HB 537-FN – AS INTRODUCED
2011 SESSION
10/01
HOUSE BILL 537-FN
AN ACT reducing retirement allowances paid by the New Hampshire retirement system.
COMMITTEE: Special Committee on Public Employee Pensions Reform
This bill requires the reduction of retirement allowances paid to members and beneficiaries of the retirement system under RSA 100-A until the funded ratio of the system is at or greater than 100 percent.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0723
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT reducing retirement allowances paid by the New Hampshire retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; Retirement Allowance Reductions. Amend RSA 100-A by inserting after section 57 the following new subdivision:
Retirement Allowance Reductions
100-A:58 Retirement Allowance Reductions.
I. Notwithstanding the method of calculating retirement allowances under the provisions of RSA 100-A:5, 100-A:6, 100-A:8, 100-A:10, or 100-A:19-c - 19-g, the state annuity for members and beneficiaries under this chapter shall be reduced beginning July 1, 2011 so that annual retirement allowances in the ranges as follows are decreased by the percentages indicated:
(a) $1 - 10,000; ˝ of 1 percent
(b) $10,001 - 20,000; 1 percent.
(c) $20,001 - 30,000; 2 percent.
(d) $30,001 - 40,000; 3 1/2 percent.
(e) $40,001 - 50,000; 5 percent.
(f) $50,001 - 60,000; 7 percent.
(g) $60,001 - 70,000; 9 percent.
(h) $70,001 - 80,000; 12 percent.
(i) $80,001 - 100,000; 15 percent.
(j) $100,001 and greater; 20 percent.
II. The percentage reductions required in paragraph I shall be adjusted as follows:
(a) Each year on June 30 the actuary will determine if the funded ratio of the consolidated retirement system has risen 10 percent above the ratio for the previous year. Each year such funded ratio has improved by 10 percent or more the reduction in paragraph I will be lessened by one percentage point or to zero for amounts less than one percent. Any year the funded ratio of the consolidated retirement system is improved less than 10 percent but more than zero, the improvement will be carried forward to the following year to enable the 10 percent improvement reduction. When the reduction has been applied no other improvement percentage will be carried forward. No adjustment shall be made in any year with a decrease in the funded ratio.
(b) Adjustments to the percentage reductions of paragraph I shall be effective as of July 1 in the year
III. The reductions in allowances under paragraph I, as adjusted in paragraph II, shall not be considered as reductions in the liabilities of the system and shall not be used in the calculation of employer contributions under RSA 100-A:16, II and III.
IV. Upon the determination by the actuary that the funded ratio of the consolidated retirement system as of June 30 of any given year is equal to or greater than 100 percent, the reductions under paragraph I shall cease and no further reductions shall be made in any following year.
V. The board is authorized to take actions as necessary to implement the provisions of this section.
2 Effective Date. This act shall take effect 60 days after its passage.
LBAO
11-0723
Revised 02/17/11
HB 537 FISCAL NOTE
AN ACT reducing retirement allowances paid by the New Hampshire retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill may have an indeterminable impact on state, county, and local expenditures. There will be no fiscal impact on state, county, and local revenues.
METHODOLOGY:
The New Hampshire Retirement System states this bill would reduce the annual retirement allowances paid to retirees and beneficiaries under RSA 100-A as of July 1, 2011 by varying percentages based on the amount of the payee’s state annuity. The System further states under this bill, percentage reductions would be decreased by up to 1% if the funded ratio of the System increases by at least 10% from the previous fiscal year and if the funded ratio for any given year is equal to or greater than 100%, annuity reductions would be discontinued. The System did not provide calculations as to the fiscal impact of this bill.
The System states under RSA 100-A:2 the System is “intended for all time to meet the requirements of a qualified pension trust within the meaning of section 401(a)…of the United States internal revenue code of 1986, as amended”. The System further states to be qualified under section 401(a) a defined benefit pension plan must “…provide systematically for the payment of definitely determinable benefits…over a period of years, usually for life, after retirement”. The System states a benefit is not definitely determinable under the terms of a defined benefit pension plan unless each member’s accrued benefit and retirement benefit can be precisely calculated for every point in time, now and in the future, based on the plan’s retirement benefit formula, the member’s earnable compensation and years of creditable service and under this bill, benefits payable after retirement are not definitely determinable.