Lawmakers close in on retirement agreement

TOM FAHEY

CONCORD – Lawmakers were close but had not sealed a deal last night to save tens of millions of dollars in retirement payments for towns and school districts.

Work on a retirement reform plan in House Bill 1645 stretched into late night for the second consecutive day on a plan to cut an expected 50 percent increase to about 15 percent for all public employers.

?AP UPDATE: Deadlock again overnight

A joint conference committee nearly sealed a deal when it broke apart over House insistence that new workers would have their pensions capped at 100 percent of their final pay. The limitation would apply mostly to police officers who leave active service after careers that run long past the 20 years needed to collect full pension, valued at 50 percent of full-time pay. The House wants to start the clock on July 1, 2009. The Senate wants to wait until 2010.

Neither side would budge on the issue last night. The change would not affect NHRS finances for at least 22 years, when new hires reach retirement. NHRS chair Lisa Shapiro said the issue has no impact, "for the vast majority of people in the system." Whatever the outcome, the reform cannot take effect unless members of both the full House and Senate agree and Gov. John Lynch signs the bill.

One of the key agreements was on the transfer of $250 million in to the pension account from a medical subsidy account in 2010. That transfer is equal to what the state, towns and schools paid contributed to worker pension accounts in 2009.

Last year, the Legislature changed accounting procedures at NHRS and required employers to make up the shortfall over 30 years, a move that, without the transfer, would push up costs by 50 percent in local communities in 2010.

The New Hampshire Retirement System is $2.7 billion short on funds it needs to cover its long-term obligations. The $6 billion system serves 20,000 retirees and has 50,000 more active teachers, firefighters, police and other public workers.

Legislators have tentative agreements on reform that include a cost of living adjustment (COLA) with extra payments for those on the lowest pensions, freezes in medical subsidy hikes and investment and business experience requirements for new board members.

They agreed to a 1.5 percent COLA for the first $30,000 in pension payments per year, equal to $450 a year; a $1,000 payment for retirees with pensions of up to $20,000 a year; and a $500 payment for those who retired before 1993. Cost of the payouts is $53 million, from NHRS funds.

The deal also provides up to $1,000 per couple and $500 for a single retiree until they qualify for Medicare, to compensate for a freeze on annual 8 percent increases in medical insurance subsidies. After four years, the increase would resume at 4 percent annually.

The House retreated from its effort to make police and firefighters work an extra five years before they qualify for a pension equal to 50 percent of full-time pay.

Other changes:

-- Drop uniform costs, car expenses, tuitions, moving, health club and other expenses as part of compensation used to calculate pensions;

-- Require employers to cover the long-term pension costs of special bonus payments, and other "golden parachute" deals;

-- Leaves unchanged the 14-member NHRS board, with eight members from labor;

-- Establish a five-member investment committee to carry out general board policies with advice from professional advisors;

-- Set up study commissions on long-term funding for COLAs and the medical insurance subsidies, which were once funded by a portion of pension earnings.

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