The New Hampshire Union Leader reports that the bill raises mandatory contributions by employees, increases retirement ages and required years of service, cuts the number of workers serving on the New Hampshire Retirement System, and reduces the compensation that can be considered in pension formulas. The bill also calls for a study that could lead to creation of a 401(k)-type plan for state employees.
For the most part, the changes will apply to people who are hired after June 30, 2011, according to the news report. Other changes, including the increase in retirement age, apply to those with less than 10 years of service.
Senate Majority Leader Jeb Bradley, prime sponsor of the proposal, said the pension system’s unfunded long-term obligations are nearly $4.75 billion, when medical subsidies are included in the calculation. The NHRS fund has 58.5% of what it needs to meet its long-term obligations to all workers and retirees.
The news report said Bradley contends there are several causes for the shortfall, including a flawed accounting system lawmakers left in place for most of two decades, the use of excess investment earnings to subsidize retiree health plans, and a number of severe stock market downturns, most recently in 2008.“It is going to take time to turn this around. That doesn’t mean that just because these provisions are not going to be a magic wand that we shouldn’t do them now. The longer we kick the can down the road, the more difficult solutions become, and the higher the burden on taxpayers,” Bradley said.