the highest compensation year as determined for the purpose of calculating average final compensation, but excluding the final 24 months. Any compensation received in the final 24 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. 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.
3 Membership; Employees; Full-Time Requirement. Amend RSA 100-A:3, III to read as follows:
III. The board of trustees may, in its discretion, accept as members any class of full-time employees, or any class of teachers, permanent policemen or permanent firemen, whose compensation is only partly paid by an employer or who are serving on a temporary or other than per annum basis, and it may also, in its discretion, make optional with such employees, teachers, permanent policemen or permanent firemen in any such class their individual entrance into membership. Provided, however, that membership as an employee as defined in RSA 100-A:1, V shall require full-time employment, which shall not be satisfied by the combination of service in one or more part-time positions. In addition, no member in a full-time position as an employee shall be permitted to make contributions or to accrue benefits under this chapter on account of any such part-time employment. Any rule or practice adopted by the board which is inconsistent with the requirements of this paragraph shall be without effect.
4 Service Retirement; Age Increased. Amend RSA 100-A:5 to read as follows:
100-A:5 Service Retirement Benefits.
I. Group I Members.
(a) Any group I member, who may retire on a service retirement allowance upon written application to the board of trustees setting forth at what time, not less than 30 days nor more than 90 days subsequent to the filing thereof, the member desires to be retired, provided the member at the time so specified for retirement has attained age 60 if the member is in vested status before July 1, 2011 or age 65 if the member is not in vested status on or after July 1, 2011, and notwithstanding that during such period of notification the member may have separated from service. For the purposes of this section, a teacher member of group I who remains in service throughout a school year shall be deemed to be in service during July and August at the end of such school year.
(b) Upon service retirement, an employee member or teacher member of group I shall receive a service retirement allowance which shall consist of a member annuity which shall be the actuarial equivalent of the member’s accumulated contributions at the time of retirement, and a state annuity. Prior to the member’s attainment of age 65, the state annuity, together with the member annuity, shall be equal to 1/60 of the member’s average final compensation multiplied by the number of years of creditable service. After attainment of age 65, the state annuity, together with the member annuity, shall be equal to 1/66 of the member’s average final compensation multiplied by the number of years of creditable service.
(c) Notwithstanding any other provision of law, any group I member who meets the requirements of RSA 100-A:10, I(a), and who has either completed at least 20 years of creditable service which, when combined with his age equals at least 70 years, or who has attained the age of 50, but not the age of 60 if the member is in vested status before July 1, 2011 or the age of 65 if the member is not in vested status on or after July 1, 2011, may elect to retire and have benefits commence immediately as a reduced service retirement allowance upon written application to the board of trustees setting forth the time, not less than 30 days nor more than 90 days subsequent to the filing thereof, at which the member desires to have benefits commence. The service retirement allowance shall be determined in accordance with RSA 100-A:5, I(b) and shall be reduced, for each month by which the date on which benefits commence precedes the month after which the member attains 60 years of age if the member is in vested status before July 1, 2011 or 65 years of age if the member is not in vested status on or after July 1, 2011, by 1/8 of one percent if the member has 35 years or more of creditable service, by 1/4 of one percent if the member has 30 years but less than 35 years of creditable service, by 1/3 of one percent if the member has at least 25 years but less than 30 years of creditable service, by 5/12 of one percent if the member has at least 20 years but less than 25 years of creditable service, and by 5/9 of one percent if the member has less than 20 years of creditable service.
(d) [Repealed.]
II. Group II Members.
(a) Any group II member in service, who is in vested status before July 1, 2011, who has attained age 45 and completed 20 years of creditable service, or who has attained age 60 regardless of the number of years of creditable service, and a group II member who commenced service or is not in vested status on or after July 1, 2011, who has attained age 50 and completed 25 years of creditable service, or who has attained age 65 regardless of the number of years of creditable service, may retire on a service retirement allowance upon written application to the board of trustees setting forth at what time not less than 30 days nor more than 90 days subsequent to the filing thereof the member desires to be retired, notwithstanding that during such period of notification the member may have separated from service.
(b) Upon service retirement, a group II member shall receive a service retirement allowance which shall consist of:
(1) A member annuity which shall be the actuarial equivalent of his accumulated contributions at the time of retirement; and
(2) For members who are in vested status before July 1, 2011, a state annuity which, together with his or her member annuity, shall be equal to 2-1/2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service not in excess of 40 years, or for members who commenced service or are not in vested status on or after July 1, 2011, a state annuity which, together with his or her member annuity, shall be equal to 2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service not in excess of 50 years.
(c)(1) Notwithstanding any provision of RSA 100-A to the contrary, any group II member who is in vested status before July 1, 2011 and has retired on or after the effective date of this subparagraph after attaining the age of 45 with at least 20 years of creditable service, and any group II member who commenced service or is not in vested status on or after July 1, 2011 and has retired on or after the effective date of this subparagraph after attaining the age of 50 with at least 25 years of creditable service, shall receive a minimum annual service retirement allowance of $10,000. If such group II member has elected to convert the retirement allowance into an optional allowance for the surviving spouse under RSA 100-A:13, the surviving spouse shall be entitled to a proportional share of the $10,000.
