Bill Text: NH HB556 | 2015 | Regular Session | Introduced
Bill Title: Establishing a cash balance plan for public employees in the retirement system.
Spectrum: Moderate Partisan Bill (Republican 5-1)
Status: (Introduced - Dead) 2015-11-12 - Committee Report: Refer to Interim Study for Jan 6 (Vote 9-4; Regular Calendar); House Calendar 67, PG. 27 [HB556 Detail]
Download: New_Hampshire-2015-HB556-Introduced.html
HB 556-FN-LOCAL - AS INTRODUCED
2015 SESSION
15-0773
10/01
HOUSE BILL 556-FN-LOCAL
AN ACT establishing a cash balance plan for public employees in the retirement system.
SPONSORS: Rep. Kurk, Hills 2; Rep. Hill, Merr 3; Rep. C. McGuire, Merr 29; Rep. Leishman, Hills 24; Sen. Bradley, Dist 3; Sen. Reagan, Dist 17
COMMITTEE: Special Committee on Public Employee Pension Plans
This bill establishes a cash balance pension plan for all New Hampshire retirement system members hired on and after July 1, 2015.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
15-0773
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT establishing a cash balance plan for public employees in the retirement system.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Participation by Members; Retirement System. Amend the introductory paragraph of RSA 100-A:3, I(a) to read as follows:
I.(a) Any person who becomes an employee, teacher, permanent policeman, or permanent fireman [after the date of establishment] prior to July 1, 2015, working in a position for an employer under this chapter as determined by common law standards, shall become a member of the retirement system as a condition of employment. In addition, employees appointed to an unclassified position with no fixed term on or after July 1, 2011 shall become members of the retirement system as a condition of employment, if they are receiving benefits from the retirement system. Any retirement benefit collected by such an unclassified employee shall be suspended during the period of employment. Employees, teachers, permanent policemen, and permanent firemen beginning service on or after July 1, 2015, working in a full-time position for an employer as determined by common law standards, shall as a condition of employment participate in the cash balance plan established under RSA 100-A:58 – RSA 100-A:63. Until July 1, 2015, membership in the retirement system shall be optional in the case of elected officials, officials appointed for fixed terms, employees appointed to an unclassified position with no fixed term prior to July 1, 2011, or those employees of the general court who are eligible for membership in the retirement system. Elected officials and officials appointed for fixed terms shall, however, be eligible for membership in the retirement system only under the following conditions:
2 New Subdivision; Retirement System; Cash Balance Plan. Amend RSA 100-A by inserting after section 57 the following new subdivision:
100-A:58 Definitions. In this subdivision:
I. “Member” means a person employed by the state who is required to become a member in the cash balance plan established in this subdivision, or a person employed by a political subdivision which elects to participate in the cash balance plan.
II. “Plan” means the retirement system administered cash balance plan established for members who began service on and after July 1, 2015. The cash balance plan is a plan in which savings are accumulated in an individual account for the exclusive benefit of the member or beneficiaries.
100-A:59 Cash Balance Plan Account Accumulation.
I.(a) Each member shall contribute to the cash balance retirement system the amount of 7.5 percent of the member’s base rate of compensation. Employers are authorized to deduct contributions as provided in RSA 100-A:16, I(aa) and (b) and rules of the board. A member may make additional contributions pursuant to procedures adopted by the board.
(b) Employer contributions to each cash balance retirement system shall be 2.5 percent of the member’s base rate of compensation.
II. The cash balance plan member’s account shall be credited with an amount equal to the contributions under paragraph I and the interest accrued under paragraph III. No sum credited may be borrowed by the member.
III.(a) For the duration of service covered by the cash balance plan, interest shall be payable on the member’s account each plan year at a rate equal to the system’s actuarial rate of return as certified by the system actuary in the system’s actuarial valuation, less the costs of administration as determined by the board. Interest shall be based on the balance of the account at the end of each month for the prior plan year. The employer shall guarantee that over any 10-year period, the interest credited is at least 2 percent of the total contributions under paragraph I, compounded annually.
