New Hampshire House Bill HB1587

New Hampshire 2022 Regular Session

• Introduced: 12/21/21
• Refer: 12/21/21
• Report Pass: 2/10/22
• Report DNP: 2/10/22
• Refer: 3/4/22
• Report Pass: 3/24/22
• Engrossed: 4/5/22
• Refer: 4/5/22
• Report Pass: 4/20/22
• Report Pass: 5/3/22
• Enrolled: 5/24/22
• Chaptered: 6/17/22
• Passed: 6/17/22

Caption

Relative to determination of average final compensation under the retirement system and making an appropriation therefor.

Impact

The fiscal implications of this legislation are considerable, as an appropriation is made for the change in calculation, which is estimated to create an additional cost of approximately $42.9 million in the first year alone. This is funded by surplus funds from the state and sets a precedent for how future adjustments in retirement funding may be approached. Local governments and political subdivisions are also projected to face increased expenses, estimated at around $490,000 to $500,000 in subsequent years due to the alteration in pension funding obligations related to police and fire service personnel benefits.

Summary

House Bill 1587, known as the act relative to the determination of average final compensation under the retirement system, modifies the salary calculation for retirement benefits for certain members of the New Hampshire Retirement System. Specifically, it affects Group II members who commenced service on or after July 1, 2011, and who were not vested prior to January 1, 2012. The bill stipulates that these individuals' average final compensation will now be based on their highest five years of creditable service instead of three, which could significantly impact their retirement payouts and future financial planning.

Sentiment

General sentiment regarding HB 1587 appears to be mixed. Supporters argue that the bill provides a fairer calculation method for hardworking public servants who may have experienced fluctuating salaries over their careers. Conversely, opponents raise concerns about the sustainability of pension funding and the potential impact on the state budget, fearing that such a large financial commitment may lead to difficulty in funding other state priorities or result in increased taxpayer burdens in the future.

Contention

One notable point of contention is the appropriateness of the additional funding and how it may drive changes in pension policies moving forward. Critics argue that expanding the average final compensation calculation period could set a precedent for unsustainable growth in pension liabilities. The discussions surrounding HB 1587 highlight the delicate balance of ensuring fair compensation for public employees while managing the state's fiscal responsibilities effectively.