LONDONDERRY — With the town expected to pay higher retirement pension rates starting this summer, town councilors had plenty of questions for legislators and state officials attending Monday night’s meeting.

Council Chairman John Farrell said the recent changes, which were announced about a week ago, will complicate matters at a time when a new budget season is just beginning.

The New Hampshire Retirement System generally sets its rates every two years, and for fiscal year 2014 the rates are higher due to a lowering of assumed rates on previous investment returns. The assumed rate of return was lowered by around 1 percent in May 2011, so the coming budget season will be the first one reflecting that change.

While it’s too early to say exactly what the long-term effects of the rate increase might be in Londonderry, Farrell said he expected the process of reaching collective bargaining agreements with the town’s employee unions to be especially daunting this time around.

“We’re not looking to degrade services, and our commitment is to retain the same staffing levels,” he said. “But we definitely have our work cut out for us this year.”

As it stands now, the town is responsible for 11.3 percent of teachers’ pensions, 22.9 percent of firefighters’ pensions and 20 percent of police pensions, according to Marty Karlon, public information officer for the N.H. Retirement System.

As of July 1, those rates will increase to 14.2 percent for teachers, 27.7 percent for firefighters and 23.8 percent for police.

The state retirement system provides lifelong pension benefits to teachers, firefighters and police officers.

Currently, an estimated 49,738 active employees and 27,130 retirees and beneficiaries are covered by the statewide pension system. As of this year, the state is no longer assisting with the payment of pension funds.

Londonderry Sen. Sharon Carson said she and other legislators had attempted to get a bill passed aimed at easing the burden on municipalities and establish a commission to work toward a more defined contribution plan, but the item was ultimately rejected.

“The problems with the retirement system did not happen overnight,” Carson told the councilors this week. “Right now … the problem still remains that rates are getting higher for municipalities.”

She noted that the most recent changes mean new hires will now have to work longer before retiring and won’t receive as many benefits as once they do.

Karlon said the economy has fluctuated over the past 15 years and that factor, combined with a flawed calculating system, has led to severe underfunding of the state pension fund.

“Essentially, there are several main reasons why the system’s status is where we’re at now,” he said. “The 2008 economic crash definitely made matters worse.”

Councilor Tom Freda criticized the rate increases, noting that the rising costs would ultimately be reflected in residential tax bills.

“This just doesn’t happen in the private sector … and I don’t see how you can expect taxpayers to keep taking the hit,” Freda said, though he said he’s more interested in fixing the problem than placing blame.

“I have to decide, as one voter here, where money goes,” he said. “Blame is irrelevant, because you’re pushing the payout to us. I see both sides of it. When you get down to it, you’ve got a benefit and have to figure out how to pay for it.”

Carson said: “We realize we’re all taxpayers sitting in this room and it affects all of us. But we don’t have billions in cash to throw into the system to make it whole again.”

aguilmet@newstote.com