Herald editorial on NHRS irresponsible
Feb. 9 — To the Editor:
I am writing in response to your editorial on Feb. 3, 2011, "Bradley bill provides vital reform for N.H. pensions." I found your comments irresponsible and at points inaccurate. I am disappointed that this newspaper would print an editorial that only fans the flames of political rhetoric instead of relying on facts. People read newspapers for news, and while this is an opinion page, I believe it is still important to remain accurate.
Your editorial stated, "The system is not going to make up a $3.5 billion deficit without real reform. Take a look around the nation at the number of public pension systems that have collapsed or are in jeopardy of collapsing." Is that your way of suggesting that the New Hampshire Retirement System is in danger of collapsing? If so, you are quite mistaken. The NHRS Comprehensive Annual Financial Reports for the last 12 years are available online, and show that the system has taken in more than a billion dollars more than benefits paid in this time period, including nearly $500 million in the last year alone. It's simple: when a system is taking in more payments then it's distributing in benefits, it does not mean the system is "collapsing."
In 2010, the NHRS reported $1.126 billion in additions to plan assets and $688.6 million in deductions to plan assets. The system reported a 12.9 percent rate of return on investments for the period ending June 30, 2010. Again, a large return like this — in a very tough economic climate, I might add — is hardly the sign of a system on the brink.
Municipalities claim that the reason they pay 19.51 percent of payroll for police officers and 24.69 percent for firefighters is because the benefits structure is too generous. In fact, the reason for these costs is because the legislature placed NHRS on an accounting scheme that deliberately depressed the employer's contributions, at their urging, and pushed the funding off to a future date. That date is here. Now, these employers are trying to get out from under the bills they incurred over time by crying out that their employees are too expensive. For every dollar paid by the employer for a firefighter's pension benefit, 58.10 cents pays off the debt for the past funding scheme; for police officers, it is 59.50 cents for every dollar paid. The only way to pay back the unfunded liability The Herald is so concerned about is for employers to take responsibility for the bills they owe. By law, employee benefits can only be used to pay for normal pension costs, a safeguard against governments dipping their hands into the pockets of employees when they don't want to pay their share.
Understandably, paying off a $3.7 billion liability of one's own making is a daunting task. That is why in 2006, the Legislature allowed for the ability for the employer to pay back their debt over a 28-year period. The Retirement System Trustees have also made the responsible change to the investment goals of the system to be better prepared for future market conditions. These are the kind of reforms that will help close the unfunded liability and they need time to work. The NHRS staff has been working to educate legislators and the public about these issues and they have imparted the same sentiment. We are on the right track to fully funding the system, now let it work and leave it alone.
Your editorial states, "David Lang, President of the Professional Fire Fighters of New Hampshire, said the plan would unconstitutionally cut benefits to workers not vested in the system with less than 10 years of service. Such resistance is expected, though that defense is suspect." Perhaps your paper was unaware of recent opinions and case law regarding this issue and that is why you have called the defense "suspect." The assistant attorney general, Richard Head, has expressed this to be his belief in the commission report on House Bill 876 (Jan. 2, 2008). And, according to New Hampshire case law, as decided in Jeannont v. N.H. Personnel Commission, 118 N.H. 597, 602, 392 A.2d 1193, 1196 (1978); see RSA 100-A:3, and affirmed in Cloutier v. State, No. 219-2009-CV-00525 (Sept. 24, 2010), which was a case regarding judges retirement. The court ruled again that the plaintiff's retirement benefits had vested when they became a permanent employee, not after 10 years.
There is a debate underway in our state about public pensions and what they should entail as well as what they should cost. That is a conversation we welcome, but let us all speak rationally, factually and responsibly about these issues. While it may be advantageous to exaggerate and incite, it is not helpful to the 76,000 people whose financial future rests with the NHRS; it is not helpful to the 425 legislators who must make decisions on these issues and it is not helpful to the public who is trying to comprehend these complicated issues.
William J. McQuillen
Professional Fire Fighters
of New Hampshire