Legislators look to change retirement system

Several legislators have requested 2017 bills to change the New Hampshire Retirement System (NHRS).

Most of the proposals seek to change state, local, or employee contributions to the NHRS.  One bill, proposed by Rep. Neal Kurk, would establish a cash balance plan for new hires and non-vested employees.

Right now the NHRS provides a pension to public employees, which guarantees payments until an employee’s death based on the employee’s salary and how long they worked for the government.  A cash balance plan is more like a 401(k); retirees are given an account for all of their retirement contributions.

The House of Representatives considered a similar bill last year, HB 1673.  Writing in favor of that bill, Rep. Kurk argued that a cash balance plan is less likely to increase the unfunded liability in the NHRS. 

“By its very nature, a cash balance defined benefit plan is funded on a pay-as-you-go basis,” wrote Kurk. 

The NHRS argues that the current pension system is sustainable, and there is a plan in effect to reduce the unfunded liability. Given how cash balance plans are structured, there is also a chance that the NHRS would end up owing more to employees than it does under the pension system.

Do you have an opinion on public employee retirement plans in New Hampshire?  Let us know in the comments.