(2) [Repealed.]
(3) [Repealed.]
5 Disability Retirement; Group I Age Increased. Amend RSA 100-A:6, I(b) to read as follows:
(b)(1) Upon ordinary disability retirement, the group I member who has attained age 60 if the member is in vested status before July 1, 2011 or the age of 65 if the member is not in vested status on or after July 1, 2011 shall receive an ordinary disability retirement allowance which shall consist of a member annuity and shall be the actuarial equivalent of the member’s accumulated contributions at the time of his ordinary disability retirement, and a state annuity as follows:
(A) Prior to the member’s attainment of age 65, the state annuity, together with the member annuity, shall be equal to 1/60 of the member’s average final compensation at the time of his ordinary disability retirement multiplied by the number of years of creditable service at the time of his ordinary disability retirement;
(B) After attainment of age 65, the state annuity, together with the member annuity, shall be equal to 1/66 of the member’s average final compensation at the time of his ordinary disability retirement multiplied by the number of years of creditable service at the time of his ordinary disability retirement;
(C) Regardless of age at disability, the ordinary disability retirement allowance shall not be less than 25 percent of the member’s average final compensation at the time of his or her disability retirement.
(2) Upon ordinary disability retirement, the group I member who has not attained age 60 if the member is in vested status before July 1, 2011 or the age of 65 if the member is not in vested status on or after July 1, 2011 shall receive an ordinary disability retirement allowance which shall consist of: a member annuity which shall be the actuarial equivalent of the member’s accumulated contributions at the time of his ordinary disability retirement; and a state annuity which, together with the member annuity, shall be equal to 1.5 percent of the member’s average final compensation at the time of his ordinary disability retirement multiplied by the number of years of creditable service at that time of his ordinary disability retirement. However, regardless of age at disability, the ordinary disability retirement allowance shall not be less than 25 percent of the member’s average final compensation at the time of his or her disability retirement.
6 Accidental Disability Retirement; Group I. Amend RSA 100-A:6, I(d) to read as follows:
(d)(1) Upon accidental disability retirement, the group I member who has attained age 60 if the member is in vested status before July 1, 2011 or the age of 65 if the member is not in vested status on or after July 1, 2011 shall receive an accidental disability retirement allowance which shall consist of a member annuity and shall be the actuarial equivalent of the member’s accumulated contributions at the time of his accidental disability retirement, and a state annuity as follows:
(A) Prior to the member’s attainment of age 65, the state annuity, together with the member annuity, shall be equal to 1/60 of the member’s average final compensation at the time of his accidental disability retirement multiplied by the number of years of creditable service at the time of his accidental disability retirement;
(B) After attainment of age 65, the state annuity, together with the member annuity, shall be equal to 1/66 of the member’s average final compensation at the time of his accidental disability retirement multiplied by the number of years of creditable service at the time of his accidental disability retirement;
(C) Regardless of age at disability, such allowance shall not be less than 50 percent of the member’s average final compensation at the time of his accidental disability retirement.
(2) Upon accidental disability retirement, the group I member who has not attained age 60 if the member is in vested status before July 1, 2011 or the age of 65 if the member is not in vested status on or after July 1, 2011 shall receive an accidental disability retirement allowance which shall consist of: the member annuity which shall be the actuarial equivalent of the member’s accumulated contributions at the time of his accidental disability retirement; and a state annuity which, together with the member annuity, shall be equal to 50 percent of the member’s average final compensation at the time of his disability retirement.
7 Ordinary Disability Retirement; Group II. Amend RSA 100-A:6, II(b) to read as follows:
(b) Upon ordinary disability retirement, the group II member shall receive an ordinary disability retirement allowance which shall consist of: a member annuity which shall be the actuarial equivalent of his accumulated contributions at the time of his or her ordinary disability retirement; and a state annuity which, together with his or her member annuity, for members who are in vested status before July 1, 2011, shall be equal to 2-1/2 percent of his or her average final compensation at the time of [his] ordinary disability retirement multiplied by the number of years of his or her creditable service not in excess of 40 at the time of [his] ordinary disability retirement, or for members who commenced service or are not in vested status on or after July 1, 2011, shall be equal to 2 percent of his or her average final compensation at the time of ordinary disability retirement multiplied by the number of years of his or her creditable service not in excess of 50 at the time of ordinary disability retirement, provided, however, that such allowance shall not be less than 25 percent of the member’s final compensation at the time of his or her disability retirement.
8 Accidental Disability Retirement; Group II. Amend RSA 100-A:6, II(d) to read as follows:
(d) Upon accidental disability retirement, the group II member shall receive an accidental disability retirement allowance equal to 2/3 of his or her average final compensation at the time of [his] disability retirement.
(1) For members who are in vested status before July 1, 2011, any group II member who has more than 26-2/3 years of service, a supplemental disability retirement allowance shall be paid. Such supplement shall be equal to 2-1/2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service in excess of 26-2/3 but not in excess of 40 years.
