Fixing the N.H. Retirement System

— Old-timers at the State House told us that this is a train wreck that's been coming for years. An audit back in 1994 said the retirement system was headed for trouble, but nothing was done until last year when we changed the way pensions are calculated from something the men in the gray suits call open group aggregate to something they call entry age normal.

— A first-grade teacher told us she thinks the system is in trouble. She used small words and simple sentences but she was talking about a problem that even a precocious first grader could understand. When the system was generating excellent returns during the days of the booming stock market in the 90s, some of the money was siphoned off into so-called special accounts to provide additional benefits for retirees. Then when the market went south at the beginning of this decade, the system began to bleed red ink.

— Policemen, firefighters and teachers all told us they're worried about their pensions and their health insurance. They've all been paying a fixed rate into the pension fund, the same rate whether the fund is doing good or bad. But their employers, the towns and cities and school districts, have been paying a variable rate depending on how the fund is doing. So they're afraid the employers — who get their money from the taxpayers — won't be able to cover that thorny UAAL problem, the underfunded liability. And they don't think they should have to pay more because they didn't get the same break as the employers when the stock market was booming.

— And the towns and cities and school districts are afraid their portion of pension costs will go up dramatically and that means higher local taxes. As a matter of fact, catching up with the UAAL could more than double the employer contributions, and that means big money added to town and city and school budgets if nothing is done.

— And everyone wants to tell us about the special accounts. Some of the excess earnings from the good years have been used to supplement health insurance premiums for some retirees. But that money has dried up and now it appears that people who retire after July 1 won't get the supplement. So some people are afraid lots of their experienced people might run for the door before July.

— But nobody seems to be able to explain exactly who gets the health insurance subsidy and why. And it appears that some of the towns and cities and schools have been paying toward the subsidies even though they don't have any retirees who are eligible. So some of the towns and school districts are suing the system to get their money back.

*The men in gray suits also told us that the retirement system board needs to have financial professionals overseeing the system. But the current board members — mostly public retirees themselves — tell us that it's their money and they should be the ones who control it.

The bill we're considering would transfer $250 million back into the fund from the special accounts, freeze the medical subsidies, establish a new health care plan, start a cost of living adjustment system and change the composition of the board. So it would make a real effort to remedy the problems. But it probably won't resolve all those differing perspectives on what's wrong with the retirement system.

And remember. All those differing perspectives and all those problems and all those arguments are about a bill that's non-partisan. I can hardly wait until we get to more controversial legislation.


Rep. Anne-Marie Irwin (D-Peterborough) is chair of the House Executive Departments and Administration Committee and chair of the Joint Committee of House Executive Departments and Administration and House Finance