Bill Text: NH HB1756 | 2018 | Regular Session | Introduced


Bill Title: Relative to an additional allowance and a cost of living adjustment for retirees from the state retirement system.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Engrossed) 2018-04-17 - Committee Report: Inexpedient to Legislate, 04/26/2018; Senate Calendar 18 [HB1756 Detail]

Download: New_Hampshire-2018-HB1756-Introduced.html

HB 1756-FN-A - AS INTRODUCED

 

 

2018 SESSION

18-2196

10/04

 

HOUSE BILL 1756-FN-A

 

AN ACT relative to an additional allowance and a cost of living adjustment for retirees from the state retirement system.

 

SPONSORS: Rep. Shurtleff, Merr. 11; Rep. Schuett, Merr. 20; Rep. Freitas, Hills. 14

 

COMMITTEE: Finance

 

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ANALYSIS

 

This bill grants a one-time additional allowance to certain retirees in the state retirement system and makes a general fund appropriation therefor.  The bill also grants a cost of living adjustment to such retirees contingent on the funding for the total actuarial cost 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

18-2196

10/04

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Eighteen

 

AN ACT relative to an additional allowance and a cost of living adjustment for retirees from the state retirement system.

 

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

 

1  Retirement System; Additional Allowance; Appropriation.

I.  An additional one-time allowance of $500 shall be paid during state fiscal year 2020 to retired members of the retirement system receiving an allowance who have been receiving an allowance for at least 60 months prior to or on July 1, 2019, provided such annual allowance is not greater than $30,000.

II.  The additional allowance shall not become a permanent addition to the member's base retirement allowance.

III.  The retirement system shall certify the cost of providing the additional allowance in paragraph I to the state treasurer by May 1, 2019.  The sum necessary to fund the additional allowances granted under this act is hereby appropriated to the board of trustees of the retirement system.  The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

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

100-A:41-e  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, 2019, 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 after July 1, 2020.  The amount of such COLA shall be one and 1/2 percent.

II.  No supplemental allowance under paragraph I shall be made unless the terminal funding of the total actuarial cost thereof, as determined by the actuary and certified by the board of trustees of the retirement system, is approved for funding through retirement system funds, state general funds, or some other revenue source, as determined by the general court.  The general court shall provide in separate legislation for the approved source of funds to be used for payment of the total actuarial cost of the supplemental allowance in paragraph I.

III.  If funded, 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.

3  Repeal.  RSA 100-A:41-a through RSA 100-A:41-d, relative to prior provisions for supplemental allowances, are repealed.

4 Effective Date.  This act shall take effect July 1, 2018.

 

LBAO

18-2196

Revised 1/22/18

 

HB 1756-FN-A- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to an additional allowance and a cost of living adjustment for retirees from the state retirement system.

 

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

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2019

FY 2020

FY 2021

FY 2022

   Appropriation

$0

 $10,375,888

$0

$0

   Revenue

$0

$0

$0

$0

   Expenditures

$0

$11,185,292

$832,000

$859,000

Funding Source:

  [ X ] General            [    ] Education            [ X ] Highway           [ X ] Other -

 

 

 

 

 

POLITICAL SUBDIVISIONS*:

 

 

 

 

   Revenue

$0

$0

$0

$0

   Expenditures

$0

$3,435,000

$3,542,000

$3,653,000

* 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 grants a one-time additional allowance of $500 to certain retirees in the state retirement system funded by General Fund appropriations in FY 2020.  The one-time allowance applies to retirees receiving a benefit under $30,000 per year who have been retired for at least 60 months (5 years).  The bill also grants a cost of living adjustment (COLA) of 1.5 percent to the same retirees contingent on funding for the total actuarial cost in FY 2021.  The actuarial analysis indicates the estimated one-time upfront cost of funding the $500 additional allowance in FY 2020 would be a General Fund appropriation of $7,842,167 based on the actuarial valuation of June 30, 2015, the most recent rate-setting valuation available.  This cost would be anticipated to increase by 7.25% per year until appropriated, for a total of $10,375,888 if appropriated on July 1, 2019.  The actuarial analysis also indicates the 1.5% COLA is projected to cost $51,367,194 based on the actuarial valuation of June 30, 2015, the most recent rate-setting valuation available.  This cost would be anticipated to increase by 7.25% per year until appropriated, for a total of $72,890,738 if appropriated on July 1, 2020.  The bill states "the general court shall provide in separate legislation for the approved source of funds to be used for payment of the total actuarial cost of the supplemental allowance."  With this contingency, the only option for the actuary was to project the annual cost of funding these benefits through increased future employer contribution rates.  The expected cost to make these changes to the NHRS pension database software Pension Gold is estimated to be approximately $3,404 in other funds.  Assuming an annual rate of return or 7.25 percent, wage inflation of 3.25 percent a year, and an amortization period of a closed 22 year period beginning in FY 2018, the New Hampshire Retirement System's actuary determined the following increases:

 

 

 

 

 

AGENCIES CONTACTED:

New Hampshire Retirement System

 

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