(2) For members who commenced service or are not in vested status on or after July 1, 2011, any group II member who has more than 33-1/3 years of service, a supplemental disability retirement allowance shall be paid. Such supplement shall be equal to 2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service in excess of 33-1/3 but not in excess of 50 years.
(3) An accidental disability retirement allowance together with a supplemental disability retirement allowance, as provided in this subparagraph, shall not exceed 100 percent of the disability retiree’s average final compensation.
9 Vested Deferred; Group II Age Increased. Amend RSA 100-A:10, II(b) to read as follows:
(b) For members who are in vested status before July 1, 2011, upon the member’s attainment of age 45, provided the member would then have completed 20 years of creditable service, otherwise the subsequent date on which such 20 years would have been completed, or at any time after age 60, or for members who commenced service or are not in vested status on or after July 1, 2011, upon the member’s attainment of age 50, provided the member would then have completed 25 years of creditable service, otherwise the subsequent date on which such 25 years would have been completed, or at any time after age 65, a group II member who meets the requirement of subparagraph (a) may make application on a form prescribed by the board of trustees and receive a vested deferred retirement allowance which shall consist of: (1) A member annuity which shall be the actuarial equivalent of accumulated contributions on the date the member’s retirement allowance commences; and (2) A state annuity which, together with the member annuity, shall be equal to a service retirement allowance based on the member’s average final compensation and creditable service at the time the member’s service is terminated.
10 Return of Contributions. Amend RSA 100-A:11, I(c) to read as follows:
(c) Upon the death of a group I member who has elected, pursuant to RSA 100-A:10, to receive a vested deferred retirement allowance before his or her attainment of age 60 if the member is in vested status before July 1, 2011 or the age of 65 if the member is not in vested status on or after July 1, 2011, the amount of his accumulated contributions at the time of his or her death shall be paid to the person or persons, if any, nominated by [him] the member, if living, otherwise to the member’s estate.
11 Split Benefits; Minimum Age. Amend RSA 100-A:19-b to read as follows:
100-A:19-b Minimum Age. For the purposes of this subdivision only, minimum age shall mean:
I. For a member who has completed less than 20 years combined creditable service in both group I and group II, 60 years if the member is in vested status before July 1, 2011 or 65 years if the member is not in vested status on or after July 1, 2011.
II. For a member who is in vested status before July 1, 2011 and, who has completed 20 or more years of combined creditable service, one year shall be deducted from age 60 for each year of creditable group II service, provided that the age shall not be less than 45 years. For a member who commenced service or is not in vested status on or after July 1, 2011 and, who has completed 25 or more years of combined creditable service, one year shall be deducted from age 65 for each year of creditable group II service, provided that the age shall not be less than 50 years.
12 Split Benefits; Reduced Early Retirement; Minimum Age. Amend RSA 100-A:19-d to read as follows:
100-A:19-d Reduced Early Retirement. Notwithstanding any other provision of law, any retirement system member who has creditable service in both group I and group II with at least 10 years combined creditable service, and who has attained an age which is at least 45 for members who are in vested status with group II service prior to July 1, 2011 or at least 50 for members who commenced group II service or are not in vested status on or after July 1, 2011 and is within 10 years of the minimum age set forth in RSA 100-A:19-b, may elect to retire and have benefits commence immediately as a reduced split-benefit service retirement allowance. Application shall be as provided in RSA 100-A:5, I(c). The allowance shall be determined as a split-benefit service retirement allowance in accordance with RSA 100-A:19-c, and the total combined split-benefit service allowance shall be reduced by the percentages shown in RSA 100-A:5, I(c), based on the total combined length of creditable service, for each month by which the date on which benefits commence precedes the month after which the member attains the minimum age set forth in RSA 100-A:19-b.
13 State Employees; Retirement. Amend RSA 21-I:30, II(a) to read as follows:
(a) Has at least 10 years of creditable service for the state if the employee’s service began prior to July 1, 2003 or 20 years of creditable service if the employee’s service began on or after July 1, 2003, and who also is at least 60 years of age at the time of retirement if the employee is in vested status before July 1, 2011 or at least 65 years of age at the time of retirement if the employee is not in vested status on or after July 1, 2011; or
14 State Employees; Group Insurance Benefits; Group II. Amend RSA 21-I:30, III to read as follows:
III. Any vested deferred state retiree may receive medical and surgical benefits under this section if the vested deferred state retiree is eligible. To be eligible, a group I vested deferred state retiree shall have at least 10 years of creditable service with the state if the employee’s service began prior to July 1, 2003 or 20 years of creditable service with the state if the employee’s service began on or after July 1, 2003 and a group II vested deferred state retiree shall have at least 20 years of creditable service with the state if the employee’s service with the state began on or after July 1, 2010. In addition, if the vested deferred state retiree is a member of group I, such retiree shall be at least 60 years of age to be eligible if the member is in vested status before July 1, 2011 or 65 years of age if the member is not in vested status on or after July 1, 2011. If the vested deferred state retiree is a member of group II who is in vested status before July 1, 2011, such retiree shall not be eligible until 20 years from the date of becoming a member of group II and shall be at least 45 years of age, and any group II member who commenced service or is not in vested status on or after July 1, 2011 shall not be eligible until 25 years from the date of becoming a member of group II and shall be at least 50 years of age.
