by Ed Naile
Updated and bumped: Here is the text of SB 3 The hearing will be in Representatives Hall on 02/25/2011 at 01:00 PM by the Senate Executive Departments and Administration Committee to whom you should write to express your support.
Also, Contact your Senators about SB 3.
Below are some of the main issues involved in the NH Retirement Reform Legislation moving through the legislature. The is SB 3 sponsored by Senator Jeb Bradley and his 20 other co-signers.
Coalition of NH Taxpayers members and supporters have been active in local and state politics for years and have always warned about what government over-spending would do to our communities and country. That day of reckoning has arrived here in our state. We have an almost BILLION dollar deficit for the next biennial budget.
Luckily we have many friends in the NH Legislature due to the last historic election. Now is the time to set our fiscal house in order.
We have been asked for help regarding the billions in public employee retirement obligations our state faces.
All we need do is let our elected officials know, through personal contact, how important it is for them to fix, sensibly with no delay, the imbalance in our retirement system which is unsustainable in its current state has just two contributors for every retiree.
Our elected officials are going to be inundated with calls and letters from those who support the current failing system.
We need to contact our legislators, State Senators and Representatives and ask specific questions and express specific concerns about this problem. That way they will know we are serious about reform and we know the issues. Educated constituents are the squeaky wheel! We are sullying you with a brief run down of the bill.
Make a copy.
Read it.
Have it with you when you contact your elected officials.
Here are some important facts regarding SB 3:
COMPREHENSIVE RETIREMENT REFORM
Summary of Key Proposed Changes – January 27, 2011
RETIREMENT AGE
Proposed: For Group II (Police and Fire) full retirement at age 50 (currently 45) with 25 (currently 20) years of service
Proposal would apply to non-vested (less than 10 years service) and new hires.
EARNABLE COMPENSATION DETERMINATION
Earnable compensation is currently determined by inclusion of various salary components averaged over the highest three years of compensation.
Proposed: Average the final five years of compensation
Proposal would apply to non-vested (less than 10 years service) and new hires
EARNABLE COMPENSATION COMPONENTS
“Earnable compensation” are the various components of employee salary that determine pension benefit. Earnable compensation currently includes unused sick time, unused vacation time, career buyouts, overtime, longevity pay, cost of living bonus, instructional pay, and several other components in addition to base salary.
Proposed: Eliminate “spiking” – the use of unused sick time, unused vacation time, and career buyouts to enhance earnable compensation averages.
Proposal would apply to non-vested (less than 10 years service) and new hires.
SPECIAL DETAIL PAY INCLUDED IN EARNABLE COMPENSATION
“Special Detail” compensation is currently included in earnable compensation components for pension calculation.
Proposed:
Eliminate further special detail compensation from pension calculation, any accumulated special detail compensation would not be impacted.
Proposal would apply to all beneficiaries immediately.
Would not prohibit earning special detail pay.
GAIN SHARING
Gain sharing is the diversion of revenues above annual investment targets towards the payment of new, additional or higher benefits via the special account. Gain sharing prevents the return on “good” investment years from offsetting the bad.
Proposed: Preserve the special account but eliminate future gain sharing.
Practice was curtailed in 2006 and under current law is unlikely to re-occur until 2030.
MEDICAL SUBSIDY
Medical Subsidy payments provide cash offsets for additional health benefits of some retirees Previously, the subsidy was mandated to grow at 8%. It is currently frozen at 0% growth and set to return to 4% beginning in July 2011..
Proposed: Eliminate the prospective 4% growth rate.
EMPLOYEE CONTRIBUTION RATES
Proposed: Group I contribution: 7% (from 5%)
Group II contribution rate: 11% (from 9.3%)
Proposal would apply only to new hires after the effective date of the legislation.
PENSION ANNUITY
Proposed: Cap retirement pension annuity at 100% of highest year’s base pay
Proposal would apply to all beneficiaries moving forward.
RECEIVING PENSION WHILE ASSUMING NEW EMPLOYMENT WITHIN NHRS
Current law allows employees to “double dip,” meaning they can receive a full pension from previous employment while working part-time in another NHRS covered position.
Proposed: Curtail “double dipping” by reducing part-time employment to 24 hrs/week.
Proposal would apply immediately.
NHRS BOARD COMPOSITION
Current Board has two members from each employee group: teachers, police, firefighters, and other employees and only one member representing employers/taxpayers.
Proposed: Establish parity on the board by ensuring one employee and employer member from each group.
DEFINED CONTRIBUTION STUDY
Proposed: Establish a study committee consisting of three House Members and one Senator to study merits of transitioning to a defined contribution system.
If you find these reforms fair to all sides and a solution to ballooning retirement costs make your calls today.