Commission to Study the Long-Term Viability of the NH Retirement System
In 2007, the NH legislature passed HB876 creating a Commission to study, review, and make recommendations regarding the NH Retirement System. The Commission convened multiple times and made several recommendations for the 2008 Legislative Session. One of the recommendations was to include in statute that the Commission reconvene every ten years.
The most noteworthy recommendations and legislative changes included:
Establish an Independent Investment Committee That Includes Only Investment Professionals
This change removed the responsibility of investing NHRS funds from the NHRS Board of Trustees that included employee and employer representation. By removing this responsibility from the Board and placing it into the hands of non-NHRS members or employers, no one on the committee has any “skin in the game.” Decisions made by the IIC in executive session are kept from the public, and employees and employers have no say in how the funds are invested.
Freeze the Medical Subsidy Amount in 2010
At the time of the Commission, nearly 10,000 retirees or beneficiaries were eligible for a medical subsidy which helped pay off the remaining costs of their former employer group healthcare plans. This change meant the 8% escalator would be frozen in 2010 with the possibility of turning it back on in the future. In 2011 the legislature voted to keep the freeze indefinitely.
Transfer $250 Million from the Special Account into the Corpus
This change took half of the funds available in the Special Account which were earmarked to pay for Cost of Living Adjustments for retirees. This transfer was put into the corpus of the fund to help offset employer rates. These monies had been specifically set aside for COLAs and by removing them lessened the funds available to administer COLAs for retired members.
The most noteworthy recommendation that did not become future legislation was:
Provide current retirees with a minimum annual increase
While the Commission did recommend the removal of half of the Special Accounts funds, they did recommend using the remaining $300 million + funds to pay for COLAs for retirees. Unfortunately, in 2011, the legislature voted to remove the remaining monies in the Special Account to suppress employer rates and therefore there would be no funds available for future COLAs.