15 Retirement Age Changed; Vested Status. Notwithstanding the provisions of RSA 100-A:5, RSA 100-A:6, RSA 100-A:10, RSA 100-A:11, RSA 100-A:19-b, and RSA 21-I:30 relating to retirement at age 60, persons who are in vested status in the retirement system or as a state employee under RSA 21-I:30 on the effective date of this section shall be permitted to retire on an unreduced service retirement, disability retirement, vested deferred retirement, or split benefit retirement at the following ages, based on the corresponding number of years of creditable service:
I. At least 10 but not 15 years of creditable service, age 64.
II. At least 15 but not 20 years of creditable service, age 63.
III. At least 20 but not 25 years of creditable service, age 62.
IV. At least 25 but not 30 years of creditable service, age 61.
V. At least 30 years of creditable service, age 60.
16 Financing; Contribution Rates; Group II Member Payroll Deduction. Amend RSA 100-A:16, I(a) to read as follows:
(a) The member annuity savings fund shall be a fund in which shall be accumulated the contributions deducted from the compensation of members to provide for their member annuities together with any amounts transferred thereto from a similar fund under one or more of the predecessor systems. Except as provided in RSA 100-A:24, I, such contribution shall be, for each member, dependent upon the member’s employment classification at the rate determined in accordance with the following table:
[Employees of employers other than the state 5.00
Employees of the state hired on or before June 30, 2009 5.00
Employees of the state hired after June 30, 2009 7.00
Teachers 5.00
Permanent Policemen 9.30
Permanent Firemen 9.30 ]
Group I members, 7.00
Group II members, 11.00
The board of trustees shall certify to the proper authority or officer responsible for making up the payroll of each employer, and such authority or officer shall cause to be deducted from the compensation of each member, except group II members who are in vested status before July 1, 2011 with creditable service in excess of 40 years or group II members who commenced service or are not in vested status on or after July 1, 2011 with creditable service in excess of 50 years, as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), on each and every payroll of such employer for each and every payroll period, the percentage of earnable compensation applicable to such member. No deduction from earnable compensation under this paragraph shall apply to any group II member who is in vested status before July 1, 2011 with creditable service in excess of 40 years, or group II member who commenced service or is not in vested status on or after July 1, 2011 with creditable service in excess of 50 years, as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), and this provision for such members shall not affect the method of determining average final compensation as provided in RSA 100-A:1, XVIII. In determining the amount earnable by a member in a payroll period, the board may consider the rate of compensation payable to such member on the first day of a payroll period as continuing throughout the payroll period and it may omit deduction from compensation for any period less than a full payroll period if such person was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as shall not exceed 1/10 of one percent of the annual earnable compensation upon the basis of which such deduction is made. The amounts deducted shall be reported to the board of trustees. Each of such amounts, when deducted, shall be paid to the retirement system at such times as may be designated by the board of trustees and credited to the individual account, in the member annuity savings fund, of the member from whose compensation the deduction was made.
17 Local Adoption of Contribution Rates for Political Subdivision Members. Amend RSA 100-A:24, I to read as follows:
I. Employees who have become members of the retirement system under the provisions of this subdivision shall contribute at the [same] rates of contribution [and on the same basis as state employees] required by RSA 100-A:16, I, except that a governing body participating as an employer under this chapter may elect to apply a higher or lower rate of employee contribution.
18 Retirement System; Recalculation of Employer Rates; Recertification. Notwithstanding the notice requirements of RSA 100-A:16, III, the board of trustees of the retirement system shall recalculate employer contribution rates for the state fiscal years 2012 and 2013 to reflect the requirements of RSA 100-A:16, II(a) and RSA 100-A:24, I as amended by this act. Notwithstanding the notice requirements of RSA 100-A:16, III, such employer contribution rates shall be effective for the biennium beginning July 1, 2011, and the recertification of employer contribution percentages, applicable beginning July 1, 2011, shall be provided to each employer within a reasonable period of time not to exceed 30 days from the effective date of this section. The exception to the notice requirements of RSA 100-A:16, III in this section shall be limited to the applicable employer contribution rates for the biennium beginning July 1, 2011.
19 New Section; Retirement System; Return to Work. Amend RSA 100-A by inserting after section 27 the following new section:
100-A:27-a Return to Work; Suspension of Benefits. Beginning July 1, 2011, no person for whom membership in the retirement system is optional under RSA 100-A:3, I, and no person employed by an employer on a full- or part-time basis or as a consultant for longer than 3 months in a year, may concurrently receive benefits under this chapter as a retired member. Benefits shall be suspended during any such period of employment.
