§ 100-A:16 — Method of Financing

New Hampshire § 100-A:16

• Jurisdiction: New Hampshire
• Title VI: PUBLIC OFFICERS AND EMPLOYEES
• Ch. 100-A: NEW HAMPSHIRE RETIREMENT SYSTEM

Text

All of the assets of the retirement system shall be credited, according to the purpose for which they are held, between 2 funds, namely, the member annuity savings fund and the state annuity accumulation fund. Each of the funds shall be subdivided on account of the various member classifications. In making the determinations required under this section for financing the retirement system, the board of trustees shall use the entry age normal funding methodology. The board of trustees shall direct the system's actuary to prepare biennial valuations of the system's assets and liabilities commencing with the valuation prepared as of June 30, 2007. Such biennial valuation shall be the basis for determining the annual contribution requirements of the system until the next following biennial valuation.
I.
Member Annuity Savings Fund.
(a) The member annuity savings fund shall be a fund in which shall be accumulated the contributions deducted from the compensation of members to provide for their member annuities together with any amounts transferred thereto from a similar fund under one or more of the predecessor systems. Such contribution shall be, for each member, and except as provided in RSA 100-A:16, II-a, dependent upon the member's employment classification at the rate determined in accordance with the following table:
(1) Group I members,
7.00
(2) Group II permanent fireman members,
11.80
Group II permanent police members,
11.55
[Paragraph I(aa) effective until July 1, 2034; see also paragraph I(aa) set out below. For prospective changes to this paragraph effective January 1, 2026 and July 1, 2026 through July 1, 2033, see 2025, 142:9-17.]
(aa) The board of trustees shall certify to the proper authority or officer responsible for making up the payroll of each employer, and such authority or officer shall cause to be deducted from the compensation of each member, except group II members who are in vested status before January 1, 2012 with creditable service in excess of 40 years, and group II members who commenced service on or after July 1, 2011 or who have not attained vested status prior to January 1, 2012 with creditable service in excess of 42.5 years as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), on each and every payroll of such employer for each and every payroll period, the percentage of earnable compensation applicable to such member. No deduction from earnable compensation under this paragraph shall apply to any group II member who is in vested status before January 1, 2012 with creditable service in excess of 40 years, and any group II member who commenced service on or after July 1, 2011 or who have not attained vested status prior to January 1, 2012 with creditable service in excess of 42.5 years as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), and this provision for such members shall not affect the method of determining average final compensation as provided in RSA 100-A:1, XVIII. In determining the amount earnable by a member in a payroll period, the board may consider the rate of compensation payable to such member on the first day of a payroll period as continuing throughout the payroll period and it may omit deduction from compensation for any period less than a full payroll period if such person was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as shall not exceed 1/10 of one percent of the annual earnable compensation upon the basis of which such deduction is made. The amounts deducted shall be reported to the board of trustees. Each of such amounts, when deducted, shall be paid to the retirement system at such times as may be designated by the board of trustees and credited to the individual account, in the member annuity savings fund, of the member from whose compensation the deduction was made.
[Paragraph I(aa) effective July 1, 2034; see also paragraph I(aa) set out above.]
(aa) The board of trustees shall certify to the proper authority or officer responsible for making up the payroll of each employer, and such authority or officer shall cause to be deducted from the compensation of each member, except group II members who are in vested status before January 1, 2012, with creditable service in excess of 40 years, and group II members who commenced service on or after July 1, 2011, or who have not attained vested status prior to January 1, 2012, with creditable service in excess of 42.5 years as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), on each and every payroll of such employer for each and every payroll period, the percentage of earnable compensation applicable to such member. No deduction from earnable compensation under this paragraph shall apply to any group II member who commenced service prior to July 1, 2011, with creditable service in excess of 40 years, and any group II member who commenced service on or after July 1, 2011, or who have not attained vested status prior to January 1, 2012, with creditable service in excess of 42.5 years as provided in RSA 100-A:5, II(b) and RSA 100-A:6, II(b), and this provision for such members shall not affect the method of determining average final compensation as provided in RSA 100-A:1, XVIII. In determining the amount earnable by a member in a payroll period, the board may consider the rate of compensation payable to such member on the first day of a payroll period as continuing throughout the payroll period and it may omit deduction from compensation for any period less than a full payroll period if such person was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as shall not exceed 1/10 of one percent of the annual earnable compensation upon the basis of which such deduction is made. The amounts deducted shall be reported to the board of trustees. Each of such amounts, when deducted, shall be paid to the retirement system at such times as may be designated by the board of trustees and credited to the individual account, in the member annuity savings fund, of the member from whose compensation the deduction was made.
