Bill Text - HB561 (2018)

(Second New Title) relative to part-time employment of a retirement system retiree by a participating employer.


Revision: Jan. 25, 2017, 3:38 p.m.

HB 561-FN - AS INTRODUCED

 

 

2017 SESSION

17-0651

10/01

 

HOUSE BILL 561-FN

 

AN ACT relative to contributions by employers of part-time employees receiving retirement system pensions and relative to enforcement of provisions concerning retired members working part-time after retirement.

 

SPONSORS: Rep. Kurk, Hills. 2; Rep. L. Turcotte, Straf. 4; Rep. Ohm, Hills. 36; Rep. Azarian, Rock. 8; Sen. Giuda, Dist 2

 

COMMITTEE: Executive Departments and Administration

 

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ANALYSIS

 

This bill requires retirement system employers to make contributions based on the unfunded accrued liability and medical benefits employer share for retired members employed on a part-time basis.  

 

This also bill requires the executive director of the retirement system to suspend a member’s retirement allowance and assess a penalty on a retirement system employer for exceeding the limitations for part-time employment.  

 

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

17-0651

10/01

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Seventeen

 

AN ACT relative to contributions by employers of part-time employees receiving retirement system pensions and relative to enforcement of provisions concerning retired members working part-time after retirement.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Retirement System; Definition of Part Time.  Amend RSA 100-A:1, XXXIV to read as follows:

XXXIV.  "Part-time'' for purposes of employment of a retired member of the New Hampshire retirement system but excepting per diem court security officers and court bailiffs, means employment during a calendar year by one or more employers of the retired member which shall not exceed 32 hours in each normal calendar week.  Employment in some instances may exceed 32 hours in any normal calendar week provided that in such case, the part-time employment of the retired member shall not exceed 1,300 hours in a calendar year, so long as such part-time employment does not occur outside of a 5-consecutive-month period in any 12-month period.  No retired member shall be eligible to be employed in a part-time position by a retirement system employer before the expiration of one year from the effective date of the member's retirement.  

2  Part-time Employment; Notice; Exception.  Amend RSA 100-A:7-a and RSA 100-A:7-b to read as follows:

100-A:7-a  Certain Part-Time Employment; Notice Required.  The retirement system shall annually provide written notice to all retired members of the retirement system of the initial eligibility and hourly limitations on part-time employment as defined in RSA 100-A:1, XXXIV and the potential effect that exceeding such [hourly] limitations could have on the retired member's retirement benefits, including restoration to service as required in RSA 100-A:7 and penalty under RSA 100-A:7-c.

100-A:7-b  Certain Part-Time Employment; Emergency Exception.  The initial eligibility and hourly limitations on part-time employment as defined in RSA 100-A:1, XXXIV shall be modified for retired members who exceed the [32-hour limit] limits while providing assistance during an emergency under this section.  While providing assistance during an emergency under this section, a retired member may be employed and exceed the 32-hour limit in a calendar week provided that the member has not exceeded 1300 hours in the current calendar year.  For purposes of this section, an emergency includes any event declared by the governor or while working under the direction of the director of the division of forests and lands during woodland fire control.

3  New Section; Suspension of Benefits; Exceeding Part-Time Limitations.  Amend RSA 100-A by inserting after section 7-b the following new section:

100-A:7-c  Suspension of Benefits; Employer Penalty; Exceeding Part-Time Limitations.

I.  A retired member of the retirement system whose employment with an employer exceeds the initial eligibility or hourly limitations in the definition of part-time under RSA 100-A:1, XXXIV and who is not restored to service pursuant to RSA 100-A:7 shall have his or her retirement allowance suspended by the executive director for one month for every month, in full or in part, in which the member’s part-time employment exceeded the limitations under RSA 100-A:1, XXXIV.  This suspension shall apply to such a retired member who inaccurately records or fails to record his or her weekly time as an employee for an employer, including volunteer time.

II.  A retirement system employer of a retired member employed in a part-time position who knew or should have known that the employee inaccurately recorded or failed to record his or her time, including volunteer time, shall pay a penalty equal to 3 times the amount of the employee's suspended pension, as determined under paragraph I, which shall be placed in the state annuity accumulation fund.

