Retirement changes would affect N.H. retirees' benefits
CONCORD, N.H.—Veteran government workers living on the smallest pensions would get $1,000 checks and 2.5 percent cost-of-living increases under proposed changes to the state retirement system adopted by the state Senate.
The Senate voted unanimously Thursday to make those and other changes to a House-passed bill. The House isn't happy with the proposed changes and is certain to ask the Senate to try to work out a compromise.
The $6 billion fund pays pensions for retired police officers, firefighters, teachers and other public sector workers. The plan is funded at 63 percent of its long-term liabilities, short by about $2.7 billion on its annuity fund alone. There are also multimillion-dollar problems in funding health insurance subsidies, cost of living increases and health insurance for retired state workers.
Last year, the Legislature took steps to shore up the pension system, but still must find solutions to providing annual cost-of-living increases and health care subsidies for retired municipal workers and teachers. The state pays 100 percent of its retirees' health insurance.
In March, the House passed a bill addressing some of those issues, but the Senate did not endorse all the changes the House proposed -- including several provisions that upset labor groups.
The Senate would give retirees 2.5 percent cost-of-living increases for four years, but the increases would only apply to their first $40,000 in pension payments -- or capped at $1,000.
The House proposed giving retirees a supplemental check equal to no more than 2.5 percent of the median pension benefit, but at least $500.
The chambers also differ on how they would handle a health insurance subsidy for some retired teachers and municipal workers. The House would grant one more 8 percent increase, then freeze the subsidy. The Senate would freeze it immediately for four years, then would provide a series of 4 percent increases to the medical subsidy.
The Senate also proposes giving retirees with 15 years or more experience and receiving pensions of $20,000 or less an extra $1,000 check that wouldn't be added to the base pay used to calculate cost-of-living increases. They would get checks in each of the next four years. They also would get a temporary subsidy toward the medical benefit. Single retirees would get $500 and couples, $1,000, for the four years the subsidy was frozen.
State law requires towns to let their retirees participate in their municipal health plans. The subsidy, paid to the towns, reduces the out-of-pocket cost to the retirees.
Both chambers would shift $250 million from an account used to pay for cost-of-living increases into the main pension fund to ease increases paid by property taxpayers for local government's contribution to the retirement system.
The latest bill also calls for studying ways to provide health care to retirees not eligible for the medical subsidy -- which includes most active employees. One idea is for employers and employees to pay into a new account to provide post-retirement funds that could be tapped for medical expenses by the employees who don't qualify for the existing subsidy.
A commission also would study how to pay for future cost-of-living increases.
If lawmakers do nothing, the state and communities face substantial increases in retirement contributions next year to continue shoring up the main pension fund and pay for the medical subsidy.
The House proposed requiring police and firefighters to work 25 years, not 20, to be eligible to retire at age 50 instead of age 45.
Police and firefighters oppose the extension. They say the changes would mean reduced benefits while forcing police and firefighters to stay on the job past their physical ability to wrestle suspects to the ground or carry people out of burning buildings.
The Senate backed away from the proposal.
One controversial provision would change the makeup of the board of trustees by giving employee groups less representation. The House proposes reducing the number of employee representatives, but the Senate would keep the same board membership.