(b) No interest shall be credited after the member separates from service covered by the plan, except that interest shall be credited for those months during the plan year prior to his or her separation from service.
(c) In no case shall the balance in the member’s account be debited for investment losses.
IV. A cash balance plan member who separates from employment may withdraw from the cash balance plan as follows:
(a) Upon application for withdrawal, a member who has been a cash balance plan member for less than 5 years shall receive a refund of his or her accumulated member contributions plus accrued interest at the rate of 2 percent per year. The system shall retain all employer contributions and sums deducted as the costs of administration.
(b) Upon application for withdrawal, a member who has been a cash balance plan member for 5 years or longer shall receive either a lump-sum payment of 50 percent of his or her account balance or the distribution of such account balance in the form of a trustee-to-trustee, single-sum transfer between qualified plans or as a payment made directly to a conduit individual retirement account. The remaining 50 percent shall be converted by the retirement system to an annuity payable to the member or the member’s beneficiary upon the retirement of the member, as provided in RSA 100-A:60.
100-A:60 Annuitization of Retirement Benefit. Upon application, any member retiring shall receive an annuity in a retirement allowance payable throughout his or her life, or he may elect at that time to receive the actuarial equivalent of his retirement allowance in a reduced retirement allowance payable throughout life, pursuant to any retirement options provided in RSA 100-A:13, III. The system shall annuitize and pay any such allowance chosen by the member.
100-A:61 Reemployment. If, after withdrawing from the cash balance plan upon separation from service or after annuitizing the member’s benefit, a cash balance plan member becomes reemployed in a position covered by the cash balance plan, the person’s accumulation in the cash balance plan pursuant to RSA 100-A:59 shall begin again. However, the reemployment shall not affect the receipt of the lump sum or annuitized payments from the first cash balance account.
100-A:62 Guaranteed Return of Member Contributions. In no case shall the retirement system pay total benefits of an amount less than the total of the employee’s accumulated contributions. Where the total benefits received prior to an employee’s death is less than the employee’s total contributions, the difference shall be paid to the estate of the decedent.
100-A:63 Amendments to the Cash Balance Plan. The plan established in this subdivision is not a contract and may be changed by appropriate legislation at any time and from time to time, provided, however, that any contributions and interest previously credited to the member’s account shall not be adversely affected.
3 Effective Date. This act shall take effect 60 days after its passage.
LBAO
15-0773
01/23/15
HB 556-FN-LOCAL - FISCAL NOTE
AN ACT establishing a cash balance plan for public employees in the retirement system.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill, as introduced, will increase state expenditures by $158,368 in FY 2016, $298,011 in FY 2017, $434,953 in FY 2018, and $572,374 in FY 2019, and increase county and local expenditures by an indeterminable amount in FY 2016 and each year thereafter. There will be no impact on state, county, and local revenue.
METHODOLOGY:
The New Hampshire Retirement System states this bill establishes a cash balance pension plan for all Retirement System members hired on and after July 1, 2015. The System’s contracted actuary estimates the bill will increase employer contribution rates by the following amounts in FY 2016 through FY 2019. The System is unable to break out the costs attributable to political subdivisions into the county and local shares.
FY 2016
FY 2017
FY 2018
FY 2019
Employees
State
$84,064
$154,387
$223,777
$292,573
Political Subdivisions
$99,733
$183,165
$265,488
$347,107
Teachers
$830,599
$1,594,789
$2,351,308
$3,101,169
Police
State
$71,901
$138,827
$203,901
$270,010
Political Subdivisions
$204,295
$394,454
$579,350
$767,188
Fire
State
$2,403
$4,797
$7,275
$9,791
Political Subdivisions
$70,737
$141,231
$214,176
$288,260
TOTAL
$1,363,732
$2,611,650
$3,845,275
$5,076,098
State
$158,368
$298,011
$434,953
$572,374
Political Subdivisions
$1,205,364
$2,313,639
$3,410,322
$4,503,724
The System states that in addition to employer contributions, the additional costs to implement and administer the cash balance plan are unknown. As with the System’s other administrative costs, these costs will come out of the System’s pension trust fund.