20 Repeal. 2002, 137:7, relative to the application of the repeal of former RSA 100-A:3, I(c), is repealed.
21 Retirement System; Administration; Membership of Board. Amend RSA 100-A:14, I to read as follows:
I. The administration of this system is vested in a board of [14] 13 trustees. Each newly appointed or reappointed trustee shall have familiarity with or experience in finance or business management. The state treasurer shall be an ex officio voting member of the board. The governor and council shall appoint [2] 4 trustees, to be known as non-member trustees, who shall be qualified persons with investment and/or financial experience as provided in this paragraph and not be members of the system, and who shall serve for a term of 2 years and until their successors are appointed and qualified. The non-member trustees of the board shall have substantial experience in the field of institutional investment or finance, taking into account factors such as educational background, business experience, and professional licensure and designations. The original appointment of [one] 2 of the non-member trustees shall be for a term of one year. The remaining [11] 8 members of the board shall consist of [2 employees, 2 teachers, 2 permanent policemen, 2 permanent firemen, one member of the senate who shall be appointed annually by the senate president, one member of the house of representatives who serves on the executive departments and administration committee and who shall be appointed annually by the speaker of the house, and one person representing management in local government. Whenever a vacancy occurs, the senate president or the speaker of the house shall fill the vacancy in the same manner by appointing a senate or a house member who shall serve for the unexpired term.] 4 member representatives and 4 employer representatives. The New Hampshire state employees’ association, the New Hampshire education association, the New Hampshire police association, and the New Hampshire state permanent firemen’s association, [and the New Hampshire Local Government Center] shall each annually nominate from their members a panel of 5 persons, [all of whom except for the panel of the Local Government Center shall be active members of the retirement system, or one of the 4 predecessor systems,] no later than May 31 of each year, and the panels so named shall be filed with the secretary of state no later than June 10 of each year. From [each of] the above named panels, the governor and council shall appoint [one person annually to] the active member representatives of the board[, except for the panel of the Local Government Center, which shall have one person appointed every 2 years] as needed so as to maintain the representation on the board. The governor and council shall appoint the employer representatives of the board with the advice of employer organizations. Members appointed to the board in the manner aforesaid shall serve for a term of 2 years. Each member so appointed shall hold office until his or her successor shall be appointed and qualified. Whenever a vacancy occurs, the governor and council shall fill the vacancy by appointing a member who shall serve for the unexpired term [from the same panel from which the former member was appointed]. The governor shall designate one of the non-member trustees to serve as chairman of said board of trustees.
22 Application; Board of Trustees Membership. Members of the board of trustees for the retirement system on the effective date of this section shall serve for the remainder of their terms. In order to conform to changes to the retirement system board of trustees made by this act, upon a vacancy occurring in the membership on the board of trustees after the effective date of this section, the appointment of a trustee shall be made to reasonably conform to the trustee designations in RSA 100-A:14, I.
23 Repeal of Special Account. RSA 100-A:16, II(h) – (j), relative to the special account, are repealed.
24 Transfer of Balance of Special Account. Any funds remaining in the special account on the effective date of the repeal of the special account by this act shall be transferred to the respective components of the state annuity accumulation fund.
25 Definition of Terminal Funding. Amend RSA 100-A:1, XXX to read as follows:
XXX. “Terminal funding’’ shall mean providing the full present value of the total liability for benefit improvement. [Unless otherwise specified, the source of terminal funding shall be the special account established under RSA 100-A:16, II(h).]
26 Benefits Upon Death After Retirement; References to Special Account. Amend RSA 100-A:12, I-a and II to read as follows:
I-a. In addition to any other provision of this section, upon the death of a retired group II member of the New Hampshire retirement system or any predecessor system, who retired pursuant to RSA 100-A:5, II with at least 20 years of creditable service or pursuant to RSA 100-A:6, II(a) prior to April 1, 1987, there shall be paid to the member’s spouse at the time of retirement, if surviving, an allowance to continue until the spouse’s death or remarriage equal to 50 percent of the service or ordinary disability retirement allowance payable to the retired member prior to the member’s death. The total cost of terminally funding the benefits provided by this paragraph shall be funded from the [special account established under RSA 100-A:16, II(h)] state annuity accumulation fund.
II. Upon the death of a group II member who has retired on or after April 1, 1987, or upon the death of a group II member who has filed an application for retirement benefits with the board of trustees after January 1, 1991, there shall be paid to the person nominated by the member by written designation filed with the board, if living, otherwise to the retired member’s estate, in addition to the amount payable under RSA 100-A:11 a lump sum of $3,600 if the member retired before July 1, 1988, and if the member is married on the date of such member’s retirement, there shall be paid to such surviving spouse an allowance to continue until the spouse’s death or remarriage equal to 50 percent of the member’s service, ordinary disability, or accidental disability retirement allowance payments. For any person who is a group II member as of June 30, 1988, and who retires on or after July 1, 1988, the lump sum payment shall be $10,000. For any person who becomes a member of group II on or after July 1, 1988, and on or prior to July 1, 1993, the lump sum payment shall be $3,600. It is the intent of the legislature that future group II members shall be included only if the total cost of such inclusion can be terminally funded [by reimbursement from the special account established under RSA 100-A:16, II(h)].
27 Supplemental Allowance; Reference to Special Account. Amend RSA 100-A:41-a, III to read as follows:
III.(a) The payment of any such supplemental allowance shall be contingent on terminal funding of the total actuarial cost thereof. [Such terminal funding shall be from the special account established under RSA 100-A:16, II(h).]
(b) [No supplemental allowance shall reduce the funds in the respective component of the special account to an amount less than zero.
