HB 1449-FN - AS INTRODUCED
2016 SESSION
\t16-2413
\t10/09
HOUSE BILL\t1449-FN
AN ACT\trelative to additional temporary supplemental allowances for retired members of the retirement system.
SPONSORS:\tRep. Elliott, Rock. 8
COMMITTEE:\tSpecial Committee on Public Employee Pension Plans
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ANALYSIS
\tThis bill establishes a procedure for funding and distributing additional temporary supplemental allowances for retired members of the retirement system or their beneficiaries.
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Explanation:\tMatter added to current law appears in bold italics.
\t\tMatter removed from current law appears [in brackets and struckthrough.]
\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
\t16-2413
\t10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Sixteen
AN ACT\trelative to additional temporary supplemental allowances for retired members of the retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 New Section; Retirement System; Additional Temporary Supplemental Allowances. Amend RSA 100-A by inserting after section 41-d the following new section:
\t100-A:41-e Additional Temporary Supplemental Allowances.
\t\tI. The additional temporary supplemental allowance provided for in this section shall apply only for fiscal years beginning on or after July 1, 2017. Any member, whether retiree or beneficiary of the New Hampshire retirement system or any of its predecessor systems, who has received payments from the New Hampshire retirement system for at least the immediately preceding 12 months shall be entitled to a lump sum payment that shall not exceed an amount equal to 1/12 of the retirement allowance received by the member during the preceding 12 months, the payment of which shall occur on or before January 31 of the year the allowances are to be paid for a period of up to 10 years.
\t\tII. The payments contemplated in paragraph I shall be paid from a special fund referred to as the supplemental allowance fund. The supplemental allowance fund shall be funded by a one-time transfer derived from the investment returns on the funds of the retirement system, including interest, but net of directly related brokerage fees and expenses, for the first fiscal year that occurs on or after June 30, 2017, in which said investment returns exceed 12.5 percent. The investment returns that shall be transferred to the supplemental allowance fund shall be 2.5 percent of investment returns for that given year. Any investment returns contributed to the supplemental allowance fund shall be accounted for separately in the supplemental allowance fund. Investment returns and interest on the funds held in the supplemental allowance fund shall be made a part of the fund and accounted for with the fund.
\t\tIII. Additional temporary supplemental allowances shall be paid each January starting with January 2018, or at such later time as the supplemental allowance fund has been funded, and the additional temporary supplemental allowances shall continue to be paid only until the assets of the supplemental allowance fund shall be fully depleted. The amount paid to an eligible member, whether a retiree or beneficiary, shall be determined by the board of trustees based upon a plan to distribute the contents of the supplemental allowance fund over a 10-year period to eligible members based upon their years of service, but in no single year shall an additional temporary supplemental allowance exceed 1/12 of the retirement allowances paid to the eligible member or beneficiary in the preceding fiscal year.
\t\tIV. Assets segregated in the supplement allowance fund shall not be used for any other purpose than to provide the benefits described in this section.
\t\tV. By enacting this section, the state intends to be bound to the provisions of this section as a contractual obligation and to create vested rights in those members, whether retirees or beneficiaries, who are eligible, or who become eligible, for this additional temporary supplemental allowance on or after the effective date of this section. The vested rights intentionally created by the state under this section shall include the right not to have the supplemental allowance fund, and any net investment returns related thereto, diverted or used for any purpose other than paying additional temporary supplemental allowances.
\t2 Repeal. RSA 100-A:41-a through RSA 100-A:41-d, relative to prior provisions for supplemental allowances, are repealed.
\t3 Effective Date. This act shall take effect 60 days after its passage.
\t\t\t\t\t\t\t\t\t\t\t16-2413
\t\t\t\t\t\t\t\t\t\t\t11/12/15
HB 1449-FN- FISCAL NOTE
AN ACT\trelative to additional temporary supplemental allowances for retired members of the retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill, as introduced, will increase state, county, and local expenditures by an indeterminable amount in FY 2018, and each year thereafter. There will be no fiscal impact to state, county, and local revenue.
METHODOLOGY:
The New Hampshire Retirement system states this bill establishes a procedure for funding and distributing additional temporary supplemental allowances (TSAs) for retired members of the retirement system or their beneficiaries. Beginning in FY 2018, this bill provides for a one-time transfer, to the supplemental allowance fund, derived from the net investment returns on the funds of the retirement system when investment returns exceed 12.5 percent. The investment returns that shall be transferred to the supplemental allowance fund shall be 2.5 percent of investment returns for that given year. Once the program is funded, additional TSAs shall be paid each January, beginning no earlier than 2018, over a 10-year period, but shall not exceed 1/12 of the retirement allowances paid to each eligible member or beneficiary in the preceeding year. The New Hampshire Retirement System estimates this bill will increase the State's unfunded actuarial accrued liability (UAAL) by $144.2 million, based on an independent actuarial analysis using FY 2014 data, as detailed in the table below:
Expected UAAL Increase/(Decrease) (Amounts in Millions) | ||||
Employees | Teachers | Police | Fire | Total |
$47.3 | $53.4 | $29.3 | $14.2 | $144.2 |
The New Hampshire Retirement System, estimates this bill will increase state, county, and local employer costs, based on an independent actuarial analysis, by the amounts listed in the table below:
Estimated State Employer Increase/(Decrease) (Amounts in Millions) | |||||
| Employees | Teachers | Police | Fire | Total |
FY 2018 | $1.85 | n/a | $.65 | $.04 | $2.54 |
FY 2019 | $1.92 | n/a | $.68 | $.04 | $2.64 |
FY 2020 | $1.99 | n/a | $.70 | $.04 | $2.73 |
Estimated Political Subdivision Employer Increase/(Decrease)* (Amounts in Millions) | |||||
| Employees | Teachers | Police | Fire | Total |
FY 2018 | $2.19 | $4.55 | $1.85 | $1.17 | $9.76 |
FY 2019 | $2.27 | $4.72 | $1.92 | $1.22 | $10.13 |
FY 2020 | $2.36 | $4.90 | $2.00 | $1.26 | $10.52 |
*Note: County and local employer fiscal impacts cannot be separately determined. | |||||
The New Hampshire Retirement system states that it would be able to customize its pension database software for less than $10,000. Beginning in FY 2018, this bill may result in additional unknown costs to develop new reports used to review pension data to determine who qualifies for the temporary supplemental allowance and for the New Hampshire Retirement System Board to develop a payment schedule to distribute the TSAs over the next ten years. Any impact on employer contribution rates would be reflected in the next rate setting valuation as of June 30, 2015, which determines employer contribution rates for the 2018-2019 biennium. Only the net impact of the proposal is shown because the rates for the 2018-2019 biennium are unknown at this time.