CONCORD – Senate Republicans are taking a broad brush to retirement reform with a wide-ranging revision of the state's public pension plan they will unveil today.
The bill raises mandatory contributions by employees, increases retirement ages and required years of service, cuts the number of workers serving on the New Hampshire Retirement System and reduces the compensation that can be considered in pension formulas.
The bill also calls for a study that could lead to creation of a plan like the 401(k) plans that have come to dominate retirement planning in the private sector.
For the most part, the changes will apply to people who are hired after June 30, 2011. Others apply to those with less than 10 years of service, including the changes in retirement age.
The fact that most conditions won't change for more experienced workers means the reforms would have a slow-motion effect on righting a serious funding shortfall.
The New Hampshire Union Leader obtained a completed draft of the Senate bill Wednesday.
Senate Majority Leader Jeb Bradley, R-Wolfeboro, is prime sponsor of the proposal, with 11 senators and four House members as co-sponsors.
Bradley said yesterday the pension system's unfunded long-term obligations are nearly $4.75 billion, when medical subsidies are included in the calculation. The NHRS fund is at 58.5 percent of what it needs to meet its long-term obligations to all workers and retirees.
The problems have several causes, Bradley said, including a flawed accounting system lawmakers left in place for most of two decades, the use of excess investment earnings to subsidize retiree health plans, and a number of severe stock market downturns, most recently in 2008.
Taxpayers have seen their contributions quadruple over the past decade, from $70 million in 2000 to $302 million last year.
Because most changes apply to workers who haven't even been hired yet, Bradley said, "It is going to take time to turn this around. That doesn't mean that just because these provisions are not going to be a magic wand that we shouldn't do them now. The longer we kick the can down the road, the more difficult solutions become, and the higher the burden on taxpayers."
David Lang, president of the Professional Firefighters of New Hampshire, predicted a battle from a coalition of public employee and retirement groups. He said changing the NHRS benefits or conditions for anyone who is a permanent employee could run up against past state Supreme Court decisions.
"A lot of this is going to be unwound in the courts eventually, so we're just wasting time," Lang said.
The package combines elements of several bills already making their way through the Legislature, primarily in the House. Earlier this month, Speaker of the House William O'Brien created a special committee on retirement issues, headed by Rep. John Reagan, R-Deerfield, a long-time advocate of pension reform. That committee meets Friday.