Revision: Dec. 30, 2021, 1:06 p.m.
SB 363-FN - AS INTRODUCED
2022 SESSION
22-2868
10/04
SENATE BILL 363-FN
AN ACT relative to service credit for certain group II retirement eligibility.
SPONSORS: Sen. D'Allesandro, Dist 20; Sen. Bradley, Dist 3; Sen. Cavanaugh, Dist 16; Rep. Goley, Hills. 8; Rep. Umberger, Carr. 2; Rep. Wall, Straf. 6
COMMITTEE: Executive Departments and Administration
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ANALYSIS
This bill allows certain retirement system members to purchase nonqualified service time as group II creditable service in order to reduce certain transition provision requirements for retirement.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
22-2868
10/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Two
AN ACT relative to service credit for certain group II retirement eligibility.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Retirement System; Creditable Service. Amend RSA 100-A:4 by inserting after paragraph VIII the following new paragraph:
IX. Notwithstanding any provision of this section, a member in active service in the retirement system who commenced group II service between January 1, 2001 and December 31, 2011, shall be entitled to receive credit for not less than one year nor more than 4 years of nonqualified service credit within the meaning of section 415 of the United States Internal Revenue Code of 1986, as amended, upon payment by the member of the full actuarial costs of such credit and upon approval of the board, subject to the following:
(a) Credit shall not be granted until the active member has fully paid for the nonqualified service in a lump sum or by installment payments as permitted by the board. The actuarial cost shall be the product of the member’s annual rate of compensation at the time of buy-in, multiplied by the sum of the member and employer contribution rates in effect with respect to the member at the time of buy-in, multiplied by the number of years of nonqualified service credit bought. The member’s payment shall be credited to the member annuity savings fund.
(b) Nonqualified service credit” means time that is not otherwise purchasable under this chapter.
(c) Requests concerning the purchase of nonqualified service credit pursuant to this paragraph shall be limited to 2 such requests per member per calendar year.
(d) Members may only purchase as many years as designated for them under RSA 100-A:5, II(d), which will reduce the minimum age for a regular service retirement to the previous minimum age of 45, but only reduced based on the number of years purchased.
2 New Subparagraph; Service Retirement Benefits; Group II Transition Provisions. Amend RSA 100-A:5, II by inserting after subparagraph (d) the following new subparagraph:
(e) Notwithstanding the transition provisions of subparagraph (d), the member may replace the additional years of service required for minimum retirement age with the years of service that are purchased under RSA 100-A:4, IX. Therefore, allowing the member to retire between the age of 45 and 49 depending upon the years of service purchased. The purchased years under RSA 100-A:4, IX shall have an annual multiplier of 2.5 percent regardless of the percentage listed in subparagraph (d).
3 State Employee Benefits; Vested Deferred Retirees. Amend RSA 21-I:30, VIII to read as follows:
VIII.(a) 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.
(b) If the vested deferred state retiree is a member of group II who is in vested status before January 1, 2012, 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 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 52.5 years of age, and group II members who have not attained vested status prior to January 1, 2012 shall be as provided in the transition provisions in RSA 100-A:5, II(d).
(c) Notwithstanding subparagraph (b), any group II members who have not attained vested status prior to January 1, 2012 shall be eligible prior to 25 years from the date of becoming a member of group II, but after at least 20 years of service in group II, and be at least 45 years of age provided that the member purchased years of service credit pursuant to RSA 100-A:4 equal to the amount of years that the member is required to work under RSA 100-A:5, II(d).
4 Effective Date. This act shall take effect 60 days after its passage.
22-2868
Revised 12/30/21
SB 363-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to service credit for certain group II retirement eligibility.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
| Estimated Increase / (Decrease) | |||
STATE: | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $0 | $30,000 | $30,000 |
Funding Source: | [ X ] General [ X ] Education [ X ] Highway [ X ] Other - Various Funds | |||
POLITICAL SUBDIVISIONS: |
|
|
|
|
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $0 | $210,000 | $210,000 |
*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 allows Group II New Hampshire Retirement System (NHRS) members who commenced service between January 1, 2001 and December 31, 2011 to be entitled to receive credit for not less than one year and not more than four years of non-qualified service. The new provisions are as follows:
The NHRS's actuary assumed of the 1,824 Group II members eligible to purchase non-qualified service that only 5% of those eligible would make the maximum purchase available to them. Using the June 30, 2019 actuarial valuation assumptions of an annual rate of return of 6.75 percent, wage inflation at 2.75 percent a year (2.25% for Teachers), and using the entry-age actuarial cost valuation method, the NHRS’s actuary determined the following increases:
State
Employer Pension Rates as a Percent of Payroll | ||||||
| Current 2022-2023 Rates | Impact of Proposal | Proposed 2022-2023 Rates | |||
Employees | 13.75% | 0.00% | 13.75% | |||
Police | 30.67% | 0.03% | 30.70% | |||
Fire | 29.78% | 0.08% | 29.86% | |||
Expected Employer Dollar Increase (Decrease) Due to Proposal | ||||||
| FY 2022 | FY 2023 | FY 2024 | FY 2025 | ||
Employees | - | - | $0 | $0 | ||
Police | - | - | $30,000 | $30,000 | ||
Fire | - | - | $0 | $0 | ||
TOTAL | - | - | $30,000 | $30,000 | ||
Political Subdivisions
Employer Pension Rates as a Percent of Payroll | ||||||
| Current 2022-2023 Rates | Impact of Proposal | Proposed 2022-2023 Rates | |||
Employees | 13.75% | 0.00% | 13.75% | |||
Teachers | 19.48% | 0.00% | 19.48% | |||
Police | 30.67% | 0.24% | 30.91% | |||
Fire | 29.78% | 0.22% | 30.00% | |||
Expected Employer Dollar Increase (Decrease) Due to Proposal | ||||||
| FY 2022 | FY 2023 | FY 2024 | FY 2025 | ||
Employees | - | - | $0 | $0 | ||
Teachers | - | - | $0 | $0 | ||
Police | - | - | $90,000 | $90,000 | ||
Fire | - | - | $120,000 | $120,000 | ||
TOTAL | - | - | $210,000 | $210,000 | ||
The NHRS actuary projects an increase in the actuarial accrued liability of $12.4 million based on the provisions in the bill. They also note there may be administrative challenges associated with implementing these purchases. Lastly, the NHRS's actuary states there will be additional impact to FY 2025 and there will be an unknown cost to make changes to the NHRS pension software program.
AGENCIES CONTACTED:
New Hampshire Retirement System