(b) The deductions provided for herein shall be made notwithstanding that the minimum compensation provided for by law for any member shall be reduced thereby. Every member shall be deemed to consent and agree to the deductions herein provided as a condition of his membership.
(c) [Repealed.]
(d) The accumulated contributions of a member withdrawn by the member, or paid to his or her estate or designated beneficiary in event of his or her death in service, shall be paid from the member annuity savings fund. Upon the retirement of a member, his or her accumulated contributions shall be transferred from the member annuity savings fund to the state annuity accumulation fund.
(e) With respect to all employees of any employer, such employer may pick up the employee contributions required by this section for all compensation earned after July 1, 1983; and the contributions so picked up shall be treated as employer contributions in determining federal tax treatment under the United States Internal Revenue Code; however, each employer shall continue to withhold federal income tax based upon these contributions until the Internal Revenue Service, or the federal courts, rule that, pursuant to section 414(h) of the United States Internal Revenue Code (1954), as amended, these contributions shall not be included as gross income of the employee until such time as they are distributed or made available. The employer shall pay these employee contributions from the same source of funds which is used in paying earnings to the employee. The employer may pick up these contributions by a reduction in the cash salary of the employee. Employee contributions picked up shall be treated for all purposes of this section in the same manner and to the same extent as employee contributions made prior to the date picked up.
II.
State Annuity Accumulation Fund.
(a) The state annuity accumulation fund shall be the fund in which shall be accumulated all reserves for the payment of all state annuities payable from contributions made by employers, any amounts transferred thereto from a similar fund under one or more of the predecessor systems, and amounts transferred from the member annuity savings fund, and from which shall be paid all benefits payable under the system other than those payable from the member annuity savings fund.
[Paragraph II(b) effective until July 1, 2027; see also paragraph II(b) set out below.]
(b) The contributions of each employer for benefits under the retirement system on account of group II members shall consist of a percentage of the earnable compensation of its members to be known as the "normal contribution," and an additional amount to be known as the "accrued liability contribution;" provided that beginning with state fiscal year 2013 and for each state fiscal year thereafter, any employer shall pay the full amount of such total contributions. The rate percent of such normal contribution, including contributions on behalf of group II members whose group II creditable service is in excess of 40 years, in each instance shall be fixed on the basis of the liabilities of the system with respect to the particular members of the various member classifications as shown by actuarial valuations, except as provided in subparagraph (i).
[Paragraph II(b) effective July 1, 2027; see also paragraph II(b) set out above.]
(b) The contributions of each employer for benefits under the retirement system on account of group II members shall consist of a percentage of the earnable compensation of its members to be known as the "normal contribution," and an additional amount to be known as the "accrued liability contribution;" provided that beginning with state fiscal year 2028 and for each state fiscal year thereafter, the state shall pay the normal contribution and accrued liability contributions attributable to this act, and any employer other than the state, shall pay the remaining percentage, thereof; and provided further that, in the case of group II members employed by the state, the state shall pay both normal and accrued liability contributions. The rate percent of such normal contribution, including contributions on behalf of group II members whose group II creditable service is in excess of 40 years, in each instance shall be fixed on the basis of the liabilities of the system with respect to the particular members of the various member classifications as shown by actuarial valuations, except as provided in subparagraph (i). The board of trustees of the retirement system shall certify the amount required for each such state payment and each biennium thereafter, and the total amount of the state grants, to the treasurer. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.
(c) The contributions of each employer for benefits under the retirement system on account of group I members shall consist of a percentage of the earnable compensation of its members to be known as the "normal contribution," and an additional amount to be known as the "accrued liability contribution;" provided that beginning with state fiscal year 2013 and for each state fiscal year thereafter, any employer shall pay both normal and accrued liability contributions. The rate percent of such normal contribution in each instance shall be fixed on the basis of the liabilities of the system with respect to the particular members of the various member classifications as shown by actuarial valuation, except as provided in subparagraph (i).
(c-1) [Repealed.]
(d) [Repealed.]
(e)(1) Immediately following the actuarial valuation prepared as of June 30 of each fiscal year, the board shall have an actuary determine the amount of the unfunded accrued liability for each member classification, proportionally reduced using sums dedicated as provided in RSA 21-I:95, II, as the amount of the total liabilities of the state annuity accumulation fund on account of such classification which is not dischargeable by the total of the funds in hand to the credit of the state annuity accumulation fund on account of such classification, and the aforesaid normal contributions to be made on account of the members in such classification during the remainder of their active service. The amount so determined with respect to each member classification shall be known as the "unfunded accrued liability" with respect to such classification.
