HB 460-FN – AS INTRODUCED

2011 SESSION

11-0363

10/04

HOUSE BILL 460-FN

AN ACT relative to the retirement age for group II members.

SPONSORS: Rep. Hawkins, Hills 18; Rep. Kurk, Hills 7; Rep. Reagan, Rock 1; Sen. Bradley, Dist 3; Sen. Boutin, Dist 16; Sen. White, Dist 9

COMMITTEE: Special Committee on Public Employee Pensions Reform

ANALYSIS

This bill increases the retirement age for group II retirement system members who begin service or who are not in vested status on and after July 1, 2011.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

11-0363

10/04

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eleven

AN ACT relative to the retirement age for group II members.

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

1 State Employees; Group Insurance Benefits; Group II. Amend RSA 21-I:30, III to read as follows:

III. 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. If the vested deferred state retiree is a member of group II who is in vested status before July 1, 2011, 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 or is not in vested status 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 55 years of age.

2 Service Retirement; Group II. Amend RSA 100-A:5, II to read as follows:

II. Group II Members.

(a) Any group II member in service, who is in vested status before July 1, 2011, who has attained age 45 and completed 20 years of creditable service, or who has attained age 60 regardless of the number of years of creditable service, and a group II member who commenced service or is not in vested status on or after July 1, 2011, who has attained age 55 and completed 25 years of creditable service, or who has attained age 60 regardless of the number of years of creditable service, may retire on a service retirement allowance upon written application to the board of trustees setting forth at what time not less than 30 days nor more than 90 days subsequent to the filing thereof the member desires to be retired, notwithstanding that during such period of notification the member may have separated from service.

(b) Upon service retirement, a group II member shall receive a service retirement allowance which shall consist of:

(1) A member annuity which shall be the actuarial equivalent of his accumulated contributions at the time of retirement; and

(2) For members who are in vested status before July 1, 2011, a state annuity which, together with his or her member annuity, shall be equal to 2-1/2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service not in excess of 40 years, or for members who commenced service or are not in vested status on or after July 1, 2011, a state annuity which, together with his or her member annuity, shall be equal to 2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service not in excess of 50 years.

(c)(1) Notwithstanding any provision of RSA 100-A to the contrary, any group II member who is in vested status before July 1, 2011 and has retired on or after the effective date of this subparagraph after attaining the age of 45 with at least 20 years of creditable service, and any group II member who commenced service or is not in vested status on or after July 1, 2011 and has retired on or after the effective date of this subparagraph after attaining the age of 55 with at least 25 years of creditable service, shall receive a minimum annual service retirement allowance of $10,000. If such group II member has elected to convert the retirement allowance into an optional allowance for the surviving spouse under RSA 100-A:13, the surviving spouse shall be entitled to a proportional share of the $10,000.

(2) [Repealed.]

(3) [Repealed.]

3 Ordinary Disability Retirement; Group II. Amend RSA 100-A:6, II(b) to read as follows:

(b) Upon ordinary disability retirement, the group II member shall receive an ordinary disability retirement allowance which shall consist of: a member annuity which shall be the actuarial equivalent of his accumulated contributions at the time of his or her ordinary disability retirement; and a state annuity which, together with his or her member annuity, for members who are in vested status before July 1, 2011, shall be equal to 2-1/2 percent of his or her average final compensation at the time of [his] ordinary disability retirement multiplied by the number of years of his or her creditable service not in excess of 40 at the time of [his] ordinary disability retirement, or for members who commenced service or are not in vested status on or after July 1, 2011, shall be equal to 2 percent of his or her average final compensation at the time of ordinary disability retirement multiplied by the number of years of his or her creditable service not in excess of 50 at the time of ordinary disability retirement, provided, however, that such allowance shall not be less than 25 percent of the member’s final compensation at the time of his or her disability retirement.

4 Accidental Disability Retirement; Group II. Amend RSA 100-A:6, II(d) to read as follows:

(d) Upon accidental disability retirement, the group II member shall receive an accidental disability retirement allowance equal to 2/3 of his or her average final compensation at the time of [his] disability retirement.

(1) For members who are in vested status before July 1, 2011, any group II member who has more than 26-2/3 years of service, a supplemental disability retirement allowance shall be paid. Such supplement shall be equal to 2-1/2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service in excess of 26-2/3 but not in excess of 40 years.

(2) For members who commenced service or are not in vested status on or after July 1, 2011, any group II member who has more than 33-1/3 years of service, a supplemental disability retirement allowance shall be paid. Such supplement shall be equal to 2 percent of his or her average final compensation multiplied by the number of years of his or her creditable service in excess of 33-1/3 but not in excess of 50 years.

(3) An accidental disability retirement allowance together with a supplemental disability retirement allowance, as provided in this subparagraph, shall not exceed 100 percent of the disability retiree’s average final compensation.

5 Vested Deferred Retirement; Group II. Amend RSA 100-A:10, II(b) to read as follows:

(b) For members who are in vested status before July 1, 2011, upon the member’s attainment of age 45, provided the member would then have completed 20 years of creditable service, otherwise the subsequent date on which such 20 years would have been completed, or for members who commenced service or are not in vested status on or after July 1, 2011, upon the member’s attainment of age 55, provided the member would then have completed 25 years of creditable service, otherwise the subsequent date on which such 25 years would have been completed, or at any time after age 60, a group II member who meets the requirement of subparagraph (a) may make application on a form prescribed by the board of trustees and receive a vested deferred retirement allowance which shall consist of: (1) A member annuity which shall be the actuarial equivalent of accumulated contributions on the date the member’s retirement allowance commences; and (2) A state annuity which, together with the member annuity, shall be equal to a service retirement allowance based on the member’s average final compensation and creditable service at the time the member’s service is terminated.

