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Negotiators: Vested NH workers to retain pension benefits

State House Bureau Chief

May 23. 2011 10:42PM

CONCORD - Members of the House and Senate yesterday agreed to leave in place most benefits for workers already vested in the state's public pension plan.

Although all public workers will have to pay higher pension contributions beginning July 1, negotiators agreed that the bulk of reforms in Senate Bill 3 will apply to those who are hired after July 1.

Senate Majority Leader Sen. Jeb Bradley, R-Wolfeboro, who chairs the committee, said there were serious concerns that changing benefits for vested workers could not withstand a court challenge. Workers are considered vested in the New Hampshire Retirement System once they have contributed to it for 10 years.

Some labor representatives argue that court decisions in the past award vested rights to anyone who gets through an initial probation period.

NHRS is the pension plan for more than 50,000 active workers and nearly 26,000 retirees. The plan calls for all public workers to pay roughly 2 percent more of their earnings toward their pensions each year.

Among changes that will hit new hires are delays on the age when workers can collect full pensions. For police and firefighters, pensions will not begin until age 52.5 under the tentative plan, even though they can retire at age 50. Teachers would not be able to collect a full pension until age 65, even if they retired earlier.

Newly hired police and firefighters would not make pension payments on special duty pay, but they would not have it used in pension calculations at retirement, either.

Newly hired state workers would not see the medical subsidy they now get after 20 years of service until they turned 65.

Bradley said the change for most workers will not be felt for 30 or 40 years, after new hires reach retirement age.

Those with fewer than 10 years in NHRS will see earnings used in pension calculations averaged over their five highest paying years, rather than their highest three years, as is current practice.

One change for vested workers would be to use a seven-year average of earnings for special duty and overtime pay in calculating pension benefits.

Settlement of the SB 3 differences carries a significant impact on the state budget. The original Senate plan, which was less aggressive than the House's version, would save state government an estimated $54 million in 2012 and 2013. Savings for all public employers, including schools and municipalities would amount to $127 million in 2012 and $225 million in 2013.

The Senate and House agreed to drop any mention of collective bargaining changes from the bill. Both the full House and Senate have agreed to study the issue of collective bargaining over the coming year.

The committee still has to agree on how to handle part-time workers and elimination of so-called double-dippers, who retire with full pension then take part-time jobs with government.

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