Revision: Jan. 30, 2017, 8:21 a.m.
HB 366-FN - AS INTRODUCED
2017 SESSION
17-0506
10/01
HOUSE BILL 366-FN
SPONSORS: Rep. Shaw, Hills. 16
COMMITTEE: Executive Departments and Administration
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This bill modifies the calculation of average final compensation for retirement system members who commenced service on or after July 1, 2011 or who had not attained vested status prior to January 1, 2012.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
17-0506
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seventeen
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Definition; Average Final Compensation. Amend RSA 100-A:1, XVIII(b) to read as follows:
(b) For members who commenced service on or after July 1, 2011 or who have not attained vested status prior to January 1, 2012, 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. For purposes of inclusion in this calculation, the average percentage of compensation paid in excess of the full base rate of compensation in the highest 5 years shall not exceed the average percentage of compensation paid in excess of the full base rate of compensation over all the member's years of service on or after January 1, 2012[, but excluding the highest 5 years].
2 Effective Date. This act shall take effect 60 days after its passage.
17-0506
1/3/17
HB 366-FN- FISCAL NOTE
AS INTRODUCED
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2018 | FY 2019 | FY 2020 | FY 2021 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $0 | $730,000 | $750,000 |
Funding Source: | [ X ] General [ X ] Education [ X ] Highway [ X ] Other | |||
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POLITICAL SUBDIVISIONS*: |
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $0 | $2,420,000 | $2,510,000 |
*The New Hampshire Retirement System states it is not able to separate the fiscal impact of this legislation between county and local government, therefore the fiscal impact is shown together as political subdivisions.
METHODOLOGY:
This bill modifies the calculation of average final compensation for retirement system members who commenced service on or after July 1, 2011 or who had not attained vested status prior to January 1, 2012 by including the highest five years of the members’ service. Assuming an annual rate of return of 7.25 percent, wage inflation at 3.25 percent a year, and an amortization period of a closed 22 year period beginning in FY 2018, the New Hampshire Retirement System’s actuary determined the following increases:
State Estimated Employer Increase/(Decrease) | ||
| FY 2020 | FY 2021 |
Employees | $490,000 | $500,000 |
Police | $230,000 | $240,000 |
Fire | $10,000 | $10,000 |
State Total | $730,000 | $750,000 |
Political Subdivisions Estimated Employer Increase/(Decrease) | ||
| FY 2020 | FY 2021 |
Employees | $570,000 | $590,000 |
Teachers | $850,000 | $880,000 |
Police | $630,000 | $650,000 |
Fire | $370,000 | $390,000 |
Political Subdivisions Total | $2,420,000 | $2,510,000 |
The System states the proposal would be reflected in the next rate setting valuation as of June 30, 2017, which determines employer contribution rates for the 2020-2021 biennium. Since the rates for the 2020-2021 biennium are unknown at this time, only the net impact of the proposal is shown. This bill would also increase the unfunded actuarial accrued liability by $16.5 million (a 0.1 percent decrease in the funded ratio). The unfunded actuarial accrued liability was $5.0 billion at the close of FY 2015.
The System states it will need to make an estimated $3,000 change to the Pension Gold reporting software.
AGENCIES CONTACTED:
New Hampshire Retirement System