(c)] Cost of living adjustments shall be retroactive to the member’s eligibility date pursuant to paragraph I.
28 Additional Temporary Supplemental Allowances. Amend RSA 100-A:41-d to read as follows:
100-A:41-d Additional Temporary Supplemental Allowances.
I. The additional supplemental allowance in this paragraph shall apply only for the fiscal year beginning July 1, 2008, the state fiscal year beginning July 1, 2009, and the state fiscal year beginning July 1, 2010. Any retired member of the New Hampshire retirement system or any of its predecessor systems who has been retired for at least 12 months and whose annual retirement allowance is based on at least 15 years of service and is $20,000 or less, or any beneficiary of such member who is receiving an allowance, shall be entitled to receive an additional supplemental allowance, in addition to the provisions of RSA 100-A:41-a, on the retired member’s latest anniversary date. The amount of the additional temporary supplemental allowance under this paragraph shall be $1,000[, paid from the respective component of the special account].
II. The supplemental allowance in this paragraph shall apply only for the fiscal year beginning July 1, 2008, the state fiscal year beginning July 1, 2009, and the state fiscal year beginning July 1, 2010. Any retired member of the New Hampshire retirement system or any of its predecessor systems who retired prior to January 1, 1993, or any beneficiary of such member who is receiving an allowance, shall be entitled to receive an additional supplemental allowance, in addition to the provisions of RSA 100-A:41-a and paragraph I, on the retired member’s latest anniversary date. The amount of the additional temporary supplemental allowance under this paragraph shall be $500[, paid from the respective component of the special account].
III. The supplemental allowance in this paragraph shall apply only for the fiscal years beginning July 1, 2008 up to and including the fiscal year beginning July 1, [2011] 2010. In addition to paragraphs I and II, any retired member of the New Hampshire retirement system or any of its predecessor systems or any beneficiary of such retired member who is receiving an allowance, except for a retired state member, or his or her beneficiary, whose medical benefits are paid by the state pursuant to RSA 21-I[, who is receiving a medical benefit subsidy payment under RSA 100-A:52 or RSA 100-A:52-a], shall be entitled to receive an additional supplemental allowance, in addition to the provisions of RSA 100-A:41-a, on the retired member’s latest anniversary date. The amount of the additional temporary supplemental allowance under this paragraph shall be $500 for retirees taking a one-person medical benefit and $1,000 for retirees taking a 2-person medical benefit[, paid from the respective component of the special account]. Provided, however that no 2-person subsidy recipient may receive more than $1,000 per year under this paragraph, and that once a recipient is entitled to Medicare, the additional allowance under this paragraph shall be reduced to 60 percent of the non-Medicare eligible retiree amounts.
IV. The additional supplemental allowances under this section shall be issued as separate payment to eligible members or their beneficiaries on or after July 1. Supplemental allowances under this section shall not become a permanent addition to the base retirement allowance.
[ V. No supplemental allowance shall be paid if it would reduce the funds in the respective component of the special account to an amount less than zero. If insufficient funds exist in the special account to fund all the supplemental allowances provided for in this section and in RSA 100-A:41-a, the available funds shall be used first to fund the supplemental allowance in RSA 100-A:41-a then to fund the supplemental allowance in paragraphs I, II, and III of this section, in that order.]
29 Repeal of Medical Benefits Provisions. The following are repealed:
I. RSA 100-A:52 through RSA 100-A:52-b, relative to payment by the retirement system for certain group I and group II medical benefits.
II. RSA 100-A:53, relative to method of financing group II medical benefits.
III. RSA 100-A:53-b through RSA 100-A:53-d, relative to the method of financing group I medical benefits.
IV. RSA 100-A:53-e, relative to temporary contribution amounts and ratification.
V. RSA 100-A:55, relative to application of medical benefits payments.
VI. RSA 21-I:30-a, II, relative the offset of retirement system medical benefits payments.
VII. RSA 99:9, V, relative to benefits for certain classified employees laid off in 1998.
30 Medical Benefits; Miscellaneous Provisions; Discontinuance. Amend RSA 100-A:54 to read as follows:
100-A:54 Miscellaneous Provisions.
I. [It is the intention of the state of New Hampshire that the New Hampshire retirement system continue to provide medical benefits under RSA 100-A:52 subject to RSA 100-A:55, and that the employer make contributions in such amounts as the board of trustees shall deem necessary and appropriate under RSA 100-A:16 for such purpose. Any forfeitures of a member’s interest in the medical benefit accounts as provided under this section prior to any discontinuance of medical benefits by the legislature shall be applied to reduce any subsequent employer contributions made pursuant to this section.
II.] The legislature [may] shall discontinue contributions under this subdivision with respect to medical benefits provided under former RSA 100-A:52 [or] and cease providing such medical benefits [for any reason, at any time, in which event]. The funds allocated to provide such medical benefits, if any remain, shall be used to continue medical benefits to members who were eligible for them under former RSA 100-A:52 and 100-A:55 prior to the discontinuance date as long as any funds remain. However, if after the satisfaction of all medical benefits provided under former RSA 100-A:52 there remain any funds, the program shall be deemed to be terminated and such remainder shall be returned to the appropriate employer, as defined in RSA 100-A:1, IV, in accordance with section 401(h)(5) of the Internal Revenue Code.
