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House, Senate negotiators debate pension changes
CONCORD — House and Senate members negotiating changes in the state retirement system did agree on one thing Friday — to use the House's contribution rates for police and firefighters.
After more than an hour-and-a-half of talk about how to determine an employee's pension benefit and how to deal with system retirees who take part-time jobs for cities, towns, school districts, counties and the state, negotiators quickly agreed on how much police and firefighters should contribute to the retirement system beginning July 1.
The House and Senate both proposed Group 1 members, which include state, county, municipal and school district employees, would see a contribution increase from 5 to 7 percent of their salaries, but did not initially agree on the amount Group 2 members — police and firefighters — should contribute.
Currently, police and firefighters contribute 9.3 percent of their salary for retirement. The House proposed police pay 11.55 percent and firefighters pay 11.8 percent. The Senate proposed 11.3 percent for both police and firefighters.
The two sides agreed to use the House's contribution rate increases and that the change would begin July 1, but did not decide if other changes in the retirement system statutes would be effective Dec. 1 or Jan. 1, 2012.
Earlier in the day, the House and Senate again clashed over how to handle system retirees who take part-time jobs for public employers. Cities and towns and the court system hire part-time workers because they do not have to pay for health insurance benefits or contribute to the retirement system.
The House wants a strict limit on how many hours part-time employees can work before they have to contribute to the retirement system along with the employer, but the Senate has proposed a 36-hour limit before the worker and employer would have to contribute.
The Senate's chief negotiator, Majority Leader Jeb Bradley, R-Wolfeboro, asked the House to clarify if the additional contributions from part-time workers would be used to pay down the $4.7 billion in unfunded liability the system faces for pensions and medical benefits, or if the contribution would instead help lower employer contributions to the system for full-time workers.
The House's chief negotiator, Rep. Ken Hawkins, R-Bedford, said the House proposal would help reduce the system's unfunded liability.
Rep. Neal Kurk, R-Weare, said, “We've created a bizarre system where cities and towns want to hire as many part-time employees as possible because they can save on health care and pension costs. But when they do, they hurt the (retirement) system.”
The two sides will revisit the issue Monday, when negotiators meet again at 10 a.m. in the Legislative Office Building.
The Senate proposed changing the method used to determine a retiree's pension benefit for non-vested and new employees by eliminating unused sick, vacation or comp time, overtime, or longevity or severance pay in lump sum payments prior to retirement to increase pension benefit.
Instead the benefit would be based on an employee's base pay, which includes overtime, vacation and sick time, etc.
The pension benefit also will be based on the five highest years of service instead of the current three-year period.
Negotiators will discuss the plan Monday as well.
Under both the Senate and House plans, public employees would have to work longer, contribute more and, in many cases, receive a lower pension when they retire.
Under both plans, retirees would give up cost-of-living raises for the foreseeable future and see medical subsidies reduced by doing away with a special fund used to pay cost-of-living raises and the subsidies.
And the composition of the retirement system board of trustees would be changed to include more employer representatives.
The state retirement system pays pensions to 24,000 retired public workers, and includes more than 50,000 active workers.
After more than an hour-and-a-half of talk about how to determine an employee's pension benefit and how to deal with system retirees who take part-time jobs for cities, towns, school districts, counties and the state, negotiators quickly agreed on how much police and firefighters should contribute to the retirement system beginning July 1.
The House and Senate both proposed Group 1 members, which include state, county, municipal and school district employees, would see a contribution increase from 5 to 7 percent of their salaries, but did not initially agree on the amount Group 2 members — police and firefighters — should contribute.
Currently, police and firefighters contribute 9.3 percent of their salary for retirement. The House proposed police pay 11.55 percent and firefighters pay 11.8 percent. The Senate proposed 11.3 percent for both police and firefighters.
The two sides agreed to use the House's contribution rate increases and that the change would begin July 1, but did not decide if other changes in the retirement system statutes would be effective Dec. 1 or Jan. 1, 2012.
Earlier in the day, the House and Senate again clashed over how to handle system retirees who take part-time jobs for public employers. Cities and towns and the court system hire part-time workers because they do not have to pay for health insurance benefits or contribute to the retirement system.
The House wants a strict limit on how many hours part-time employees can work before they have to contribute to the retirement system along with the employer, but the Senate has proposed a 36-hour limit before the worker and employer would have to contribute.
The Senate's chief negotiator, Majority Leader Jeb Bradley, R-Wolfeboro, asked the House to clarify if the additional contributions from part-time workers would be used to pay down the $4.7 billion in unfunded liability the system faces for pensions and medical benefits, or if the contribution would instead help lower employer contributions to the system for full-time workers.
The House's chief negotiator, Rep. Ken Hawkins, R-Bedford, said the House proposal would help reduce the system's unfunded liability.
Rep. Neal Kurk, R-Weare, said, “We've created a bizarre system where cities and towns want to hire as many part-time employees as possible because they can save on health care and pension costs. But when they do, they hurt the (retirement) system.”
The two sides will revisit the issue Monday, when negotiators meet again at 10 a.m. in the Legislative Office Building.
The Senate proposed changing the method used to determine a retiree's pension benefit for non-vested and new employees by eliminating unused sick, vacation or comp time, overtime, or longevity or severance pay in lump sum payments prior to retirement to increase pension benefit.
Instead the benefit would be based on an employee's base pay, which includes overtime, vacation and sick time, etc.
The pension benefit also will be based on the five highest years of service instead of the current three-year period.
Negotiators will discuss the plan Monday as well.
Under both the Senate and House plans, public employees would have to work longer, contribute more and, in many cases, receive a lower pension when they retire.
Under both plans, retirees would give up cost-of-living raises for the foreseeable future and see medical subsidies reduced by doing away with a special fund used to pay cost-of-living raises and the subsidies.
And the composition of the retirement system board of trustees would be changed to include more employer representatives.
The state retirement system pays pensions to 24,000 retired public workers, and includes more than 50,000 active workers.