HB463: relative to the retirement system maximum initial benefit limitation.

HB 463-FN – AS INTRODUCED

2011 SESSION

11-0366

10/01

HOUSE BILL 463-FN

AN ACT relative to the retirement system maximum initial benefit limitation.

SPONSORS: Rep. Hawkins, Hills 18; Rep. Harding, Graf 11; Rep. Kurk, Hills 7; Rep. Reagan, Rock 1; Rep. Bouchard, Merr 11

COMMITTEE: Special Committee on Public Employee Pensions Reform

ANALYSIS

This bill limits the initial retirement benefit under the retirement system to the member’s highest year of base pay for all members who become vested 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

11-0366

10/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eleven

AN ACT relative to the retirement system maximum initial benefit limitation.

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

1 Retirement System; Maximum Benefit Limitation; Initial Calculation. Amend RSA 100-A:6-a to read as follows:

100-A:6-a Maximum Retirement Benefit. Notwithstanding any other provision of this chapter to the contrary, for members who [commenced service before July 1, 2009] attain vested status before July 1, 2011, a member’s initial calculation of the retirement benefit granted under the provisions of RSA 100-A:5 or RSA 100-A:6 shall not exceed 100 percent of the member’s highest year of earnable compensation. For members who [commenced service on or after July 1, 2009] attain vested status on or after July 1, 2011, a member’s maximum retirement benefit granted under the provisions of RSA 100-A:5 or RSA 100-A:6 shall not exceed [$120,000] 100 percent of the member’s highest year of base pay. Nothing in this section shall affect the ability of a member to receive disability benefits pursuant to RSA 100-A:6, II(b) and (c). This provision shall not limit the application of supplemental allowances under RSA 100-A:41-a.

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

LBAO

11-0366

Revised 02/22/11

HB 463 FISCAL NOTE

AN ACT relative to the retirement system maximum initial benefit limitation.

FISCAL IMPACT:

The New Hampshire Retirement System states this bill may decrease state, county, and local expenditures by an indeterminable amount in FY 2014 and each fiscal year thereafter. There is no fiscal impact on state, county, and local revenue.

METHODOLOGY:

The Retirement System states this bill would limit the retirement benefit of each member who is not in vested status before July 1, 2011 to 100% of his or her highest year of base pay. The System’s actuary provides an estimated fiscal impact of this bill for FY 2014 and FY 2015 as it is assumed there will be no change in the employer contribution percentage rates for FY 2012 and FY 2013. The System’s actuary also assumed an annual rate of return of 8.5 percent, assumed wage inflation at 4.5 percent a year, and uses the entry-age normal cost valuation method. The System and its actuary further state the results of the actuarial valuation below were derived using limited data which may not be reflective of the average member of the System.

The New Hampshire Retirement System states projected annual state and political subdivision (county and local) employer contribution savings as a result of this bill are as follows:

(1)

(2)

(3)

(4)

Political Subdivisions

35% of Political Subdivisions

100% of State Employees

Total State Savings

(2 + 3)

2014

Employees

($2,116,182)

($0)

($1,924,973)

($1,924,973)

Teachers

($1,819,799)

($979,892)

($0)

($979,892)

Police

($885,365)

($476,735)

($518,116)

($994,851)

Fire

($489,359)

($263,501)

($27,190)

($290,691)

Total

($5,310,705)

($1,720,128)

($2,470,279)

($4,190,407)

2015

Employees

($2,211,410)

($0)

($2,011,597)

($2,011,597)

Teachers

($1,901,691)

($1,023,987)

($0)

($1,023,987)

Police

($925,206)

($498,188)

($541,431)

($1,039,619)

Fire

($511,380)

($275,359)

($28,414)

($303,773)

Total

($5,549,687)

($1,797,534)

($2,581,442)

($4,378,976)