hb 0279

CHAPTER 275

HB 279-FN-A-LOCAL - FINAL VERSION

AN ACT relative to the payment of certain unfunded accrued liability of the retirement system and making an appropriation therefor; relative to payment of medical benefits costs for group II members of the retirement system; and relative to the election of optional allowances by certain retirement system members granted disability retirement benefits.

SPONSORS: Rep. Dyer, Hills 8

I. Makes a bonded appropriation for payment of certain unfunded accrued liability of the New Hampshire retirement system.

II. Extends the years of eligibility of active and retired group II members for the payment of medical benefits costs by the retirement system

III. Allows for payment of compensation after 120 days from termination of employment to be considered as earnable compensation.

IV. Allows retirement system members granted a disability retirement by the board of trustees to have 120 days from the decision by the board to elect an optional allowance.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

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

275:1 Appropriation. The sum not to exceed $5,250,000 is hereby appropriated to the New Hampshire retirement system for the purpose of the payment of the balance of the unfunded accrued liability attributable to the state for group I and group II members currently funded by an additional normal contribution percentage.

275:2 Bonds Authorized. To provide funds for the appropriation made in section 1 of this act, the state treasurer is hereby authorized to borrow upon the credit of the state not exceeding the sum of $5,250,000 and for said purpose may issue bonds and notes in the name of and on behalf of the state of New Hampshire in accordance with RSA 6-A. Payments of principal and interest of the bonds and notes shall be made from the general fund of the state.

275:3 Method of Financing; Contributions; Unfunded Accrued Liability Removed. Amend RSA 100-A:16, II(b) and (c) to read as follows:

(b) The contributions of each employer for benefits under the retirement system on account of group II members shall consist of a percentage of the earnable compensation of its members to be known as the "normal contribution", and an additional amount to be known as the "accrued liability contribution"; provided that any employer, other than the state, shall pay 65 percent of such total contributions, and 35 percent thereof shall be paid by the state; and provided further that, in case of group II members employed by the state, the state shall pay both normal and accrued liability contributions. The rate percent of such normal contribution in each instance shall be fixed on the basis of the liabilities of the system with respect to the particular members of the various member classifications as shown by actuarial valuations, except as provided in subparagraphs (h) and (i). [With respect to the balance of the unfunded accrued liability attributable to the state for group II members, as of June 30, 1994, such balance shall be funded prospectively as an additional normal contribution percentage as determined by the actuary. Such additional normal contribution percentage shall be assessed against the state payroll for the respective group II members until such time as the unfunded accrued liability is fully funded.]

(c) The contributions of each employer for benefits under the retirement system on account of group I members shall consist of a percentage of the earnable compensation of its members to be known as the "normal contribution", and an additional amount to be known as the "accrued liability contribution"; provided that, in the case of teachers, any employer, other than the state, shall pay 65 percent of such total contributions, and 35 percent thereof shall be paid by the state; and provided further that in case of teacher members employed by the state the state shall pay both normal and accrued liability contributions. The rate percent of such normal contribution in each instance shall be fixed on the basis of the liabilities of the system with respect to the particular members of the various member classifications as shown by actuarial valuation, except as provided in subparagraphs (h) and (i). [With respect to the balance of the unfunded accrued liability attributable to the state for group I members, as of June 30, 1994, such balance shall be funded prospectively as an additional normal contribution percentage as determined by the actuary. Such additional normal contribution percentage shall be assessed against the state payroll for the respective group I members until such time as the unfunded accrued liability is fully funded.]

275:4 Method of Financing; Reference to Unfunded Accrued Liability Removed. Amend RSA 100-A:16, II(f) to read as follows:

(f) The total amount payable to the state annuity accumulation fund in each year on account of each member classification shall not be less than normal contribution rate multiplied by the total compensation earnable by all members in such classification for such year, plus the amount of the accrued liability contribution necessary to liquidate the unfunded accrued liability on behalf of such classification as determined by the actuary under subparagraph (e) above [~~including such additional normal contribution percentages as determined by the actuary to be paid by the state under subparagraphs (b) and (c) above~~].