4  New Paragraph; Retirement System; Employer Contributions; Part-time Employment of Retired Member.  Amend RSA 100-A:16 by inserting after paragraph II-a the following new paragraph:

II-b.  In addition to employer contributions required under paragraph II, an employer who employs a retired member for part-time employment, who is not restored to service, shall make contributions at the percentage rates certified by the board of trustees for the compensation paid to such part-time employee; provided that the percentage rates which shall be applied shall only be for the employer’s share of the unfunded accrued liability determined under subparagraph II(e) and the medical benefits contributions under RSA 100-A:50 through 100-A:55 for the member classification of such part-time employee.

5  Effective Date.  This act shall take effect July 1, 2017.

 

LBAO

17-0651

1/14/17

 

HB 561-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to contributions by employers of part-time employees receiving retirement system pensions and relative to enforcement of provisions concerning retired members working part-time after retirement.

 

FISCAL IMPACT:      [ X ] State              [ X ] County               [ X ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2018

FY 2019

FY 2020

FY 2021

   Appropriation

$0

$0

$0

$0

   Revenue

$0

$0

$0

$0

   Expenditures

$1,620,000

$1,680,000

($310,000)

($320,000)

Funding Source:

  [ X ] General            [ X ] Education            [ X ] Highway           [ X ] Other

 

 

 

 

 

POLITICAL

SUBDIVISONS*:

 

 

 

 

   Revenue

$0

$0

$0

$0

   Expenditures

$5,530,000

$5,720,000

($750,000)

($760,000)

*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 requires Retirement System employers to make contributions based on the unfunded accrued liability and medical benefits employer share for retired members employed on a part-time basis.  The bill also requires the executive director of the Retirement System to suspend a member’s retirement allowance and assess a penalty on a Retirement System employer for exceeding the limitations for part-time employment.    The 2016 valuation payroll is used as the annualized amount, without adjustment for inflation.  Assuming part-time members would continue employment at the current rate, an annual rate of return of 7.25 percent, and an amortization period of a closed 22 year period beginning in FY 2018, the Retirement System’s actuary determined the following:

 

State Pension Only Estimated Expenditure Increase/(Decrease)

 

 

FY 2018

FY 2019

FY 2020

FY 2021

Employees

$1,450,000

$1,500,000

($250,000)

($260,000)

Police

-

-

($60,000)

($60,000)

Fire

-

-

-

-

State Total

$1,450,0000

$1,500,000

($310,000)

($320,000)

 

Political Subdivision Pension Only Estimated Expenditure Increase/(Decrease)

 

 

FY 2018

FY 2019

FY 2020

FY 2021

Employees

$1,880,000

$1,940,000

($300,000)

($300,000)

Teachers

$1,340,000

$1,380,000

($250,000)

($250,000)

Police

$1,540,000

$1,590,000

($170,000)

($180,000)

Fire

$190,000

$200,000

($30,000)

($30,000)

State Total

$4,950,000

$5,110,000

($750,000)

($760,000)

 

State Medical Subsidy Only Estimated Expenditure Increase/(Decrease)

 

 

FY 2018

FY 2019

FY 2020

FY 2021

Employees

$170,000

$180,000

-

-

Police

-

-

-

-

Fire

-

-

-

-

State Total

$170,000

$180,000

-

-

 

Political Subdivisions Medical Subsidy Only Estimated Expenditure Increase/(Decrease)

 

Employees

$60,000

$70,000

-

-

Teachers

$160,000

$170,000

-

-

Police and Fire

$360,000

$370,000

 

 

Political Subdivisions Total

 

$580,000

 

$610,000

 

-

 

-

 

The System states the bill would bring in additional monies in the 2018-2019 biennium which would lower the unfunded actuarial accrued liability over that period faster than expected.  The proposal would 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.  The employer contributions for the 2020-2021 biennium would be reduced as a dollar amount by the reduction in the unfunded liability.  The corresponding reduction in the employer rate for 2020 and beyond would be based on the higher payroll including the part-time members.  

 

The System states it will need to make an estimated $5,000 change to the Pension Gold reporting software.  There would also be an additional unknown administrative cost to track compliance with the 1,300 hour provision.

 

AGENCIES CONTACTED:

New Hamsphire Retirement System