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Bill would keep state retirees from money not due them

State House Bureau

January 23. 2014 8:32PM

CONCORD — Two lawmakers want the New Hampshire Retirement System to recoup all money retirees received in error for any reason.

House Bill 1101 would also establish a study committee with subpoena power to review the system’s policies and procedures to recoup money paid to retirees, beneficiaries or members erroneously.

The bill’s prime sponsor, Rep. Peter Hansen, R-Amherst, said the bill was conceived after two former police officers that the system said owed more than $500,000 reached a settlement to pay back $20,000 over 20 years.

Hansen told the House Executive Department and Administration Committee Thursday that the system has little chance of recouping the money it is owed and that further impacts its financial situation.

The system has a $4.5 billion unfunded liability that lawmakers and the system are trying to address through increased contributions from employees and employers and reductions in benefits for new members of the system.

“This bill will provide tools to further ensure the financial strength of the system,” Hansen said, and added it would restrict the system’s flexibility to settle for less than full payment.

Two former police officers, John M. Egan and Brian J. Loanes, collected more than $500,000 in pension overpayments after they retired in 2001 and then took full-time jobs with Belknap County. Under state law, retiree can only work part-time and collect their retirement benefits The settlement also required Belknap County to pay the system $23,699.

NHRS spokesman Marty Karlon told the House committee that the case was the only high-profile settlement the retirement system has reached in the last five years.

The system has a procedure and system for recouping benefits paid in error through its statutory authority and a policy adopted by the board of trustees, Karlon said.

He said the benefit errors are often the result of an unreported death of a retiree or beneficiary, a divorce or early eligibility for Medicare, or a retiree returning to a full-time position that requires he or she and the employer to contribute to the system.

Since 2008 there have been seven or eight cases that exceeded $5,000 in benefits paid in error, Karlon told the committee, but he could not say how many cases there were and the total amount of money involved. He told the commission he would need to put together the information for the committee.

He noted that the Supreme Court has ruled in the system’s favor on several challenged cases in the past few months.

“We take no pleasure in taking money away from people,” Karlon said, “but in some cases it is in the best interest of the system as a whole.”

He said the system’s policy is such that if a retiree receives more money then they are entitled to for 12 months, that retiree would have 24 months to pay it back through a deduction in benefits.

Karlon said the system needs flexibility for financial concerns for retirees and depending on who made the mistake or used incorrect data.

The bill was opposed by two teachers unions, the National Education Association — New Hampshire and the American Federation of Teachers.

Rick Trombly, NEA executive director, said his organization is also concerned about the loss of system assets but noted the present system works and provides the needed flexibility.

“The bottom line is there is a system in place which allows the trustees to do their fiduciary duty,” Trombly said, noting that his organization receives calls occasionally from retired members saying the retirement system wants them to return money.

“They have been very aggressive with those who receive overpayments,” he said.

But he said his real concern with the bill is granting the study committee subpoena power. “I don’t know that you want to start down that road,” Trombly said.

Laura Hainey of the AFT echoed Trombly’s comments and said there is a tendency to jump to the conclusion that public employees are scamming the system when that is not the case.

She said there might be a rare case once in a while, but the vast majority receive the correct benefit.

“With no COLAs (cost of living raises) and having to pay for their health insurance,” Hainey said, “many retirees do not have a lot of money.”

The committee did not make an immediate recommendation on the bill.

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