275:5 Group II; Medical Benefits; Application. Amend RSA 100-A:55, I to read as follows:

I. The additional benefits provided under RSA 100-A:52 shall apply to persons who are active or retired members of group II as of June 30, [~~1997~~] 2000; to persons who prior to July 1, 1988, had completed no less than 20 years of group II creditable service, but who for reasons other than retirement or death ceased to be a group II member prior to attaining the age of 45, and who, as of July 1, 1993, are eligible for vested deferred retirement benefits; and to persons who are group II permanent policemen or permanent firemen members on disability retirement as the natural and proximate result of injuries suffered while in the performance of duty who become permanent policemen members of group II [~~after June 30, 1988, but~~] before July 1, [~~2000~~] 2002 or permanent firemen members of group II [~~after June 30, 1988, but~~] before July 1, [~~2000~~] 2002. Such additional benefits shall not apply to other persons who become members of group II after June 30, [~~2000~~] 2002, without future legislation to include them. It is the intent of the legislature that future group II members shall be included only if the total cost of such inclusion can be funded by reimbursement from the special account established under RSA 100-A:16, II(h).

275:6 Retirement System; Definition; Earnable Compensation. Amend RSA 100-A:1, XVII to read as follows:

XVII. "Earnable compensation" shall mean for all members the full base rate of compensation paid plus any overtime pay, holiday and vacation pay, sick pay, longevity or severance pay, cost of living bonus, additional pay for extracurricular and instructional activities or for other extra or special duty, and other compensation paid to the member by the employer, plus the fair market value of non-cash compensation such as meals or living quarters if subject to federal income tax. However, earnable compensation in the final 12 months of creditable service prior to termination of employment shall be limited to 1-1/2 times the higher of the earnable compensation in the 12-month period preceding the final 12 months or the highest compensation year as determined for the purpose of calculating average final compensation, but excluding the final 12 months. Any compensation received in the final 12 months of employment in excess of such limit shall not be subject to member or employer contributions to the retirement system and shall not be considered in the computation of average final compensation. Provided that, the annual compensation limit for members of governmental defined benefit pension plans under section 401(a) (17) of the United States Internal Revenue Code of 1986, as amended, shall apply to earnable compensation for all employees, teachers, permanent firemen, and permanent policemen who first become eligible for membership in the system on or after July 1, 1996. Earnable compensation shall not include [~~any~~] compensation in any form paid later than 120 days after the member's termination of employment from a retirement eligible position, with the limited exceptions of disability related severance pay paid to a member or retiree no later than 120 days after a decision by the board of trustees granting the member or retiree disability retirement benefits pursuant to RSA 100-A:6 and of severance pay which a member was entitled to be paid within 120 days after termination but which, without the consent of the member and not through any fault of the member, was paid more than 120 days after the member's termination. The member shall have the burden of proving to the board of trustees that any severance payment paid later than 120 days after the member's termination of employment is earnable compensation and meets the requirements of an asserted exception to the 120-day post-termination payment requirement.

275:7 Optional Allowances; Disability Retirement; 120-day Period for 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, or any retiree within 120 days after a decision by the board of trustees granting the retiree disability retirement benefits pursuant to RSA 100-A:6, 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 or retiree elects to receive an optional retirement allowance under paragraph III, the beneficiary or beneficiaries whom the member or retiree 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 or retiree 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~~] a 120-day grace period. When an election or change of option is made during [~~the~~] a 120-day grace period, no retroactive adjustments will be made in payments already received by the retiree. When an election or change of option is made within 120 days after a decision by the board of trustees granting the retiree disability retirement benefits, the optional allowance shall be calculated using retiree and beneficiary age factors applicable as of the first day of the month following receipt by the board of the notice of election or change in option. 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.