DOVER — Debate and discussion about reforms to the state retirement system are far from over.
While municipal officials and legislators last week lauded SB3, which aims to make comprehensive changes to the system, union officials take issue with some of its proposals and provisions.
The bill's lead sponsor, Senate Majority Leader Jeb Bradley, R-Wolfeboro, was questioned during a meeting last week as to issues with its constitutionality. He maintains the bill meets constitutional muster, but some are anticipating it will run into some legal gridlock.
New Hampshire Professional Firefighters Association President Dave Lang said Monday the legislation proposes unconstitutional benefit cuts to police and fire employees with 10 years or less on the job.
Lang said the position of the NHPFFA is once someone comes on the job and begins to pay into the defined benefit plan, a contractual relationship is born between the employee and employer.
"The state of New Hampshire recognizes those contractual relationships," he said.
He said there is a confusion between the use of the word "vesting" and its legal definition.
"Our belief legally is that the benefits are vested once you start," he said.
SB3 has several components that would apply to "nonvested" employees who have worked less than 10 years and new hires. These provisions include the elimination of "spiking," which is the use of unused sick time, unused vacation time and career buyouts to enhance earnable compensation wages, and the elimination of further special detail compensation to form the pension calculation (accumulated special detail compensation would not be impacted).
He also said changing the benefit levels for nonvested police and fire employees would only affect about 40 percent, or 2,800, of the 5,000 Group 2 employees in the system.
"It's not going to have the desired effect and the savings will be minimal," Lang said. "When you look at the $3.7 billion unfunded liability, the piece that's associated to police and fire is about 25 percent of that $3.7 billion."
Twenty-five percent equates to about $900 million.
The association does support the components of the legislation that would increase the retirement age of Group 2 employees from age 45 to age 50 with 25 (instead of 20) years of service, and an increase in employee contribution rates from 9.3 percent for Group 2 to 11 percent. Lang said the benefit structure would be intended to stay the same with those changes and that both changes should apply to new hires.
According to the language of SB3, the legislation that increases the retirement age would apply not only to new hires but to employees with less than 10 years of service (nonvested).
He said they also agree with the language that prohibits "double-dipping" — current law allows employees to receive a full pension from previous employment while working part time, or less than 32 hours a week, in another NHRS-covered position. The legislation proposes reducing part-time employment to 24 hours a week that would be eligible for a second pension.
"When you're retired, you should not come back into a NHRS certified position," Lang said.
Although John Stewart, president of the New Hampshire Police Association, could not be reached for comment for this story, he said in a press release from the New Hampshire Retirement Security Council that Bradley's bill doesn't reflect how system members feel.
"Our members' benefits are modest and more importantly, they are reinvested in the local New Hampshire communities where our members worked and continue to live and contribute to the economy," Stewart said.
Rhonda Weslowski, president of New Hampshire Northern Education Association, said SB3 calls for higher employee rates and diminished benefits "and we are unwilling to concede to a lesser benefit for a higher cost."
The Retirement Security Coalition has raised question about the constitutionality of making changes to nonvested employees' contracts. Bradley has argued that at the point before vesting, there is no constitutional obligation.
"It's illogical to say no changes can be made to a retirement package from the day you're hired," he said recently.
Lang maintains comprehensive changes made by the Legislature in 2007 and 2008 with HB653 and HB1645, which changed the way the system is funded and how the system works need time to take effect before additional legislation is introduced.
"When you build retirement systems, you do it over a 30 year horizon," Lang said. "We just think we're wasting time and taxpayer money in going through the court system to protect those members rights."
He added, "We hope to have a series of discussions with Senate leadership and leadership at the House. We're willing to come forward with reasonable proposals that will ensure fair coverage at the end of the day."