1 / 40

New Hampshire Retirement System Presentation for NHSAA

New Hampshire Retirement System Presentation for NHSAA. Plan Governance. NH Legislature: Plan Sponsor RSA 100-A serves as plan document NHRS Board of Trustees and Independent Investment Committee Members serve as fiduciaries NHRS staff implements RSA 100-A

jett
Download Presentation

New Hampshire Retirement System Presentation for NHSAA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. New Hampshire Retirement System Presentation for NHSAA

  2. Plan Governance • NH Legislature: Plan Sponsor • RSA 100-A serves as plan document • NHRS Board of Trustees and Independent Investment Committee Members serve as fiduciaries • NHRS staff implements RSA 100-A • Internal Revenue Code provisions • NH Constitution Art. 36-a protects funds “for the exclusive purpose” of providing benefits

  3. Fiduciary Management Contributions Benefit Payments = + + Investment Earnings Expenses + • Equation must balance over long-term

  4. Trust Fund • Member Contributions • Fire and Police = 9.3% of earnings • Employees and Teachers = 5.0% of earnings • Employer Contributions • Actuarially determined • Based on membership classification • Includes pension contribution and medical subsidy contribution • Trust Fund Investment Earnings *State employees hired on or after July 1, 2009, must contribute 7.0% of gross earnings

  5. Actuarial Analysis • Biannual Actuarial Valuation • Calculates funding status • Used to set employer rates • Assumptions derived in experience study • Actuarial Experience Study • Conducted every five years • Evaluates assumptions • Member demographics and mortality • Investment Assumptions • Inflation

  6. Employer Contributions • Actuary recommends average increase in employer rates by 22.7% of total fund for biennium beginning July 1, 2011 • Increases from 11.4% to 31.1% based on membership classification (employee, teacher, fire, police) • Rate increases primarily due to investment losses • Employer rate increases to be less dramatic than other plans

  7. Employer Contributions Group I Political Subdivision Employers – 2010-11 *The State of NH contributes 25% of the cost for teacher members, and the employer contributes the remaining 75%. The contribution percentage is scheduled to revert to a 35% (state)/65% (employer) split in Fiscal Year 2012.

  8. Employer Contributions Group I Political Subdivision Employers – 2012-13 (projected) *The State of NH contributes 35% of the cost for teacher members, and the employer contributes the remaining 65%.

  9. Employer Contributions

  10. Funded Ratio History

  11. Funding Status of NHRS • 58% funded as of June 30, 2009 • NHRS well-positioned to recover as economy improves; 2010 numbers still being audited, but overall return on marketable assets is encouraging.

  12. Investment Management • Board of Trustees • Independent Investment Committee • Investment Strategy • Asset Liability Modeling

  13. Independent Investment Committee • New as of January 1, 2009 • Oversees the administration of the investment program within Board’s policies • Hires investment service providers, such as the custodian and investment managers • Prepares a comprehensive annual investment report for approval by the Board

  14. Investment Strategy • Reviewed annually • Long-term time horizon • Manages risk and liquidity • Diversifies portfolio among different types of assets

  15. Trust Fund Assets

  16. Investment Performance

  17. Financial Status of NHRS • Trust fund stood at $4.9 billion as of June 30, 2010 • Marketable assets showed a 13.7% return for year ending June 30, 2010 • Investment performance better than many other funds

  18. Asset Liability Model • Models asset allocation alternatives • Maximize investment returns • Acceptable levels of liquidity and risk • Liquidity: cash management to fund benefits payments • Goal: Balance expected return, risk, and liquidity

  19. Legislative Review2008 - 2010 • Board Governance • Changes to Certain Benefits • Employer Assessments and Contributions • Funding Source of Certain Benefits • Post-Retirement Benefits • Spiking

  20. 2008 Laws House Bill 1516-FN • Sudan Divestment Act House Bill 1520 • Peace Corps or AmeriCorps service credit House Bill 1643 • Extended eligibility for medical subsidy benefits to certain Group I teacher and political subdivision employee members who retired on or before July 1, 2009

  21. 2008 Laws House Bill 1645 • Definition of “Earnable Compensation” • Transferred $250 million to the State Annuity Accumulation Fund • Special Account funds will not be used to provide medical benefits • Effective July 1, 2008, medical subsidy rates will not increase for four years • Effective July 1, 2012, rates will increase by 4.0% each July 1st

