Retirement System Legislation Update

On Wednesday, the House acted on many of the bills this session that would impact municipal budgets by modifying, changing, or redefining member benefits. Most will increase the unfunded liability, employer costs—and, ultimately, local property taxes. NHMA opposes legislation that expands or changes pension benefits resulting in increased employer costs based on our member-enacted policy. Below is a summary of the House actions on these bills. 

• HB 436: Ought to Pass with Amendment on a roll call vote of 260-103. This bill was significantly amended in committee and would adjust the transition provisions for Group II service retirement adopted in 2011 over a 10-year period until 2033 and make general fund appropriations each year to terminally fund the cost of the benefits. The amendment does not contain an appropriation to fund the policy change or a fiscal note to determine if there will be any increase to employer costs or an impact on the unfunded accrued liability. This bill now heads to the House Finance Committee.
• HB 250: Ought to Pass on a roll call vote of 260-103. This bill would increase the Group II accidental death benefit from 50 percent to 100 percent of member’s annual rate of earnable compensation at the date of the member’s passing. The estimated increase of this legislation on the employer pension rate for police is .25 percent and .28 percent for fire, totaling just over $1 million in additional employer costs for fiscal year 2024 alone. The New Hampshire Retirement System (NHRS) estimates a $4 million increase in the actuarial accrued liability (UAAL). This bill now heads to the House Finance Committee.
• HB 449: Retained in Committee. This bill would increase the service retirement and disability retirement annuity multiplier for the first 20 years of service for Group II retirement system members under the transition provisions adopted in 2011. NHRS estimates a $82.2 million increase in the UAAL increasing employer rates in fiscal year 2024 by 2.94 percent (an estimated $7.26 million) and 2.41 percent for fire (an estimated $3.72 million) for an aggregate increase of $10.98 million. 
• HB 525: Inexpedient to Legislate. This bill would have reinstated certain types of earnable compensation and change the calculation of the pension benefit for all members who became vested between January 1, 2012, and December 31, 2013. NHRS estimates an increase of $124.3 million in the UAAL and the expected fiscal impact to municipal employers across all Group I and Group II is estimated at $9.8 million in fiscal year 2025 and $10 million in fiscal year 2026.
• HB 579: Inexpedient to Legislate. This bill eliminates the transition provision adopted in 2011 for Group II retirement system members that began service before July 1, 2011, but were not yet vested. The local impact is estimated at $25.8 million beginning in fiscal year 2026. 
• HB 571: Ought to Pass on a division vote of 192-167. This bill would provide a cost-of-living adjustment (COLA) in 2023 to qualified Group II retirees on the first $50,000 of a retired Group II member's or beneficiary’s allowance. As passed by the House, the cost of this COLA would be paid from the state general fund having no impact on municipal employers. This bill now heads to the House Finance Committee.