(2) On the basis of each such unfunded accrued liability, the board shall have an actuary determine the level annual contribution required to discharge such amount as provided in subparagraph (3).
(3) The unfunded liability as of July 30, 2017 shall be amortized through 2039. Each subsequent change in liability as calculated in odd-numbered years shall be separately amortized over a fixed period of no longer than 20 years.
(f) The total amount payable to the state annuity accumulation fund in each year on account of each member classification shall not be less than normal contribution rate multiplied by the total compensation earnable by all members in such classification for such year, plus the amount of the accrued liability contribution necessary to liquidate the unfunded accrued liability on behalf of such classification as determined by the actuary under subparagraph (e) above.
(g) All interest and dividends earned on the funds of the retirement system shall be credited to the state annuity accumulation fund. The board of trustees shall allow interest on the individual accounts of members in the member annuity savings fund and shall annually transfer such interest amount from the state annuity accumulation fund. The rate of interest for the calendar year beginning January 1 shall be 2 percentage points less than either the most recent board of trustees approved assumed rate of return or the actual rate of return, whichever is lower, for the immediately preceding fiscal year as reported in the annual comprehensive financial report (ACFR) as approved and accepted by the board of trustees by December 31 of each year, provided the rate shall not be less than zero. Such interest shall be compounded at an annual rate and shall be prorated and credited to the member annuity savings fund to the date of processing upon termination of active service for any reason including withdrawal, retirement, or death.
(h) [Repealed.]
(i) If the actuarially determined normal contribution rate as set forth in subparagraphs (b) and (c) on account of any of the various member classifications shall be negative in any fiscal year, then the excess amount resulting from the difference between zero and the negative actuarially determined normal contribution rate shall be used to reduce the employee contribution rate for that member classification in that fiscal year.
(j) [Repealed.]
II-a. (a) Notwithstanding the method of calculating member and employer contributions under this section, if for any year the board of trustees certifies that within a member classification the employer rates determined under paragraph III have lowered to require them to be equal to the member rates under paragraph I, then for all subsequent years following such certification the employer rates and the members rates for such member classification shall continue to be equal whether the system liabilities increase or decrease.
(b) The provisions of subparagraph (a) shall not take effect and shall be inapplicable to the retirement system calculation of contribution rates under this section if such provisions of subparagraph (a) would violate the requirements set forth in U.S. Treasury Regulation 1.401-1.
III.
Employer Contributions.
(a) On or before the first day of October next preceding each regular session of the state legislature, the board of trustees shall certify to the commissioner of administrative services the amounts which will become due and payable by the state during the biennium next following to the retirement system and it shall be the duty of the commissioner of administrative services in preparing the executive budget for each ensuing biennium to include in the budget the amounts so certified which amounts shall be appropriated by the legislature. The amounts so certified under this subparagraph shall include the unfunded accrued liability of the retirement system. The annual employer contribution requirements effective July 1, 2008 and as calculated each year thereafter shall not be less than the employee contribution rates under RSA 100-A:16, I(a).
(b) A county, city, town, school district or other political subdivision of the state having any employee members who are paid directly by the state but for whom the staff is later reimbursed for the part of their compensation not chargeable to state funds shall likewise reimburse the state for that part of the contribution made by the state to this system which is based on such part of compensation not chargeable to state funds.
(c) At the beginning of each year commencing on the first day of July the board of trustees shall certify to each employer other than the state the percentage rates of contribution due the system from each such employer, and shall assess upon each such employer such percentages of the earnable compensation of members in its employ, and it shall be the duty of the treasurer or other disbursing officer of each such employer to pay to the board of trustees such portion of the annual amount so assessed at such times and in such manner as the board of trustees may prescribe. Each such employer is hereby authorized to appropriate the sums necessary for the payment of such assessments. The annual employer contribution requirements effective July 1, 2008 and as calculated each year thereafter shall not be less than the employee contribution rates under RSA 100-A:16, I(a).
(d) Notwithstanding RSA 100-A:16, III(a), the New Hampshire retirement system board of trustees shall, within a reasonable period of time not to exceed 30 days from the effective date of this subparagraph, certify to the commissioner of administrative services the amounts that will become due and payable by the state during the biennium beginning July 1, 2009 based upon a state employee group other post-employment benefit (OPEB) plan balance as of July 1, 2009 for the state medical plan subtrust of $0.00. Such certification shall in all other respects be based upon the data and assumptions used to calculate the state employer rate as certified in September 2008. In no event shall the board of trustees certify a rate in any subsequent year based upon payments made from the medical plan subtrust to the state prior to July 1, 2009.
III-a. [Repealed.]
III-b. Every employer shall annually report to the retirement system the annual base pay paid to each member.
