New Hampshire Retirement System NHRS

1
New Hampshire Retirement System(NHRS)

• Briefing for the New Hampshire
• School Administrators Association

9/29/05
2
Overview of Program

• Type of plan and governance
• Demographics and Trends
• Retirement Benefits
• Death Benefits
• Health Insurance after Retirement
• Special Account
• 2005 Legislation

3
NHRS Governance

• RSA 100-A
• Administrative Rules
• NHRS Board of Trustees
• Teacher Members
• Joseph Morris, Sam Giarrusso
• Employee Members
• Dennis Kinnan, Chuck Koontz

4
NHRS Membership

• Group I
• Employee members
• Teacher members
• Group II
• Firefighter members
• Police Officer members

5
Defined Benefit Plan

• Benefits are determined by a specific formula
  which considers two variables
• Salary
• Service Credit

6
In Contrast to a Defined Contribution Plan

• Contributions
• Investment returns
• Risk is on the individual
  member
• It may be possible to outlive retirement savings

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NHRS Lifetime Pension

• Pension funding comes from
• Member contributions
• Employer contributions
• Growth of the trust fund assets
• Generally, members recover their
  personal contributions within 5-7
  years after retirement

8
How NHRS Guarantees the Pension

• Biennial actuarial valuation
• The amount needed to meet benefit obligations

9
Funding Status

• Factors that impact funding status
• Expected annual rate of 9.0 v. actual rate of
  return
• Life expectancy
• Average annual earnings
• (The employer contribution rate shall be
  increased in order to maintain the funded ratio
  of assets to liabilities.)

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Employer Rates

• Rates Effective 7/1/05 - 6/30/07
• Employees 6.81
• Teachers
• District share 3.7
• State share 2.0
• The State pays 35 of the cost
• for teachers

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Demographics

• Workers Age 45 and older
• New Hampshire 58.3
• United States 50.2
• -US Census Bureau, 2002-2003

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Retirement Trends

• Number of retiring NHRS members has increased
  nearly 30 per year.
• Number of retiring NHRS members from 2001 to 2011
  will more than double!

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Recent RetirementsAll Classifications
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Recent Retirements
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Teacher Shortage

• Approximately 500 public school teachers retire
  each year.
• -NHRS
• Nearly 35 of newly hired teachers leave the
  profession within 5 years.
• -NEA-NH
• One-third of new teachers leave within 3 years
  up to 50 leave within 5 years.
• -National Commission on Teaching

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4000 Eligible Teachers
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Retirement Projections
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Retirement

• What is it?
• When?
• How much?

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Service Credit

• Creditable Service -
• Months and years of service credit earned as a
  contributing member
• Optional (Prior) Service Credit

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Prior Service

• Military
• Out of State
• Probationary/Temporary
• Employer Enrollment Oversight
• Previously Withdrawn
• Workers Compensation

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Salary Credit

• Average Final Compensation (AFC) - The average of
  a members three highest-paid years of creditable
  service
• 120 day law
• 150 earnings limitation
• Grandfathered severance

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Service Retirement

• Age 60, no minimum service
• Age 50-59, minimum 10 years of service,
  permanently reduced pension
• Minimum 20 years of service when years of service
  plus age 70

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Service Retirement

• AFC 60, multiplied by
• creditable service annual pension
• 30,000 60 500 x 30 years
• 15,000

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Service Retirement

• Age 65 and older
• AFC 66, multiplied by
• creditable service annual pension
• 30,000 66 455 x 30 years
• 13,636

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Early Service Retirement

• At least 10 years of service
• Ages 50-59
• OR Rule of 70
• At least 20 years of service
• Age Service 70

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Early Service Retirement

• Permanent reduction to pension
• Based on of years before age 60 that retirement
  commences
• 35 years..1 ½
• 30-34 years ..3
• 25-29 years ..4
• 20-24 years ..5
• lt 20 years.6 2/3

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Vested Deferred Retirement

• 10 years of creditable service
• Terminate covered employment
• Do not withdraw accumulated contributions
• Pension can commence at age 60, or earlier as an
  early reduced pension

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Disability Retirement

• Ordinary Disability
• Non-job-related incapacity
• Vested
• Accidental Disability
• Job-related incapacity
• No minimum service required

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Filing Requirements

• File for benefits with NHRS
• 30-90 days prior to effective date of retirement
  (always the first of a month)
• Terminate your employment prior to the effective
  date of retirement
• Monthly pension

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Death Benefits after Retirement

• Reduced pension based on option selected and the
  age of the primary beneficiary(ies)
• Lifetime pension to beneficiary
• Various options available

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Death BenefitsBefore Retirement

• Ordinary Death (non-job-related)
• Accidental Death (job-related)
• Must be in service

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Pre-selection

• If you are still working AND
• age 60 or older
• Lifetime pension to beneficiary

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Health Insurance after Retirement

• School Districts must allow their retiring
  teachers and employees to continue to participate
  in the medical insurance plan
• School Districts are not required to pay for the
  medical insurance coverage

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Medical Subsidy

• Must retire under service, early service, vested
  deferred, or ordinary disability retirement on or
  before July 1, 2008

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Medical Subsidy

• Group I members with at least 20 years of
  creditable service will be eligible at age 60
• Group I members with at least 30 years of
  creditable service, will be eligible as early as
  age 55

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Medical Subsidy Rates

• Type of Plan Rate
• 1 Person 321.98
• 2 Person 643.96
• 1 Person- Medicare supplement 203.06
• 2 Person- Medicare supplement 406.12
• Rates increase by 8 each year, on July 1

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Cost-of-Living AdjustmentsCOLAs

• Approved by Fiscal Committee of NH legislature
• Permanent addition to pension
• Must be retired at least 12 months to be eligible

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Special Account

• RSA 100-A16, II(h) established a Special Account
  to fund additional benefits

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Special Account

• The assumed actuarial rate of return set by the
  NHRS Board is 9.0
• Actuarial returns in excess of 9.5 go into the
  Special Account, on a 5 year smoothing formula

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(No Transcript)
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Special Account

• COLAs are the primary purpose
• 3-year reserve of 5 COLAs
• Other benefits may be approved
• (The Legislature may approve additional benefits
  if funds are below the reserve.)

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Legislative Study CommitteeHB 181

• Research and develop
• the most appropriate method for increasing
  Special Account balances

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Legislative Study Committee

• To provide COLAs for future retirees
• To provide the medical subsidy to future retirees

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Legislative Study Committee

• General Court Web Site
• http//www.gencourt.state.nh.us/ie/

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Inactive MembersHB 210

• Effective June 30, 2006
• Inactive members who are not vested may leave
  their funds in NHRS for up to two years (not six
  years).

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Important Reminders

• Contact NHRS prior to terminating employment to
  determine your options
• You must file for benefits while you are in
  service
• Make sure your beneficiary designation is
  up-to-date

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New Hampshire Retirement System

• Call 603-271-3351
• Toll Free 1-877-917-6477
• Information sessions/publications.x272
• Filing for benefits/benefit questions..x279
• Service credit......x232
• .
• www.nh.gov/retirement