[III.] II. The retirement system shall deduct from the monthly retirement allowance of retired state employees under the age of 65 years receiving medical and surgical benefits provided pursuant to RSA 21-I:30, the premium contribution amounts of $65 per month for each such retiree and $65 per month for each applicable spouse; provided that the charge to each household shall not exceed $130 per month. Deducted amounts[, which shall be in addition to and notwithstanding any amounts payable by the retirement system pursuant to RSA 100-A:52, RSA 100-A:52-a, and RSA 100-A:52-b,] shall be deposited in the employee and retiree benefit risk management fund. In the event the retiree’s monthly allowance is insufficient to cover the certified contribution amount, the retirement system shall so notify the department of administrative services, which shall invoice and collect from the retiree the remaining contribution amount.
31 Purchase of Creditable Service. Amend RSA 100-A:3, VI to read as follows:
(c) Except for service described in subparagraph (d), in no case shall prior service purchased as credible service in the New Hampshire retirement system under the provisions of this section be deemed to be creditable service for the purposes of eligibility for medical benefits after retirement under the provisions of RSA 21-I:30[, RSA 100-A:52, RSA 100-A:52-a, or RSA 100-A:52-b].
32 Armed Forces Credit. Amend RSA 100-A:4, VI(c) to read as follows:
(c) Additional creditable service purchased under this paragraph shall not be used as creditable service for the purpose of determining service retirement eligibility or for the purpose of eligibility for medical and surgical benefits as a retired employee under RSA 21-I:30[, RSA 100-A:52, RSA 100-A:52-a, or RSA 100-A:52-b].
33 Peace Corps and AmeriCorps Credit. Amend RSA 100-A:4, VIII to read as follows:
VIII. Any employee, teacher, permanent policeman, or permanent fireman who has completed at least 5 years of membership service and who terminates his or her employment in order to enter directly into the Peace Corps or AmeriCorps, shall be entitled to service credit for the period of such Peace Corps or AmeriCorps service, provided he or she again becomes employed within a year after the termination of such service and provided further that he or she elects to make, and makes while in active service and within a period of time equal to 3 times the length of time of such service, but not more than 5 years, all payments of the full actuarial cost to the system. The full actuarial cost of service credit purchases under this paragraph shall be determined by the actuary based on methods and assumptions recommended by the actuary and approved by the board of trustees. The member may be required to prepay all or part of the actuarial calculation fee, as determined by the board. Credit shall not be granted until the active member has fully paid for such service credit in a lump sum or by installment payments as permitted by the board. The member’s payment shall be credited to the member annuity savings fund. The amount of service credit purchased under this paragraph shall not exceed the least of (a) 2 years or (b) the member’s actual period of Peace Corps and AmeriCorps service or (c) 5 years minus the period of nonqualified service credit purchased by the member pursuant to former RSA 100-A:4, VII. Creditable service purchased under this paragraph shall not be used for the purpose of eligibility for medical and surgical benefits as a retired employee under RSA 21-I:30[, RSA 100-A:52, RSA 100-A:52-a, or RSA 100-A:52-b].
34 Purchase of Out-of-State Credit. Amend RSA 100-A:4-b, III to read as follows:
III. In no case shall out-of-state service purchased as creditable service in the New Hampshire retirement system under the provisions of this section be deemed to be creditable state service for the purposes of eligibility for medical benefits after retirement under the provisions of RSA 21-I:30 [or RSA 100-A:52-a].
35 Purchase of Out-of-State Group II Service. Amend RSA 100-A:4-c, IV to read as follows:
IV. In no case shall out-of-state service purchased as creditable service in the New Hampshire retirement system under the provisions of this section be deemed to be creditable service for the purposes of eligibility for medical benefits after retirement under the provisions of [RSA 100-A:52 through 100-A:55 or] RSA 21-I:26 through 21-I:36.
36 Political Subdivision Members. Amend RSA 100-A:22 to read as follows:
100-A:22 Modifications. Membership in the retirement system shall be optional for officers and employees of the employer who are in the service of the employer on the date when participation becomes effective, and any such officer or employee who elects to join the retirement system within one year thereafter shall be credited with prior service covering such periods of prior service rendered to such employer for which the employer is willing to make accrued liability contributions. If the employer is unable or unwilling to make such contributions, a member in service may petition the board of trustees for periods of prior service rendered to such employer. Upon payment by the member of the amount determined in accordance with RSA 100-A:3, VI(b) and with the approval of the board, the member shall receive credit for such prior service. Thereafter, service for such employer on account of which contributions are made by the employer and member shall also be considered as creditable service. However, in no event shall prior service purchased as creditable service under this section be used as creditable service for the purpose of eligibility for medical benefits [under RSA 100-A:52, RSA 100-A:52-a, or RSA 100-A:52-b]. Membership shall be compulsory for all employees entering the service of such employer after the date participation becomes effective. Municipalities may, by action of their city council or board of selectmen, exempt their chief administrative officer, at the time of initial hiring or appointment, from compulsory membership provided herein. The chief fiscal officer of the employer, and the heads of its departments, shall submit to the board of trustees such information and shall cause to be performed with respect to the employees of such employer, who are members of the retirement system, such duties as shall be prescribed by the trustees in order to carry out the provisions of this chapter.