  22. 2008 Laws House Bill 1645 continued: • Extended the deadline for medical subsidy eligibility for teachers and political subdivision employees • Created a legislative study commission to determine future funding for medical benefits

  23. 2008 Laws House Bill 1645 continued: • Granted certain COLA payments to eligible retired members • Granted one-time supplemental allowances to eligible retired members • Created a legislative study commission to determine future funding for COLAs

  24. 2008 Laws House Bill 1645 continued: • Newly appointed and reappointed trustees must have familiarity with or experience in finance or business management • Non-member trustees must have substantial experience in the field of institutional investment or finance • Chairperson now has vote on board

  25. 2008 Laws House Bill 1645 continued: • “Spiking” Legislation – 125% Calculation • Members shall cease to be active after more than 180 days of absence from service • Interest rate applied to funds of non-vested members is different from interest rate applied to funds of vested members

  26. 2008 Laws House Bill 1645 continued: • Maximum benefit for member hired on or after July 1, 2009, will be no more than $120,000 under service or disability retirement • Decennial Retirement Commission

  27. 2009 Laws “Spiking” Legislation House Bill 223 • Delayed the implementation of the “spiking” legislation (HB 1645, Laws of 2008) to July 1, 2010 House Bill 641 • NHRS to recommend methodology for determining employer assessment for excess pension benefits (“spiking assessment”) Senate Bill 108 • Established a study committee to review employer assessments

  28. 2009 Laws House Bill 2 • State’s share of employer contribution • 7.0% contribution rate for new state employees • State OPEB balance to $0.00 for calculating rates • Healthcare premiums for state retirees under age 65 House Bill 436 • Same gender married couples House Bill 633 • Extended eligibility for medical subsidy benefits to certain Group I teacher and political subdivision employee members who retired on or before July 1, 2009

  29. 2009 Laws Senate Bill 160 • Accidental Death Benefit • Pension to spouse continues upon remarriage Senate Bill 200 • Ordinary Death Benefit • Pension to spouse continues upon remarriage • HEART Act: Death benefit payable to beneficiary if member dies during military service

  30. 2010 Laws Special Session House Bill 1 • Provides Cost-of-Living Adjustments (COLA) and Temporary Supplemental Allowances (TSA) to eligible retirees and beneficiaries

  31. Challenges and Initiatives • Spiking • Supplemental Allowances • Working After Retirement • Lawsuits • Legislation 2011

  32. “Spiking” House Bill 1645, Laws of 2008 • Created the 125% employer assessment – “spiking” legislation House Bill 223, Laws of 2009 • Delayed the implementation of the “spiking” legislation (HB 1645, Laws of 2008) to July 1, 2010 Senate Bill 504, Laws of 2010 • Delayed the implementation of the “spiking” legislation (HB 1645, Laws of 2008) to July 1, 2011

  33. Supplemental Allowances • Cost-of-Living Adjustments (COLAs) become a permanent addition to the pension if and when granted by the New Hampshire Legislature • Temporary Supplemental Allowances (TSAs) are one-time payments • A legislative study commission will determine future funding of COLAs

  34. COLAs and TSAs

  35. Working After Retirement • May work for non-NHRS employer (such as private sector) • May not occupy NHRS-covered position and receive pension • Pension will cease • Active membership will be restored • Disability Retirement – Different provisions (gainful occupation earnings limitations) • NHRS is reviewing post-retirement employment issues

  36. Lawsuits • State health insurance for retirees • HB 1645 earnable compensation • Sudan divestment • State’s share of employer contribution rates

  37. Legislation 2011 • “Spiking solution” • State’s contribution to employer rates • Plan design changes

  38. NHRS Communications • Outreach and communication • Employer, member, and retiree education • Public Forums • Website and content enhancements • New “My Account” feature • User-friendly information • Consistent messaging

  39. Email Updates • Visit www.nhrs.org • Enter information in section entitled “NHRS Email Updates” • Receive up-to-date information on various NHRS-related topics

  40. NH Retirement System 54 Regional Drive Concord, NH 03301 Phone: 603-410-3500 Toll Free: 877-600-0158 www.nhrs.org info@nhrs.org

More Related