The Union Leader reports that by a vote of 35-4 the House Finance and Executive Departments and Administration committees passed the bill that unions have said they will actively oppose. The bill would change eligibility for retirement for police and firefighter new hires after this summer to age 50 and 25 years of service, compared to the current age 45 and 20 years of service requirement.
House leaders said the bill, HB 1645, was necessary to address two decades of neglect in the system’s finances, according to the Union Leader. Public worker unions have formed the N.H. Retirement Security Coalition to fight the bill.
The New Hampshire Retirement System is underfunded for its long-term obligations by $2.7 billion. The reform bill plans to collect the shortfall plus 8.5% interest, from public employers like towns, school districts, and state government. Changes to the system will save public employers more than $100 million between 2010 and 2011, the news report said.
Without the bill the state’s share of payments into the system in 2010 would go up 53%, and local government employers would see a 50% increase in payments. The House proposal cuts the state’s contribution in half, and that of towns and school districts by two-thirds.
The bill also includes a list of changes that affect all workers and public employers. According to the news report, the bill:
- Limits the level of pay used in calculation of retirement benefits. No severance paid out after 120 days will be included.
- Eliminates the automatic 8% annual increase in medical subsidy payments, after July 1. Calls for a review every two years after that, to see if an increase is affordable.
- Mandates that COLAs will be paid out through a 13th check during the year equal to 2.5% of a retiree’s pension benefit on July 1, 2009, with a one-time minimum of $500.
- Establishes a COLA commission to study how to proceed with funding COLAs in the future. This year, the Legislative Fiscal Committee will determine the increase.
- Caps pensions for employees hired after July 1 2008 at 100% of highest full-year base rate of pay.
- Transfers $250 million into the pension fund from a special account used to fund COLAs and medical subsidies. It continues funding medical subsidies with 25% of employer payments, or less if it can be shown that a lower payment will keep the fund solvent.
- Cuts the NHRS board to 12 from 14 members, and cuts four of the eight employee representatives who now have seats.
- Establishes two commissions, one to study health care benefits, and one to review the NHRS condition every 10 years. The bill also requires regular performance audits to keep close tabs on its operations.