NHLGC :: NHRS Legislative Activity

The following is a list and brief explanation of retirement laws amended or enacted during the 2007-2011 legislative sessions. To access a copy of a chaptered bill, click on the chapter/bill numbers below. (The following information can also be found in NHMA's Final Legislative Bulletin. Additional information is available on the NHRS website.)

2011 Legislative Session

Transfer of Funds from Retirement Special Account
Chapter 60 (HB 464) transferred $89 million from the New Hampshire Retirement System (NHRS) group II special account to the pension corpus account, known as the state annuity accumulation fund. (Note: Chapter 224 (HB 2) eliminated the special account for both group I and group II employees and transferred the entire balance to the corpus.) E.D. May 11, 2011.

Retirement Reform
Chapter 224, sections 160 – 190 (HB 2). Numerous reforms to the NHRS were enacted, affecting new hires, non-vested members (members with less than ten years of service), vested members (members with more than ten years of service), and/or retirees. These reform measures are summarized on the table in Appendix 2 of the 2011 Final Legislative Bulletin, which indicates each reform measure by chapter section and the employee categories affected. Most of the reform measures are effective July 1, 2011, with the exception of those that directly affect a member’s pension computation, in which case the effective date is January 1, 2012. The reform measures include:

Changing the definition of earnable compensation by limiting the amount of extra and special duty pay included in the pension computation for current employees and eliminating extra and special duty pay in the pension computation for new hires.
Changing the basis for calculating the average final compensation from the highest three years to the highest five years. NHMA POLICY.
Capping the initial pension benefit for non-vested members and new hires at 85% of average final compensation or $120,000, whichever is lower.
Increasing group I (teachers and employees) retirement age for new hires from 60 to 65.
Increasing group II (police and firefighters) retirement age for new hires from 45 to 52½, with 25 years of service; and for current group II non-vested members, establishing a retirement age of 46 to 49 years, with 21 to 24 years of service (depending on their years of service as of January 1, 2012). There is no change in retirement age or years of service for vested members. NHMA POLICY.
Providing that, if and when employer contribution rates drop to the level of employee contribution rates, any subsequent rate increases or decreases will be shared equally between employers and employees. NHMA POLICY.
Changing the composition of the board of trustees by eliminating the two legislative trustees, reducing the employee trustees from eight to four, increasing the employer trustees from one to four, and adding two additional non-member (i.e., public) trustees. Employer trustees are nominated by the New Hampshire Municipal Association, the New Hampshire School Boards Association, the New Hampshire Association of Counties, and the State of New Hampshire.
Eliminating the 4% escalator in the medical subsidy, thus freezing that benefit at the current level.
Requiring mandatory membership in the NHRS for newly appointed positions created by political subdivisions after July 1, 2011.
Limiting part-time employment of a retired member to 32 hours per week, or 1,300 hours within five consecutive months in any 12-month period.
Lowering the interest rate credited to members’ individual accounts.
Eliminating the special account and transferring the balance to the pension corpus.
Establishing two study committees: one to study the establishment of a voluntary defined contribution plan, and the other to study matters related to disability retirement, cost-of-living adjustments, and medical subsidies. Both committees are required to issue reports by November 1, 2011.
Repealing the ability of both group I and group II members to purchase credit for out-of-state service.
Requiring the board of trustees to recertify employer rates for fiscal years 2012 and 2013, based on the June 30, 2010 valuation assumptions, as soon as possible after July 1, 2011.

State Retirement Contribution
Chapter 224, section 191 (HB 2). The State contribution toward retirement costs for teachers, police and firefighters is $3.5 million for fiscal year 2012 and $0 for fiscal year 2013. Enactment of retirement reform provisions was used to justify the significant reduction and eventual elimination of the state contribution towards these costs. See the section above on Retirement Reform for more details.

Employer Assessment for Excess Pension Benefits (a.k.a Spiking)
Chapter 230 (HB 462) amends the formula for computing the employer assessment for excess pension benefits by providing a credit for funds provided through the normal employer contribution, and provides a four-year phase-in for the assessment. The bill also extends the effective date of the assessment from July 1, 2011 to July 1, 2012, but makes the assessment applicable to any contracts or collective bargaining agreements entered into on or after January 1, 2010. Finally, the bill requires the NHRS to provide an interactive estimator (calculator) on its website to assist employers in determining the impact of the spiking assessment. E.D. July 1, 2012 for the assessment and phase-in; June 30, 2011 for other provisions.

