Bill Text: NH HB1647 | 2024 | Regular Session | Amended
Bill Title: Relative to the calculation of group II retirement benefits in the retirement system.
Spectrum: Moderate Partisan Bill (Democrat 5-1)
Status: (Passed) 2024-07-26 - Signed by Governor Sununu 07/19/2024; Chapter 253; eff. 06/30/2024 [HB1647 Detail]
Download: New_Hampshire-2024-HB1647-Amended.html
HB 1647-FN-A - AS AMENDED BY THE SENATE
22Feb2024... 0326h
11Apr2024... 1134h
05/22/2024 1977s
2024 SESSION
24-3143
10/06
HOUSE BILL 1647-FN-A
AN ACT relative to the calculation of group II retirement benefits in the retirement system.
SPONSORS: Rep. Leishman, Hills. 33; Rep. D. McGuire, Merr. 14; Rep. Grote, Rock. 24; Rep. Goley, Hills. 21; Rep. Shurtleff, Merr. 15; Sen. Soucy, Dist 18
COMMITTEE: Executive Departments and Administration
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ANALYSIS
This bill modifies the group II members retirement annuity multipliers for the New Hampshire retirement system. The bill makes an appropriation to the retirement system therefor.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
22Feb2024... 0326h
11Apr2024... 1134h
05/22/2024 1977s 24-3143
10/06
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT relative to the calculation of group II retirement benefits in the retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Group II Service Retirement Benefits. 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 January 1, 2012, who has attained age 45 and completed 20 years of creditable service, and any group II member who commenced service on or after July 1, 2011 who has attained age 50 and completed 25 years of creditable service, and group II members who have not attained vested status prior to January 1, 2012 as provided in the transition provisions in RSA 100-A:5, II(d), or any group II member in service 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. Provided, however, that a group II member who commenced service on or after July 1, 2011 shall not receive a service retirement allowance until attaining the age of 52.5; but may receive a reduced allowance after age 50 if the member has at least 25 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 52.5 years of age, by 1/4 of one percent.
(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 or her accumulated contributions at the time of retirement; and
(2) For members who are in vested status before January 1, 2012, 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 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 42.5 years, and group II members who have not attained vested status prior to January 1, 2012 shall be as provided in the transition provisions in RSA 100-A:5, II(d) with the maximum number of years of creditable service not in excess of [40.5 years] the limits under RSA 100-A:6-a, but only for group II members in service who have attained age 60 regardless of the number of years of creditable service, or who work up to their full age and service requirements and retire under service retirement. If a member retires prior to reaching full age and service requirements, then their annuity multiplier remains the same as their first 15 years of creditable service.
(3) [Repealed.]
(c)(1) Notwithstanding any provision of RSA 100-A to the contrary, any group II member who is in vested status before January 1, 2012 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 on or after July 1, 2011 and retires after the effective date of this subparagraph after attaining the age of 50 with at least 25 years of creditable service, and group II members who have not attained vested status prior to January 1, 2012 who qualify as provided in the transition provisions in RSA 100-A:5, II(d), 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.]
(d) Active group II members who commenced service prior to July 1, 2011 and who have not attained vested status prior to January 1, 2012 shall be subject to the following transition provisions for years of service required for regular service retirement, the minimum age for regular service retirement, and for the first 15 years of creditable service, the multiplier used to calculate the retirement annuity, which shall be applicable on, or after January 1, 2012 according to the following table:
Creditable service on Minimum years Minimum Annuity
January 1, 2012 of service age attained multiplier
(1) Less than 4 years 24 age 49 2.1 % *
(2) At least 4 years 23 age 48 2.2% *
but less than 6 years
(3) At least 6 years but 22 age 47 2.3% *
less than 8 years
(4) At least 8 years but 21 age 46 2.4% *
less than 10 years
* The annuity multiplier applied to creditable service earned beyond 15 years of creditable service, shall be 2.5 percent, but only for group II members in service who have attained age 60 regardless of the number of years of creditable service, or who work up to their full age and service requirements and retire under service retirement. If a member retires prior to reaching full age and service requirements, then their annuity multiplier remains the same as their first 15 years of creditable service.
(e) Notwithstanding the transition provisions of subparagraph (d), the member may replace the additional years of service required for minimum retirement age with the years of service that are purchased under RSA 100-A:4, IX. Therefore, allowing the member to retire between the age of 45 and 49 depending upon the years of service purchased. The purchased years under RSA 100-A:4, IX shall have an annual multiplier of 2.5 percent regardless of the percentage listed in subparagraph (d).
