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Retired judge wins decision regarding change to pension

New Hampshire Union Leader

March 31. 2012 10:11PM

CONCORD - Retired New Hampshire Probate Court Judge Raymond Cloutier won a mixed decision Friday from the state's Supreme Court in a case regarding his pension, along with the pension of six other judges, with the court sending a key question back to a lower court for a ruling.

The state's Supreme Court sided with Cloutier and six other judges, in ruling that a 2005 change to the judicial pension law was unconstitutional and a breach of contract because it lowered their pensions.

Oral arguments were heard in the Supreme Court on Aug. 26, 2011. The retired judges argued they were, in fact, vested in the pension system the day they became judges and that the subsequent changes made to the terms of their pension benefits constituted a breach of the state's constitution.

In an appeal to the Supreme Court of a lower court's decision in favor of the judges, Attorney General Michael Delaney wrote, 'In effect, (the judges) seek to create their own 'retirement plan' by picking the aspects of each plan that benefit them.'

Delaney asked the Supreme Court to reverse a September 2010 decision by retired Judge Kenneth Brown, which ruled a pension law enacted in 2005 was unconstitutional as applied to the judges 'who accepted their positions before' the law was changed. According to Brown's decision, after the law changed, the seven judges' pensions were worth between $26,225 to $218,187 less than before the law was passed.

Brown wrote that he agreed that judges' constitutional rights were violated by the state. He also ruled the judges became vested as soon as they qualified as permanent employees.

In the decision, the justices wrote: 'The trial court found that because the prior retirement statutes allowed for the calculation of retirement benefits based upon the most recent adjustments in judicial salaries, and because the new statute bases benefits on the amount the judge was being paid at the time of retirement, the new statute is clearly an impairment of the plaintiffs' vested rights under the previous statutory benefit.

'We agree with the trial court that RSA chapter 100-C impairs the obligations entered into under the prior retirement statutes. The petitioners had the right to expect that upon retirement their pension would reflect subsequent increases in pay granted to those in active service.'

During the lower court hearing at Strafford County Superior Court, the state had argued that the pension law, prior to the changes made in 2005, at least for judges, was fiscally irresponsible and created an 'unfunded liability,' according to language included in Judge Brown's decision.

The judges were also asking the Supreme Court to affirm the lower court's decision that 10 percent and 1 percent raises, given to the judges, should not be used when making calculations to determine their pension amounts. During testimony in the lower court, Delaney explained to the court that 10 percent raises the judges received in 2003 and the 1.01 percent raises they were given in 2005 were doled out to cover a 10 percent increase in member contributions, which were required by law.

The judges argued in their cross-appeal that the trial court incorrectly excluded the salary increases in calculating their benefits under the prior retirement statutes.

The 10 percent increase matched the contribution of 10 percent of earnable compensation that judges are required to make to the new plan. Because the judges' contribution to the plan was also based upon the 10 percent increase, in 2005 judicial salaries were increased by one percent to correct for that effect.

The judges argued that these increases should be included in the base calculation of retirement benefits because: the prior retirement statutes calculate benefits as seventy-five percent of the 'currently effective salary' for sitting judges, state law did not expressly exclude the salary increase from the calculation of the petitioners' benefits payable under the prior plan; and excluding the 10 percent raise violates the state constitution.

The Supreme Court decision recommends that this part of the case be remanded for further findings by the trial court 'as to whether the impairment of the petitioners' contract rights is offset by any compensating benefits under the new law.'

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