IV. [Repealed.]
V. Notwithstanding any other provision of law any member contributions deducted by an employer, or any employer assessments or contributions not remitted or that cannot be processed at the times designated by the board of trustees due to data reporting errors, shall be subject to interest on the amount due at the rate of one percent for each month or fraction thereof that they remain unpaid. For reasonable cause, the board may abate all or any part of the interest.
VI. Every employer shall report monthly to the retirement system all compensation of group II members that is attributable to extra or special duty. When an employer provides extra or special duty services, the employer shall include in its billing or charge to the entity for whom the extra or special duty is being provided the full amount of contributions required under RSA 100-A:16, II(b) attributable to the extra or special duty. Notwithstanding any provision to the contrary, the employer shall be responsible for the full amount of employer contributions required under RSA 100-A:16, II(b) attributable to extra or special duty.
VII. (a) Every employer shall report to the retirement system annually, on or before February 15, in a format provided by the retirement system, all compensation paid by, and the total hours worked for, the employer by each retired member of the retirement system, including the name of, and the total hours worked, for each retired member of the retirement system, except that an employer shall not include in the report the compensation and hours worked by a retiree for serving as an elected state official or as an elected official of a political subdivision in either a group I or group II position.
(b) Notwithstanding any other provision of law, employers may be subject to a penalty of up to $25 per day for noncompliance with the data reporting requirements of subparagraph (a), including data that was not timely remitted or data that cannot be processed at the times designated by the board of trustees due to data reporting errors by the employer. Before a penalty is assessed, the board shall notify the employer in writing of the noncompliance, identifying the reasons for the finding of noncompliance, and shall request the employer to explain to the board in writing within 30 days of the notification how the noncompliance occurred. Upon expiration of the 30 day period, the board may impose all or a portion of the penalty provided for in this paragraph, unless there is a showing that the employer did not willfully, intentionally, through gross negligence, or through a pattern of negligence fail to file the data as required.
VIII. Any employer who fails to provide, within 30 days of a written request, any information required for the proper administration of the retirement system, including, but not limited to, termination forms; other information necessary to process a member's retirement application; information relating to service credit purchases; and information necessary to perform employer audits and process record corrections arising therefrom, shall be subject to a noncompliance penalty of $200 per day. Before a penalty is assessed, the board shall notify the employer in writing of the noncompliance, identifying the reasons for the finding of noncompliance, and shall request the employer to explain to the board in writing within 30 days of the notification how the noncompliance occurred. Upon expiration of the 30-day period, the board may impose all or a portion of the penalty provided for in this paragraph, unless there is a showing that the employer did not willfully, intentionally, through gross negligence, or through a pattern of negligence, fail to provide the information as requested.

Legislative History

1967, 134:1. 1969, 354:4. 1974, 33:7, 8. 1977, 510:1; 528:2. 1979, 297:3; 434:29, II. 1981, 548:2. 1983, 303:1; 304:1; 469:140, 144-146. 1985, 398:2, 3, 7; 399:3, I. 1986, 95:5-8, 13, I. 1987, 254:1. 1988, 193:6. 1989, 251:1; 400:1. 1990, 273:4. 1992, 55:4. 1994, 119:1-3. 1996, 287:4, 5, 6, 7, I-II. 1998, 302:1. 2001, 275:3, 4. 2003, 221:1. 2004, 216:2. 2006, 120:12; 178:5. 2007, 268:5-9, 11, II. 2008, 300:8, 33. 2009, 144:50, 52, 53, 55; 289:2. 2011, 224:172, 173, 179, 191. 2012, 194:3, eff. June 11, 2012; 261:15, eff. June 18, 2012; 261:3, 13, 14, III, IV, 17, eff. July 1, 2012. 2013, 251:1, eff. Jan. 1, 2014. 2014, 48:3, eff. July 1, 2014; 142:3, eff. June 16, 2014; 183:6-8, eff. July 1, 2014. 2016, 110:1, eff. July 19, 2016. 2018, 48:1, eff. July 14, 2018; 293:5, eff. Jan. 1, 2019. 2022, 189:6, eff. July 1, 2022; 191:1, eff. Aug. 16, 2022. 2023, 19:9, eff. July 3, 2023. 2025, 142:9, eff. Jan. 1, 2026; 142:10, eff. July 1, 2026; 142:11, eff. July 1, 2027; 142:12, eff. July 1, 2028; 142:13, eff. July 1, 2029; 142:14, eff. July 1, 2030; 142:15, eff. July 1, 2031; 142:16, eff. July 1, 2032; 142:17, eff. July 1, 2033; 142:36, eff. July 1, 2034; 142:40, eff. July 1, 2027.