HB 1535-FN - AS AMENDED BY THE HOUSE

17Feb2022... 0551h

2022 SESSION

22-2655

10/08

HOUSE BILL 1535-FN

AN ACT relative to cost of living adjustments for retirees in the state retirement system.

SPONSORS: Rep. Merner, Coos 7; Rep. Deshaies, Carr. 6; Rep. Guthrie, Rock. 13; Rep. Bordes, Belk. 3

COMMITTEE: Executive Departments and Administration

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AMENDED ANALYSIS

This bill establishes a cost of living adjustment in 2022 to be paid by the retirement system on the first $30,000 of a retired member's or beneficiary's allowance.  The cost of this supplemental allowance is paid from the state general fund.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

17Feb2022... 0551h 22-2655

10/08

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty Two

AN ACT relative to cost of living adjustments for retirees in the state retirement system.

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

1  New Section; Retirement System; Cost of Living Adjustment; Supplemental Allowance.  Amend RSA 100-A by inserting after section 41-e the following new section:

100-A:41-f Annual Cost of Living Adjustment; Supplemental Allowance.

I. Any retired member of the New Hampshire retirement system or any of its predecessor systems, who has been retired for at least 60 months prior to or on July 1, 2022, or any beneficiary of such member who is receiving an allowance, shall be entitled to receive a cost of living adjustment (COLA) as a supplemental allowance, on the retired member's first anniversary date occurring on or after July 1, 2022. The amount of such supplemental allowance shall be 1 1/2 percent of a member's or beneficiary's annual retirement allowance which is $30,000 or less, or otherwise 1 1/2 percent of the first $30,000 of a retired member's or beneficiary's allowance.

II. The total actuarial cost of the supplemental allowance under paragraph I, as determined by the actuary and certified by the board of trustees of the retirement system, shall be terminally funded from the state general fund.  The sum necessary is hereby appropriated to the board of trustees.  The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

III. The supplemental allowance shall become a permanent addition to the beneficiary's base retirement allowance and shall be included in the monthly annuity paid to the retired member, or to the member's beneficiary if the member is deceased and the beneficiary is receiving an allowance under RSA 100-A:8, 100-A:9, 100-A:12, 100-A:13, or similar provisions of predecessor systems.

2  Effective Date.  This act shall take effect July 1, 2022.

LBA

22-2655

Amended 3/7/22

HB 1535-FN- FISCAL NOTE

AS AMENDED BY THE HOUSE (AMENDMENT #2022-0551h)

AN ACT relative to cost of living adjustments for retirees in the state retirement system.

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

METHODOLOGY:

This bill grants a cost of living adjustment (COLA) of 1.5 percent to all retirees or beneficiaries whose annual retirement allowance is $30,000 or less, or otherwise up to the first $30,000, who have been retired for at least 60 months (5 years) prior to or on July 1, 2022. This bill has no impact on employer contributions since the change is to be terminally funded through a State General Fund appropriation.  The COLA shall become a permanent addition to the member or beneficiary's base retirement allowance.

The increase in liabilities due to the COLA was estimated as of June 30, 2019, the latest valuation available, with the COLA being effective after July 1, 2022 (FY 2022) and assuming a 6.75 percent rate of return for 3 years.  Based on these assumptions the cost to "terminally fund" the COLA up-front, rather than through future employer contribution rates, would be $79.1 million in FY 2023 (see table below). This expenditure will be offset by a General Fund appropriation.

*Totals may not add due to rounding.

The NHRS states the expected cost to make these changes to the NHRS pension database software Pension Gold is estimated to be approximately $10,000 in other funds.

AGENCIES CONTACTED:

New Hampshire Retirement System