HB425: relative to the retirement system assumed rate of return for the biennium beginning July 1, 2017.

HB 425-FN-LOCAL - AS INTRODUCED

2017 SESSION

17-0636

10/03

HOUSE BILL 425-FN-LOCAL

AN ACT relative to the retirement system assumed rate of return for the biennium beginning July 1, 2017.

SPONSORS: Rep. M. MacKay, Hills. 30; Rep. LeBrun, Hills. 32; Rep. Seidel, Hills. 28; Rep. King, Hills. 33

COMMITTEE: Executive Departments and Administration

ANALYSIS

This bill requires the retirement system to use the assumed rate of return of 7.75 percent for calculating employer contribution rates for the biennium beginning July 1, 2017, and to recertify employer rates.

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

17-0636

10/03

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seventeen

AN ACT relative to the retirement system assumed rate of return for the biennium beginning July 1, 2017.

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

1 Retirement System; Recalculation of Employer Rates; Recertification. Notwithstanding the notice requirements of RSA 100-A:16, III, the board of trustees of the retirement system shall recalculate employer contribution rates for the state fiscal years 2018 and 2019 to reflect an assumed rate of return which is unchanged from the 7.75 percent rate applicable to state fiscal year 2017. Notwithstanding the notice requirements of RSA 100-A:16, III, such employer contribution rates shall be effective July 1, 2017 or within a reasonable period of time not to exceed 30 days from the approval of the recalculation by the board of trustees. The exception to the notice requirements of RSA 100-A:16, III in this section shall be limited to the applicable employer contribution rates for the biennium beginning July 1, 2017.

2 Effective Date. This act shall take effect upon its passage.

LBAO 17-0636

1/6/17

HB 425-FN-LOCAL- FISCAL NOTE

AS INTRODUCED

AN ACT relative to the retirement system assumed rate of return for the biennium beginning July 1, 2017.

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

Estimated Increase / (Decrease)

STATE:

FY 2018

FY 2019

FY 2020

FY 2021

Appropriation

$0

$0

$0

$0

Revenue

$0

$0

$0

$0

Expenditures

($12.4 million)

($12.9 million)

($13.3 million)

($13.7 millon)

Funding Source:

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

POLITICAL SUBDIVISIONS:

Revenue

$0

$0

$0

$0

Expenditures

($49.5 million)

($51.1 million)

($52.7 million)

($54.3 milllion)

*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 requires the New Hampshire Retirement System to use the assumed rate of return of 7.75 percent for calculating employer contribution rates for the biennium beginning July 1, 2017 and to recertify employer rates. The current assumed rate of return is 7.25 percent. Assuming an annual rate of return of 7.75 percent, wage inflation of 3.25 percent a year (3.0 percent for teachers), and an amortization period of a closed 22 year period beginning in FY 2018, the System’s actuary determined the following decreases:

State Estimated Employer Expenditure Increase/(Decrease)

FY 2018

FY 2019

FY 2020

FY 2021

Employees

($8.8 million)

($9.1 million)

($9.4 million)

($9.7 million)

Police

($3.4 million)

($3.6 million)

($3.7 million)

($3.8 million)

Fire

(($0.2 million)

($0.2 million)

($0.2 million)

($0.2 million)

State Total

($12.4 million)

($12.9 million)

($13.3 million)

($13.7 million)

Political Subdivisions Estimated Employer Expenditure Increase/(Decrease)

FY 2018

FY 2019

FY 2020

FY 2021

Employees

($10.4 million)

($10.7 million)

($11.1 million)

($11.4 million)

Teachers

($23.8 million)

($24.5 million)

($25.2 million)

($26.0 million)

Police

($9.4 million)

($9.8 million)

($10.1 million)

($10.4 million)

Fire

($5.9 million)

($6.1 million)

($6.3 million)

($6.5 million)

Political Subdivisions Total

($49.5 million)

($51.1 million)

($52.7 million)

($54.3 million)

AGENCIES CONTACTED:

New Hampshire Retirement System