2 New Hampshire Retirement System; Disability Retirement Benefits. 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 or her 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 January 1, 2012, shall be equal to 2 1/2 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 40 at the time of ordinary disability retirement, or for members who commenced service 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 42.5 at the time of ordinary disability retirement, and group II members who have not attained vested status prior to January 1, 2012, shall be as provided in the transition provisions in RSA 100-A:5, II(d) with the maximum number of years of creditable service not in excess of [40.5 years] the limits under RSA 100-A:6-a 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. Members who retire upon ordinary disability or qualify for accidental death benefits as outlined in RSA 100-A:8 shall not be subject to the full age and service requirements listed under RSA 100-A:5, II(d).
3 Appropriation; Retirement System; Group II Change. The sum of $26,000,000 for the biennium ending June 30, 2025, is hereby appropriated to the retirement system for deposit in the state annuity accumulation fund for payment against the cost of the amendment to the group II calculation of service and disability retirement benefits by this act. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.
4 Effective Date. This act shall take effect June 30, 2024.
24-3143
Amended 4/16/24
HB 1647-FN-A- FISCAL NOTE
AS AMENDED BY THE HOUSE (AMENDMENT #2024-1134h)
AN ACT relative to the calculation of group II retirement benefits in the retirement system.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
|
| |||||
Estimated State Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | $0 | $0 | $0 | ||
Revenue Fund(s) | None | |||||
Expenditures | $0 | $53,600,000 and Indeterminable administrative costs to Retirement System | $910,000 | $940,000 | ||
Funding Source(s) | General Fund and Highway Fund and Various Agency Funds | |||||
Appropriations | $0 | $53,600,000 | $0 | $0 | ||
Funding Source(s) | General Fund | |||||
• Does this bill provide sufficient funding to cover estimated expenditures? [X] N/A • Does this bill authorize new positions to implement this bill? [X] N/A | ||||||
| ||||||
Estimated Political Subdivision Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | $0 | $0 | $0 | ||
Expenditures | $0 | $0 | $3,690,000 | $3,790,000 | ||
*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 applies a 2.5% retirement annuity multiplier to creditable service earned beyond 10 years of credible service for Group II members in the New Hampshire Retirement System who:
- Started service before July 1, 2011, without reaching vested status by January 1, 2012; or began service on or after July 1, 2011.
- Who have attained age 60 regardless of the number of years of creditable service, or who work up to their full age and service requirements and retire under a service retirement.
However, if a service member retires prior to reaching the full age and service requirements, the annuity multiplier remains the same as the first 10 years of creditable service.
This bill appropriates $53,600,000 of General Funds for the biennium ending June 30, 2025, to cover the estimated increase in the unfunded actuarial accrued liability (UAAL) for the increase in Group II benefits.
The New Hampshire Retirement System's actuary has confirmed that contributions for fiscal years 2024 and 2025 are certified and will remain unchanged. The impact on fiscal years 2026 and 2027 is solely attributable to this proposed bill net of the $53,600,000 expenditure coved by the appropriation. It is anticipated that future employer contributions will increase in alignment with wage inflation.
The actuary's valuations, based on data from the annual actuarial valuation as of June 30, 2021, assumes an annual interest rate of 6.75 percent, wage inflation set at 2.75 percent per year, the utilization of the entry-age actuarial cost valuation method and a $53,600,000 appropriation.
It's important to note that actual employer rates for fiscal years 2026-2027 will be determined based on the June 30, 2023, actuarial valuation and may vary from the estimates provided.
The estimated allocation of this benefit is as follows:
Estimate State Impact
Expected Employer Dollar Increase (Decrease) Due to Proposal | ||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 |
Employees | - | - | $0 | $0 |
Police | - | - | $870,000 | $900,000 |
Fire | - | - | $40,000 | $40,000 |
TOTAL | $0 | $0 | $910,000 | $940,000 |
Estimated Political Subdivision Impact
Expected Employer Dollar Increase (Decrease) Due to Proposal | ||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 |
Employees | - | - | $0 | $0 |
Teachers | - | - | $0 | $0 |
Police | - | - | $2,240,000 | $2,300,000 |
Fire | - | - | $1,450,000 | $1,490,000 |
TOTAL | $0 | $0 | $3,690,000 | $3,790,000 |
The New Hampshire Retirement System states there will be an indeterminable increase in expenditures due to administrative costs relating to the reprogramming of the pension administrative system in FY 2025.
AGENCIES CONTACTED:
New Hampshire Retirement System
