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New Hampshire Retirement System

New Hampshire Retirement System. Overview of Presentation. Structure and Governance Plan Funding Legislation Important Reminders Health Insurance after Retirement Working after Retirement. Membership Structure. 53,000 active and vested deferred members

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New Hampshire Retirement System

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  1. New Hampshire Retirement System

  2. Overview of Presentation • Structure and Governance • Plan Funding • Legislation • Important Reminders • Health Insurance after Retirement • Working after Retirement

  3. Membership Structure • 53,000 active and vested deferred members • Employees, teachers, firefighters, police officers • 24,500 pension recipients • Retirees and beneficiaries • Growing by 1,500 - 2,000 per year • 475 participating employers • State of NH, cities, counties, towns, school districts, and other units of local government

  4. Plan Governance • NH Legislature: Plan Sponsor • RSA 100-A serves as plan document • NHRS Board of Trustees and Independent Investment Committee Members serve as fiduciaries • Internal Revenue Code provisions • NH Constitution Art. 36-a protects funds “for the exclusive purpose” of providing benefits • Sununu – Supreme Court ruling

  5. Defined Benefit Plan • Benefits are determined by a specific formula which consists of three components: • Earnings • Creditable Service • Benefit Multiplier

  6. Defined Benefit Plan • Lifetime pension benefits • To retired member • To eligible beneficiary upon retired member’s death (Survivorship Option) • Benefits are not based on investment returns or contributions

  7. Fiduciary Management Contributions Benefit Payments = + + Investment Earnings Expenses + • Equation must balance over time

  8. Member Contributions • Member Contributions Set by Statute • Group I Members: • Employees* & teachers = 5.0% of earnings • Group II Members: • Firefighters & police officers = 9.3% of earnings *State employees hired on or after July 1, 2009, must contribute 7.0% of gross earnings

  9. Employer Contributions • Biannual Actuarial Valuation • Calculates funding status and employer rates • Rates based on membership classification • Rates include pension contribution and medical subsidy contribution • Actuarial Experience Study • Conducted every five years • Evaluates underlying assumptions

  10. Employer Contributions – FY 10 Group I Political Subdivision Employers *The State of NH contributes 30% of the cost for teacher members, and the employer contributes the remaining 70%.

  11. Employer Contributions • State’s share reduced for teachers, firefighters, and police officers of political subdivisions (Laws of 2009) • From 35% to 30% for fiscal year 2010 • To 25% for fiscal year 2011 • To revert back to 35% for fiscal year 2012 and each fiscal year thereafter

  12. Employer Assessment • Employer assessment for excess pension benefits • “Spiking” • To address high end of career payments

  13. Employer Assessment “Spiking” Legislation from 2009 • Delayed the implementation of employer assessment - “spiking assessment”- to July 1, 2010 (House Bill 223) • NHRS to recommend methodology for determining employer assessment for excess pension benefits (House Bill 641) • Established a study committee to review employer assessments (Senate Bill 108)

  14. Employer Assessment Status of “Spiking” in 2010 • Senate Bill 504 recommends delaying spiking assessment to July 1, 2011 • NHRS recommended methodology for determining fair assessment • Study committee reviewing employer assessments • Surveying employers, seeking spiking data • Recommends delaying employer assessment one more year

  15. 2010 Legislation • House Bill 1576 – employment as a retired member • House Bill 1664-FN – increase in member contribution rates • Senate Bill 108 (retained) - study committee reviewing implementation of employer assessments • Senate Bill 504 - spiking assessment

  16. Important Reminders • Salary Continuance Plans • Contributions must be remitted to NHRS based on the portion of the plan funded by the employer • Member earns service credit • Member is “in service” for certain benefits

  17. Important Reminders • Health Insurance “Buy Outs” and “Payments in lieu of” are not earnable compensation • Do not report those amounts to NHRS • Do not remit contributions on those amounts

  18. Important Reminders • Workers’ Compensation • Report supplemental pay paid by the employer while the member is receiving Workers' Compensation • Contributions must be remitted to NHRS on supplemental pay but not on actual Workers’ Compensation payments

  19. Important Reminders • Active Military Duty • Report military differential pay • Contributions must be remitted to NHRS on differential pay • Members should contact NHRS upon returning to NHRS-covered employment • May be eligible for service credit even if no differential pay

  20. Retiree Health Insurance • NHRS-participating local government employers must allow their retiring employees to participate in their health insurance plan • Employers are not required to pay for the health insurance coverage • Legislative Study Commission re: funding of medical benefits

  21. Retiree Health Insurance • Deductions from pensions for health insurance premiums cannot be pre-tax • Internal Revenue Code regulations • Cafeteria plans for employees only

  22. Medical Subsidy • A payment made by NHRS directly to the former employer or health insurance administrator, applied toward the cost of health insurance for the qualified retired member and qualified spouse • The medical subsidy is not a health insurance plan

  23. Medical Subsidy Rates Type of PlanRate 1 Person $375.56 2 Person $751.12 1 Person $236.84 (Medicare supplement) 2 Person $473.68 (Medicare supplement) Rates effective through 6/30/2012

  24. Working after Retirement • May work for non-NHRS employer (such as private sector) • May not occupy NHRS-covered position and receive pension • Pension will cease • Active membership will be restored • Disability Retirement – Contact NHRS for details

  25. Working after RetirementFrom Retiree to Active Member • Teachers who are “regularly scheduled” for 30 hours per week • Employees who are “regularly scheduled” for 35 hours per week • Teachers who are employed for 30 or more hours per week for 18 weeks during the school year

  26. Working after RetirementFrom Retiree to Active Member • NHRS-covered position that requires mandatory enrollment • “Under Contract” or “Independent Contractor” to avoid enrollment • “Part-time” but working and/or being paid for full-time work

  27. Communications Initiatives • Outreach and education • Member education sessions • Regional approach - more members • Mailing to employers in March • 2009 Law books • Employer newsletter • Website and content enhancements • Online resources • User-friendly information

  28. Does NHRS have your current email address? Send email to:public_relations@nhrs.org

  29. NH Retirement System 54 Regional Drive Concord, NH 03301 Phone: 603-410-3500 Toll Free: 877-600-0158 www.nhrs.org info@nhrs.org

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