Definition of Part-Time Employment for New Hampshire Retirement System Purposes Chapter 248 (SB 75) defines part-time employment for retirees drawing an NHRS pension as 32 hours or less in a normal calendar week. An exception is made for retired members working more than 32 hour per week provided they do not exceed 1,300 hours within five consecutive months in any 12-month period. (Note: Chapter 224 (HB 2) contains an identical provision.) E.D. July 13, 2011.

2010 Legislative Session

Effective Date for 'Spiking' Assessments
Chapter 357 (SB 504) extends from July 1, 2010, to July 1, 2011, the effective date for implementation of the pension penalty assessment resulting from payment of excess benefits (a.k.a. spiking) as enacted in Chapter 300:35, Laws of 2008. E.D. July 20, 2010.

Retiree Medical Trust
Chapter 379 (Senate Joint Resolution SJR 2) endorses the establishment of a statewide retiree medical trust for public employee healthcare benefits after retirement, as recommended in the final report issued by the Commission to Propose a Retiree Health Care Benefits Funding Model. The trust will be sponsored and administered by public employee associations and/or unions, and will be a defined contribution plan. Participation in the trust will be elective by option of an employee group, such as a bargaining unit, with employee contributions made on a pre-tax basis. Contributions by employers will be voluntary as may be negotiated, and may include contributions as a percent of compensation, lump sum payments, or the transfer of the cash equivalent of accumulated leave time.

Medical Benefits for State Retirees
Chapter 104 (HB 1668) requires group II state employees hired after July 1, 2010, to have 20 years of creditable state service in order to receive state retiree medical benefits. E.D. July 1, 2010.

Biennial Budget Adjustments
Special Session Chapter 1 (Special Session HB 1, sections 102 and 103) provides a cost-of-living adjustment (COLA) and other supplemental payments to eligible state and local retirees or their beneficiaries costing approximately $60 million to be paid from the retirement system’s special account. E.D. June 10, 2010.

2009 Legislative Session

Effective Date for 'Spiking' Assessments
Chapter 4 (HB 223) changes the effective date from August 29, 2008 to July 1, 2010 for the New Hampshire Retirement System (NHRS) to assess employers for additional contributions due to end-of-career payments to employees—the so-called “spiking” provision that was enacted in Chapter 300, Laws of 2008 (HB 1645). Chapter 4 also includes a provision authorizing a governing body, upon written request to the Commissioner of the Department of Revenue Administration (DRA), to remove any appropriation voted to fund anticipated spiking costs from the municipality’s 2009 tax rate. Effective Date (E.D.) August 29, 2008 (the effective date of the spiking provision in Chapter 300, Laws of 2008).

Eligibility for Medical Benefits for Certain Group I Teachers and Employees
Chapter 12 (HB 633) clarifies language enacted last year relative to medical subsidy payments provided by the NHRS to group I teachers and employees who retired prior to the age of 60, but otherwise met all the eligibility requirements for medical subsidy benefits. E.D. April 17, 2009.

State Retirement Contribution
Chapter 143 (HB 1) and Chapter 144 (HB 2) The budget reduces the state share of the employer contribution for teachers, police, and fire from 35 percent to 30 percent in fiscal year 2010 and to 25 percent in fiscal year 2011, increasing the local employer contribution rates from 65 percent to 70 percent and 75 percent. This will result in additional costs to cities, towns, school districts and counties of approximately $27 million over the biennium. This downshift of state costs is an unfunded mandate in violation of Part I, Article 28-a of the New Hampshire Constitution.
E.D. July 1, 2009.

State Medical Subsidy Liability to Political Subdivisions
Chapter 144 (HB 2) The budget eliminates a $17 million state liability to political subdivisions in the NHRS medical subsidy account. Recent changes to the GASB accounting standards required NHRS to separate the State and political subdivision medical accounts. This accounting procedure brought to light the fact that political subdivisions have been subsidizing the State’s contribution to the account. Based on the NHRS audited financial statements, the State owes political subdivisions $17 million. There will be an increase in the employer contribution rate for employees due to the elimination of this state liability. E.D. July 1, 2009.

Elimination of State Contribution on Extra or Special Duty Pay
Chapter 144 (HB 2) requires employers to report to the NH Retirement System all compensation for group II members that is attributable to extra or special duty pay, with the employer responsible for the full amount of the retirement contribution. The employer shall charge the entity for whom the extra or special duty is being provided the full amount of the retirement contribution attributed to that pay. E.D. July 1, 2009.

Elimination of Gainful Occupation Reductions for Certain Group II Members
Chapter 158 (HB 420) eliminates reductions to NHRS retirement allowances for gainful occupation for group II members on accidental disability status, provided that years of service and age requirements are met. E.D. July 1, 2009.