37 New Subdivision; Voluntary Contribution Plan. Amend RSA 100-A by inserting after section 57 the following new subdivision:
Voluntary Contribution Plan
100-A:58 Voluntary Contribution Plan Established. There is hereby established a voluntary retirement benefit plan for members of the retirement system which shall be in addition to and separate from the provisions of RSA 100-A:1 through RSA 100-A:57, except for definitions in RSA 100-A:1 used in this subdivision. The voluntary contribution 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 contributions and all investments, reinvestments, interest, or other moneys held by the board 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:59 Participation. Any active member of the retirement system may elect to participate in the voluntary contribution plan established in this subdivision.
100-A:60 Administration; Rulemaking.
I. The administrator of the plan shall be the board of trustees of the retirement system, who shall carry out all duties and responsibilities under this subdivision.
II. The board shall adopt rules, pursuant to RSA 541-A, relative to the procedure for payroll deductions or other participant contributions, administration of the investment choices of members and beneficiaries, and forms necessary for the administration of this subdivision.
III. The board shall obtain or cause to be obtained any necessary approvals, rulings, opinions, and confirmations from federal authorities or agencies.
100-A:61 Administration of Plan. The board shall have the authority to contract with a third-party administrator for the voluntary contribution plan for the administration of assets accumulated under each participant’s account. Expenses of the implementation, administration, and maintenance of the voluntary contribution plan shall be paid from contributions to the plan, income and assets of the plan, or fees or charges imposed on the participants.
100-A:62 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 voluntary 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:63 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 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 shall 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:64 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:65 Assets and Liabilities.
I. This subdivision does not create or permit any obligation on the board or the state to provide any guarantee of investment return or any other guarantee for the benefit of any individual or entity.
II. Moneys or other assets of the voluntary contribution plan shall not be considered state moneys or assets.
III. The board and the state may not insure, guarantee, or have any similar responsibility or any liability with respect to accounts, moneys, or gains or losses of investment returns, under the voluntary contribution plan.
38 Severability; Contingent Amendment; Effective Date.
I. The provisions of this act making various amendments concerning the New Hampshire retirement system shall be severable and if any phrase, clause, sentence or provision of this act is declared to be contrary to the constitution of this state or of the United States or the applicability thereof to any government, agency, person, or circumstance is held invalid, the validity of the remainder of this act and the applicability thereof to any government, agency, person, or circumstance shall not be affected thereby.
II. If as provided in paragraph I of this section, any phrase, clause, sentence, or provision is held contrary to the constitution of this state or of the United States, the remaining provisions of the act shall be in full force and effect as to all severable matters, and section 39 of this act shall take effect on the July 1 next following the date that the board of trustees certifies to the secretary of state and the director of legislative services of the occurrence of a final ruling on the declaration described in paragraph I.
39 Member Contribution Rates; Contingent Version. Amend the introductory paragraph of RSA 100-A:16, I(a) and the contribution rates following the introductory paragraph to read as follows:
(a) The member annuity savings fund shall be a fund in which shall be accumulated the contributions deducted from the compensation of members to provide for their member annuities together with any amounts transferred thereto from a similar fund under one or more of the predecessor systems. [Except as provided in RSA 100-A:24, I,] Such contribution shall be, for each member, [dependent upon the member’s employment classification at the rate determined in accordance with the following table:
Group I members, 7.00
Group II members, 11.00] the rate percent of each member’s compensation as determined by the retirement system which shall by annual total represent 75 percent of the normal contribution and accrued liability contribution determined under paragraph II.
40 Effective Date.
I. Section 39 of this act shall take effect as provided in section 38 of this act.
II. The remainder of this act shall take effect July 1, 2011.
LBAO
11-0488
Revised 03/24/11
HB 580 FISCAL NOTE
AN ACT relative to the New Hampshire retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill will have an indeterminable impact on state, county, and local expenditures in FY 2014 and each year thereafter. There will be no impact on state, county, and local revenues.
METHODOLOGY:
The New Hampshire Retirement System states RSA 100-A:16, I stipulates the NHRS member contribution rates for each of the four classifications of employees, however section 17 of this bill would permit the governing body of each participating political subdivision to deviate from stipulated rates by setting a higher or lower member contribution rate with respects to its members. The System states the total amount of anticipated member contributions is a key component in the actuary’s determination of employer contribution rates. The System states there are currently more than 50,000 System members and more than 475 political subdivisions which are employers participating in the System. The System states given those statistics, the range of member contribution rates and total member contributions is virtually limitless and totally unpredictable and without being able to reasonably estimate the total member contributions, the actuary could not determine with any actuarial certainty the employer contribution rates and therefore the fiscal impact of this bill is indeterminable.
The System further states it would incur $250,800 in computer programming costs to implement the changes in this bill.