Senate and House conferees reach a last-minute compromise on public employee retirement

This morning the House and Senate conferees on House Bill 1645, the retirement bill, reached an agreement on which both houses of the Legislature will vote tomorrow. There were times when it looked grim for employees. The final document is one that provides many more benefits than we thought it would just yesterday. Here are the highlights:

Medical subsidy
The medical subsidy is preserved. The dreaded 2011 end date is gone. Two changes made this possible. The first was a transfer of $250 million to the pension general fund and the elimination of the 8 percent annual increase in the subsidy. Instead, the subsidy will be frozen at the 2008 level; in four years the annual inflation increase will reappear but only at 4 percent. While this might not sound like a gain, the original bill called for the elimination of the increase. Retirees who are losing the increase in the medical subsidy will get a payment of $500 for a single plan and $1000 for a two-person plan beginning this year and ending, but including, 2011.

COLAs
As for cost-of-living adjustments (COLAs), there will be a one-time, 1.5 percent increase this year, which will be terminally funded. Retirees who have been retired for more than 12 months, have over 15 years of service, and whose pension income is less than $20,000 a year, will receive a one-time supplemental check in the amount of $1,000, but it will not be added to their base.

Lump-sum retirement incentives included
An attempt to eliminate inclusion of lump-sum payments given to members as retirement incentives failed. This issue was touch and go during negotiations among the conferees, and things got worse before they got better. In the end, these payments are included in earnable compensation. To the extent payments such as these cause your calculation to surpass 125 percent of your final average compensation, the employer must terminally fund that amount.

Contributions can stay
Members who are not vested, and who leave the system, will be allowed to keep their contributions in the system. A recent change in the law required they be refunded if a member were out of the system for longer than two years. Now, if you leave to raise a child, for example, you will not have to purchase those years should you become a public employee in the future.

NHRS governance
Several provisions regarding board functions, activities, and other governance issues are included in the compromise. While the member and non-member composition is now equal, the two additions to the board must bring investment experience.

Commissions to study remaining issues
Three commissions are established: one to examine post-retirement medical benefits for those who retire after 2009, one to examine future COLAs and their funding, and one that will meet every ten years to examine the system’s performance and recommend any needed changes.

I like to say politics is like an auction; it isn’t where you begin but where you end that counts. NEA-NH started working on these issues six years ago when we learned the medical subsidy might run out in 2011. Since then we have had our ups and downs. There will always be new legislation to deal with in each session of the Legislature. For now we must look to the future and work with the newly established commissions to make certain that your benefits are protected from those who think they are too generous and too expensive.

If you have any questions please contact me at 224-7751, or e-mail me at rtrombly@nhnea.org .

Rick Trombly
Director of Public Affairs
NEA-NH