1.1% return on $9B NHRS fund was bad, but cuts won’t help

To the Editor: One thing Nick De Mayo got right in his March 19th letter to the editor is that the New Hampshire Retirement System (NHRS) FY2020 performance was miserable. Receiving only 1.1% on a $9 billion fund is not what New Hampshire needs to ensure predictable costs at the community level.

What is not correct is De Mayo’s solution to this bad performance: cutting benefits for our public employees. It seems De Mayo is not aware that, in 2011, enormous cuts were made to the benefits of all working public employees and any newly-hired employees. These changes created a 3-tiered system in NHRS, with different benefits provided to members depending on how many years they had in the system as of Jan. 1, 2012.

At the same time, employee representation on the NHRS Board of Trustees was cut by 50% and the Independent Investment Committee was created. Research shows that systems perform better when there is significant employee input over decisions, including investments.

Also noteworthy is that only 20% of what communities pay toward retirement costs for public employees actually goes toward the benefit — 80% is making up for mistakes made in the past. In 2017, Boston College’s Center of Retirement Research showed that NHRS employers pay very little to the actual cost of the benefit contributing only 2.7%, while the national average is 5.9%.

De Mayo is right that investment performance is critical to ensuring predictable costs to communities, but cutting benefits is not the solution.

Submitted on behalf of the NH Retirement Security Coalition.