According to the Manchester (NH) Union Leader, the commission is headed by former Senate President Bill Bartlett, who said when he first looked at the retirement system books: “It was really shocking … I couldn’t believe the system was in such a state.”
The plan is less than 60% funded, short by about $3 billion on its annuity fund alone, partly because trustees and lawmakers failed to act on warnings that its accounting methods and earning assumptions would get into trouble, according to a legislative subcommittee that studies investments.
Recent findings of the subcommittee, which were cited by Lynch, found that the plan produced an average 7.9% annual return over the past 10 years. Senator Harold Janeway, who heads the subcommittee, said that the return would have been 8.3% if the state had matched industry averages in most of its investments. That would have produced an extra $24 million a year.
The state must also explore new ways the fund health insurance subsidies, cost of living increases and retired state workers health insurance, following a recent legislative block against funneling retirement fund money to special accounts to cover such benefits.
Another report also criticized the state’s accounting methods, saying that neither the board nor the Legislature acted on warnings that employer contribution rates were too low, severance packages for retiring workers were too high, and accounting methods the fund used were not accepted by any other public plan in the country.
“It’s not something we can fix overnight, but with the depth of expertise on this panel, I think we will be able to adopt some changes that will, over time, fix the system,” Lynch said, according to the news report.