0120-sb 0186

AN ACT relative to additional cost of living adjustments and increased minimum allowances for certain retired group II members, and relative to requiring spousal acknowledgement of a member's election of an optional retirement allowance.

SPONSORS: Sen. J. King, Dist 18; Sen. Disnard, Dist 8; Sen. Hollingworth, Dist 23; Sen. Trombly, Dist 7; Rep. Dwyer, Hills 43

This bill increases the minimum allowance and grants additional COLAs to retired group II members whose annual retirement allowance is less than a certain amount. The additional COLAs are funded on a terminal basis from the special account.

The bill also adds a requirement of spousal acknowledgment for a member's election or change of an optional allowance.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to additional cost of living adjustments and increased minimum allowances for certain retired group II members, and relative to requiring spousal acknowledgment of a member's election of an optional retirement allowance.

Be it Enacted by the Senate and House of Representatives in General Court convened:

120:1 New Paragraph; Definition Added; Spousal Acknowledgment. Amend RSA 100-A:1 by inserting after paragraph XXX the following new paragraph:

XXXI. "Spousal acknowledgment" means a written recognition, signed by a member's spouse, of the benefit payment plan selected by the member under the provisions of RSA 100-A:5, RSA 100-A:6, RSA 100-A:10, or RSA 100-A:19-a - 19-h that is filed with the retirement system on a form prescribed by the board of trustees at the time of retirement and when the member elects a change in benefit payment as allowed under RSA 100-A:13.

120:2 Service Retirement; Group II; Minimum Allowance Increased. Amend RSA 100-A:5, II (c) (1) to read as follows:

(c)(1) Notwithstanding any provision of RSA 100-A to the contrary, any group II member who has retired on [~~a full service retirement allowance~~] or after the effective date of this subparagraph after attaining the age of 45 with at least 20 years of creditable service shall receive a minimum annual service retirement allowance of [~~$5,200~~] $10,000. [In comparing the minimum service retirement allowance and the full service retirement allowance, the full service retirement allowance shall be the sum of the basic allowance plus COLA's. The provisions of this subparagraph shall not apply to a group II member who has retired on a reduced or on a vested deferred retirement allowance. In the case of a group II member who has retired on a full service retirement allowance, and who] If such group II member has elected to convert the retirement allowance into an optional allowance for the surviving spouse under RSA 100-A:13, the surviving spouse shall be entitled to a proportional share of the [$5,200 which shall be based upon the optional allowance which the surviving spouse is receiving. Under no circumstances shall the provisions of this subparagraph be construed to reduce the retirement benefits being paid to a group II member as of the effective date of this subparagraph] $10,000.

120:3 Optional Allowances; Spousal Acknowledgment of Election. Amend RSA 100-A:13, I to read as follows:

I. Any member who has reached service retirement age as provided in RSA 100-A:5, I(a), or II(a), or RSA 100-A:19-b, or any retiree within 120 days after the effective date of retirement, may elect to receive, instead of the retirement allowance otherwise payable, a retirement allowance of equivalent actuarial value under one of the options named in paragraph III, or to redesignate any such option previously elected. When the member elects to receive an optional retirement allowance under paragraph III, the beneficiary or beneficiaries whom the member nominates may include the member's spouse and/or children. The notice of non-election, election, or change of retirement option shall be on a form designated by the board, which, if the member is married, shall include a spousal acknowledgment. The optional allowance shall be effective upon retirement if the election is made before the effective date of retirement, and on the first day of the month following receipt by the board of the notice of election or change of option if made during the 120-day grace period. When an election or change of option is made during the 120-day grace period, no retroactive adjustments will be made in payments already received by the retiree. After expiration of the 120-day grace period no change in option selection shall be permitted except as provided in paragraph II. If a retiree dies after filing notice of election or change of option during the 120-day grace period but before the effective date, the election or change shall be effective as of the date of death. If a member dies after filing an election for a survivorship retirement option and before the effective date of retirement, whether or not the member has filed for retirement, the beneficiary who was nominated by the member in the election of the option may elect to receive either the optional survivor benefit which the member had elected or the ordinary death benefit provided under RSA 100-A:9, whichever is more advantageous to the beneficiary; provided that, in the case of the member's death before retirement, if the beneficiary named in the survivorship option election is not the same person as the beneficiary under RSA 100-A:9, then the death benefit under RSA 100-A:9, II, and not the survivorship option shall apply.