Eligibility for Medical Benefits for Vested Deferred Group I Members
Chapter 164 (HB 685) clarifies language relative to medical subsidy payments provided by the NHRS to group I teachers and employees who were in a vested deferred retirement status, but otherwise met all the eligibility requirements for the medical subsidy benefits. E.D. July 8, 2009.

Retirement 'Spiking' Provision Revisited
Chapter 289 (HB 641) requires the NHRS to develop a specific methodology to determine employer assessments for excess benefits paid to retirees, taking into account the normal employer contributions and the employee contributions paid on such compensation, and to report such methodology to the legislature no later than December 1, 2009. The chapter also requires employers to report annually to NHRS the annual base pay paid to each member of the system. E.D. July 29, 2009. Finally, the chapter amends the spiking application provision enacted last year in Chapter 300:34 by including an exception for contracts that continue as a result of “operation of law or the status quo doctrine.” E.D. July 1, 2010. See related chapters: Chapter 4 (HB 223) and Chapter 304 (SB 108).

Committee to Study Retirement 'Spiking' Costs and 'Earnable Compensation'
Chapter 304 (SB 108) establishes a legislative study committee with two senators and four house members to study the laws requiring the imposition of assessments to retirement system employers for excess benefits paid to retirees, including “earnable compensation.” The study committee shall issue an interim report on or before November 1, 2009 and a final report on or before November 1, 2010. The chapter also requires the NHRS to report to the committee by November 1, 2009 relative to death benefits under RSA 100-A. E.D. July 31, 2009.

Retirement Death Benefits
Chapter 324 (SB 200) allows beneficiaries of state retirement system members who die while performing qualified military service to receive ordinary death benefits as provided for in the federal Heroes Earnings Assistance and Relief Tax Act of 2008, and continues the benefits after the remarriage of the surviving spouse. E.D. August 7, 2009.

Retirement Benefits for Surviving Spouse
Chapter 327 (SB 160) amends the retirement system statute to allow the continued receipt of retirement benefits by the surviving spouse of a member who is killed or dies in the performance of duty, even if that surviving spouse remarries. E.D. October 20, 2009.

2008 Legislative Session

Refer to the New Hampshire Municipal Association's 2008 Final Legislative Bulletin for an overview of the 2008 session; NHRS-related laws are discussed starting on page 8.

HB 1645, Chapter 300, Laws of 2008
HB 1645, Chapter 300, Laws of 2008
Retirement "Spiking" Calculator
NHMA Summary of HB 1645
NHMA Testimony on HB 1645

HB 1643, Chapter 86, Laws of 2008
HB 1643, Chapter 86, Laws of 2008
HB 1643 Extension of Retirement Date for Group I Medical Subsidy Benefits
NHMA Testimony on HB 1643

2007 Legislative Session

HB 653, Chapter 268, Laws of 2007
HB 653 (Chapter 268, Laws of 2007) made changes to the actuarial methodology for valuing the pension funding ratio from the open group aggregate method to the more acceptable entry age normal method. This legislation also discontinued funding the special account (used primarily to pay for cost-of-living increases and the medical subsidy) with investment earnings until such time as the pension fund reaches an 85 percent funding level, raised the trigger rate for this gain-sharing from ½ percent above the assumed rate of return to 10.5 percent, added a municipal employer representative to the NHRS Board of Trustees and made other changes to the NHRS laws.

HB 876, Chapter 355, Laws of 2007
HB 876 (Chapter 355, Laws of 2007) created a Commission to study the long-term viability of the NHRS, with the charge to specifically address the following issues:

Study the history of funding, benefits, and investment results of the New Hampshire retirement system.
Review the structure and governance of the New Hampshire retirement system.
Analyze the current financial status of the retirement system, and the challenges facing the system in the future.
Assess the changes to general accounting standards and their potential effect on the retirement system.
Make recommendations for ensuring the long-term viability of the retirement system, including an appropriate funding methodology.
Design a sustainable and affordable cost of living increase for plan participants, which may be adopted by the legislature as part of the retirement system.
Study the limitation on maximum benefit amounts.
Study the issue of equity in contribution rates between employers and employees.
Study other matters deemed necessary by the commission.

Commission to Study the Long Term Viability of the New Hampshire Retirement System,
Final Report, January 1, 2008

Prior to the passage of HB 876, NHMA and other groups participated in a study of the issue as part of what become known as the Retirement Working Group. Contact NHMA staff to learn more.