6 Split Benefits; Minimum Age. Amend RSA 100-A:19-b, II to read as follows:

II. For a member who is in vested status before July 1, 2011 and, who has completed 20 or more years of combined creditable service, one year shall be deducted from age 60 for each year of creditable group II service, provided that the age shall not be less than 45 years. For a member who commenced service or is not in vested status on or after July 1, 2011 and, who has completed 25 or more years of combined creditable service, one year shall be deducted from age 60 for each year of creditable group II service, provided that the age shall not be less than 55 years.

7 Split Benefits; Reduced Early Retirement; Minimum Age. Amend RSA 100-A:19-d to read as follows:

100-A:19-d Reduced Early Retirement. Notwithstanding any other provision of law, any retirement system member who has creditable service in both group I and group II with at least 10 years combined creditable service, and who has attained an age which is at least 45 for members who are in vested status with group II service prior to July 1, 2011 or at least 55 for members who commenced group II service or are not in vested status on or after July 1, 2011 and is within 10 years of the minimum age set forth in RSA 100-A:19-b, may elect to retire and have benefits commence immediately as a reduced split-benefit service retirement allowance. Application shall be as provided in RSA 100-A:5, I(c). The allowance shall be determined as a split-benefit service retirement allowance in accordance with RSA 100-A:19-c, and the total combined split-benefit service allowance shall be reduced by the percentages shown in RSA 100-A:5, I(c), based on the total combined length of creditable service, for each month by which the date on which benefits commence precedes the month after which the member attains the minimum age set forth in RSA 100-A:19-b.

8 Financing; Group II Member Payroll Deduction. Amend RSA 100-A:16, I(a) to read as follows:

(a) The member annuity savings fund shall be a fund in which shall be accumulated the contributions deducted from the compensation of members to provide for their member annuities together with any amounts transferred thereto from a similar fund under one or more of the predecessor systems. Such contribution shall be, for each member, dependent upon the member's employment classification at the rate determined in accordance with the following table:

Employees of employers other than the state 5.00

Employees of the state hired on or before June 30, 2009 5.00

Employees of the state hired after June 30, 2009 7.00

Teachers 5.00

Permanent Policemen 9.30

Permanent Firemen 9.30

The board of trustees shall certify to the proper authority or officer responsible for making up the payroll of each employer, and such authority or officer shall cause to be deducted from the compensation of each member, except group II members who are in vested status before July 1, 2011 with creditable service in excess of 40 years or group II members who commenced service or are not in vested status on or after July 1, 2011 with creditable service in excess of 50 years, as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), on each and every payroll of such employer for each and every payroll period, the percentage of earnable compensation applicable to such member. No deduction from earnable compensation under this paragraph shall apply to any group II member who is in vested status before July 1, 2011 with creditable service in excess of 40 years, or group II member who commenced service or is not in vested status on or after July 1, 2011 with creditable service in excess of 50 years, as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), and this provision for such members shall not affect the method of determining average final compensation as provided in RSA 100-A:1, XVIII. In determining the amount earnable by a member in a payroll period, the board may consider the rate of compensation payable to such member on the first day of a payroll period as continuing throughout the payroll period and it may omit deduction from compensation for any period less than a full payroll period if such person was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as shall not exceed 1/10 of one percent of the annual earnable compensation upon the basis of which such deduction is made. The amounts deducted shall be reported to the board of trustees. Each of such amounts, when deducted, shall be paid to the retirement system at such times as may be designated by the board of trustees and credited to the individual account, in the member annuity savings fund, of the member from whose compensation the deduction was made.

9 Effective Date. This act shall take effect July 1, 2011.

LBAO

11-0363

Revised 06/22/11

HB 460 FISCAL NOTE

AN ACT relative to the retirement age for group II members.

FISCAL IMPACT:

The New Hampshire Retirement System states this bill will decrease state general fund expenditures by $8,958,065 in FY 2014 and by $9,784,898 in FY 2015 and will decrease local expenditures by $9,321,560 in FY 2014 and by $10,170,342 in FY 2015.

METHODOLOGY:

The New Hampshire Retirement System (NHRS) states this bill increases the retirement age for group II retirement system members who begin service or are not in vested status on and after July 1, 2011 from 45 to 55 and increases the required years of creditable service from 20 to 25 years. This bill also changes the Group II benefit multiplier for new members hired on or after July 1, 2011 and members with non-vested status as of July 1, 2011 from 2.5 percent to 2.0 percent. The NHRS assumes payroll will increase at the rate of 4.5% annually from the total payroll as of June 30, 2010 and that the rate of return will be 8.5% annually. The NHRS assumes rates set for FY 2012 and 2013 will remain in place. The NHRS estimates state general fund expenditures will be reduced in FY 2014 and FY 2015 as follows:

The NHRS estimates local savings as follows:

The Department of Administrative Services states this bill may decrease state expenditures by an indeterminable amount in FY 2012 through FY 2015. The Department states to the extent Group II employees who would have been eligible for health benefits after 20 years of creditable service at 45 years of age, will only be eligible after 25 years of creditable service at 55 years of age, future state expenditures will be reduced. The Department states it is unlikely employees not currently vested would meet the eligibility criteria for state paid retiree medical benefits before FY 2015. However, because the Department is unable to determine the number of years of creditable service on an employees-specific basis, the actual fiscal impact cannot be determined at this time. The Department states any reductions in expenditures will be approximately 40% state general funds, 16 percent federal funds, and 44 percent other funds.