Bill Text: NH HB1427 | 2018 | Regular Session | Amended
Bill Title: Relative to the reduction in the calculation of state retirement system annuities at age 65.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2018-05-03 - No Pending Motion; 05/03/2018 Senate Journal 16 [HB1427 Detail]
Download: New_Hampshire-2018-HB1427-Amended.html
HB 1427-FN - AS AMENDED BY THE SENATE
6Mar2018... 0568h
04/19/2018 1472s
2018 SESSION
18-2511
10/08
HOUSE BILL 1427-FN
AN ACT relative to the reduction in the calculation of state retirement system annuities at age 65.
SPONSORS: Rep. Freeman, Hills. 12
COMMITTEE: Executive Departments and Administration
-----------------------------------------------------------------
AMENDED ANALYSIS
This bill provides for the application of the reduction of a retiree’s annuity at the member’s full retirement age under the federal Social Security system.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
6Mar2018... 0568h
04/19/2018 1472s 18-2511
10/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eighteen
AN ACT relative to the reduction in the calculation of state retirement system annuities at age 65.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Service Retirement Benefits; Reduction Age. Amend RSA 100-A:5, I(b) to read as follows:
(b) Upon service retirement, an employee member or teacher member of group I shall receive a service retirement allowance which shall consist of a member annuity which shall be the actuarial equivalent of the member’s accumulated contributions at the time of retirement, and a state annuity. Prior to the member’s attainment of [age 65] the member’s full retirement age for Social Security, the state annuity, together with the member annuity, shall be equal to 1/60 of the member’s average final compensation multiplied by the number of years of creditable service. After attainment of [age 65] the member’s full retirement age for Social Security, the state annuity, together with the member annuity, shall be equal to 1/66 of the member’s average final compensation multiplied by the number of years of creditable service. Provided, however, that a group I member who commenced service on or after July 1, 2011 shall not receive a service retirement allowance until attaining the age of 65; but may receive a reduced allowance after age 60 if the member has at least 30 years of creditable service where the allowance shall be reduced, for each month by which the date on which benefits commence precedes the month after which the member attains 65 years of age, by 1/4 of one percent.
2 Retirement System; Ordinary Disability Retirement Benefits; Reduction Age. Amend RSA 100-A:6, I(b)(1)(A) and (B) to read as follows:
(A) Prior to the member’s attainment of [age 65] the member’s full retirement age for Social Security, the state annuity, together with the member annuity, shall be equal to 1/60 of the member’s average final compensation at the time of his or her ordinary disability retirement multiplied by the number of years of creditable service at the time of his or her ordinary disability retirement;
(B) After attainment of [age 65] the member’s full retirement age for Social Security, the state annuity, together with the member annuity, shall be equal to 1/66 of the member’s average final compensation at the time of his or her ordinary disability retirement multiplied by the number of years of creditable service at the time of his or her ordinary disability retirement;
3 Retirement System; Accidental Disability Retirement Benefits; Reduction Age. Amend RSA 100-A:6, I(d)(1)(A) and (B) to read as follows:
(A) Prior to the member’s attainment of [age 65] the member’s full retirement age for Social Security, the state annuity, together with the member annuity, shall be equal to 1/60 of the member’s average final compensation at the time of his or her accidental disability retirement multiplied by the number of years of creditable service at the time of his or her accidental disability retirement;
(B) After attainment of [age 65] the member’s full retirement age for Social Security, the state annuity, together with the member annuity, shall be equal to 1/66 of the member’s average final compensation at the time of his or her accidental disability retirement multiplied by the number of years of creditable service at the time of his or her accidental disability retirement;
4 Effective Date. This act shall take effect 60 days after its passage.
18-2511
Amended 3/27/18
HB 1427-FN- FISCAL NOTE
AS AMENDED BY THE HOUSE (AMENDMENT #2018-0568h)
AN ACT relative to membership in the retirement system for certain officials.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
|
| |||
| Estimated Increase / (Decrease) | |||
STATE: | FY 2019 | FY 2020 | FY 2021 | FY 2022 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $2,664 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ X ] Education [ X ] Highway [ X ] Other | |||
POLITICAL |
|
|
|
|
SUBDIVISIONS*: |
|
|
|
|
Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
*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 school districts, by action of their governing bodies, to exempt their superintendent of schools, at the time of initial hiring or appointment, from compulsory membership in the New Hampshire Retirement System (NHRS). Upon approval of such exemption, a superintendent of schools who was enrolled as a member in the NHRS within the 2 year period preceding the effective date of this bill may make a request to the governing body to withdraw from such membership. A superintendent who ceases to be a member of the NHRS shall not be permitted to re-enroll as a member for as long as he or she holds the same position with such employer. School districts that exempt the superintendent of schools from compulsory membership in the retirement system shall pay to the system an unfunded accrued liability (UAAL) payment applicable to the compensation paid for the superintendent of schools.
The Department of Education states that superintendents are Group I employees and the total compensation paid for superintendents statewide for 2017-2018 was $11,400,649, excluding 2 superintendents whom are paid an hourly rate.
The Group I employer rate for local political subdivision employees in effect through June 30, 2019 is 11.38%. The table below provides an estimated impact if all superintendents were exempt from the NHRS and superintendent compensation increases 3% annually. The employer rates are assumed to remain the same.
Group I Employer Rate Subdivision | Employer Contributions FY 2019 Estimate | Employer Contributions FY 2020 Estimate (+3%) | Employer Contributions FY 2021 Estimate (+3%) | Employer Contributions FY 2022 Estimate (+3%) | ||||
UAAL |
| 8.92% | $1,016,938 | $1,047,446 | $1,078,869 | $1,111,236 | ||
Normal Cost |
| 2.16% | $246,254 | $253,642 | $261,251 | $269,088 | ||
Medical Subsidy | 0.30% | $34,202 | $35,228 | $36,285 | $37,373 | |||
TOTAL |
| 11.38% | $1,297,394 | $1,336,316 | $1,376,405 | $1,417,697 | ||
|
|
|
|
|
|
| ||
|
|
| FY 2019 | FY 2020 | FY 2021 | FY 2022 | ||
Statewide Superintendent Payroll | $11,400,649 | $11,742,668 | $12,094,948 | $12,457,797 |
The UAAL contribution, with the rate at the current level and applied to the increasing payroll, will continue to be paid to NHRS:
Year Continued UAAL Contribution
2019 $1,016,938
2020 $1,047,446
2021 $1,078,869
2022 $1,111,235
Local expenditures for the Normal Cost and Medical Subsidy, assuming current rates remain the same, would decrease as follows:
Year Normal Cost + Medical Subsidy
2019 $280,456
2020 $288,870
2021 $297,536
2022 $306,462
The NHRS states the local expenditure is indeterminable since the changes are expected to have a small impact on the actuarial status of the system and employer contribution rates (i.e. increase of less than .01% of payroll). Each superintendent removed will reduce the covered payroll used to amortize the Medical Subsidy, and therefore, increase the amortization rate. The System states it will need to make an estimated $2,664 change to the Pension Gold software.
AGENCIES CONTACTED:
Department of Education and New Hampshire Retirement System