120:4 New Section; Supplemental Allowances for Certain Retired Group II Members. Amend RSA 100-A by inserting after section 41-a the following new section:

I. An eligible retired group II member of the New Hampshire retirement system whose annual retirement allowance is less than an amount specified in paragraph II and who retired on or before June 30, 1998, shall receive a one-time supplemental allowance. An eligible retired group II member shall be a member, or beneficiary of such member, who retired with at least 20 years of creditable service under RSA 100-A:5, II, or member, or beneficiary of such member, who retired under RSA 100-A:6, II.

II. The one-time supplemental retirement allowance payable to the member shall be the percentage of the member's annual retirement allowance as follows:

(a) Annual retirement allowance less than $9,300, the applicable percentage to reach a $10,000 annual retirement allowance;

(b) Annual retirement allowance greater than or equal to $9,300 and less than $11,700, 7 ½ percent;

(d) Annual retirement allowance greater than or equal to $13,700 and less than $15,700, 4 percent;

(e) Annual retirement allowance greater than or equal to $15,700 and less than or equal to $17,700, 3 percent.

III. The one-time supplemental retirement allowance payable to each beneficiary of the member shall be determined as described in paragraph II except the specified amounts of $9,300, $10,000, $11,700, $13,700, $15,700, and $17,700 shall be multiplied by the ratio of the beneficiary's annual retirement allowance to the member's annual retirement. The provisions of this section shall not apply to a group II member who has retired on a reduced or vested deferred retirement allowance. The additional allowance shall become a permanent addition to each member or beneficiary's base retirement allowance, as provided in RSA 100-A:41-a.

120:5 Funding of Supplemental Allowances. The total actuarial cost of the additional allowances provided in RSA 100-A:41-b as inserted by section 4 of this act shall be funded on a terminal basis from the special account established in RSA 100-A:16, II(h).

120:6 Repeal. RSA 100-A:5, II(c)(2) and (3), relative to the reduction in minimum service retirement allowance due to federal social security benefits or other benefits, are repealed.

120:7 Applicability. The changes to retirement system benefit amounts in sections 2 and 4 of this act shall apply as of the effective date of this act, but payment of the benefit amounts accruing to any member or beneficiary as of the effective date may be delayed by the retirement system until such time as necessary administrative and system upgrades are accomplished provided such payment is by September 30, 2000.

The N. H. Retirement System indicates this bill, as amended by the House, will have no fiscal impact on state, county and local revenues or expenditures.

The N. H. Retirement System Special Account will decrease by $6,280,000 in FY 2000.

The System indicates this bill will require spousal consent if the member elects an option or changes an option election. There is no cost impact resulting from the spousal consent requirement. In addition, this bill will provide for certain Group II members who retired on or before July 1, 1998, the greater of a one-time additional annual allowance or a $10,000 annual benefit. The additional allowance would be as follows:

The System has determined that there are 79 retired policemen or beneficiaries of retired policemen, and 80 retired firemen or beneficiaries of retired firemen who would benefit from the $10,000 annual benefit. The terminal funding for providing this benefit would total $2,140,000 for policemen and $1,880,000 for firemen.

The System has determined that there are 208 retired policemen or beneficiaries of retired policemen, and 221 retired firemen or beneficiaries of retired firemen who currently receive annual retirement benefits greater than $9,300 but less than $17,700. These members and

beneficiaries would receive a one-time additional allowance based on the table above. The terminal funding for providing this benefit would total $1,120,000 for policemen and $1,140,000 for firemen.

The cost to terminally fund the benefits provided in this bill would total $3,260,000 for policemen and $3,020,000 for firemen, resulting in a total cost of $6,280,000 in FY 2000. This would be funded from the respective Special Accounts of the System.

$10,000 Annual Benefit $2,140,000 $1,880,000

Additional Allowance 1,120,000 1,140,000

Total Terminal Funding $3,260,000 $3,020,000

There are no administrative costs associated with this legislation.

The Special Account balance for policemen and firemen as of June 30, 1999 was $69,100,000 and $58,700,000 respectively.

The Actuary's letter is on file in the bill jacket in the Senate Clerk's Office.