This autumn the New Hampshire Decennial Retirement Commission is meeting to consider the future of the New Hampshire Retirement System (NHRS), the state’s public pension plan. The commission is supposed to issue a report by November 1 detailing their recommendations, although most expect the report will be delayed. So what exactly is the Decennial Retirement Commission and why does it meet? We explore its history here.
New Hampshire has had two previous retirement commissions: one in 1991 and another in 2007. Both of those commissions were reactive, responding to unprecedented events that threatened the future stability of NHRS. As a provision of a law passed in 2007, it was decided that a commission would meet every ten years “to make recommendations to ensure the long-term viability of the New Hampshire retirement system.”
The commission has seventeen members, assigned as follows:
(a) Three members of the house of representatives, appointed by the speaker of the house of representatives.
(b) Two members of the senate, appointed by the president of the senate.
(c) The chairman of the New Hampshire retirement system board of trustees, or designee.
(d) Two representatives of group I (state employees and teachers) of the retirement system, appointed by the governor.
(e) Two representatives of group II (police officers and firefighters) of the retirement system, appointed by the governor.
(f) Two representatives of municipal and school employers in the retirement system, appointed by the governor.
(g) Four public members with recognized expertise in finance, financial management, or the governance and oversight of large endowments or public funds, appointed by the governor.
(h) One retired member of the retirement system receiving benefits at the time of appointment, appointed jointly by the speaker of the house of representatives and the president of the senate.
The commission members were announced in late August. Unfortunately, the commission contains a number of members hostile to traditional public pensions, including Howard Kaloogian, a Tea Party activist and former state assemblyman from California.
In recent years in New Hampshire, anti-pension ideologues have pushed for conversion to a cash balance system, away from a traditional defined benefit pension plan. As we’ve discussed before, cash balance plans are inefficient, needlessly confusing, and fail to provide adequate retirement security for working families. In a study of four different retirement plan designs for the Colorado legislature, an actuarial consulting firm found that cash balance plans provided the lowest level of retirement income among all four plans studied.
There is legitimate concern that the anti-pension ideologues serving on the decennial retirement commission will use the commission’s report and recommendations to push for harmful changes to the New Hampshire Retirement System. This could mean a push for cash balance plans or even conversion to a 401(k)-style defined contribution plan.
For fifty years, the New Hampshire Retirement System has provided a secure retirement to thousands of teachers, firefighters, and other public employees throughout the Granite State. NHRS currently serves over 48,000 active employees and provides benefits to nearly 33,000 retirees and other beneficiaries. The average annual benefit for a retire is $20,694. As of June 30, 2016, the fund had earned a 25 year rate of return of 8.2 percent on its investments.
Public employees, retirees, and their allies are keeping an eye on the Decennial Retirement Commission. The New Hampshire Retirement Security Coalition formed this year to advocate for protecting the New Hampshire Retirement System and the secure retirement it provides. The NHRSC will be holding commission members accountable. Follow them on Facebook for the latest news and updates as New Hampshire considers what the next ten years should look like for retirement in the Granite State.