NHRS





Plan Administration Details

About the New Hampshire Retirement System

NHRS Fact Sheet -A quick guide to the NHRS for Members, Retirees, Employers, and Lawmakers

This summary is intended to provide a basic overview of the New Hampshire Retirement System (NHRS, the retirement system) for members, lawmakers, public officials, media, and other interested parties. Links to related supplemental information are listed at the end of each section.

OVERVIEW | MEMBERSHIP | GOVERNANCE | FUNDING | INVESTMENTS | CONTRIBUTION RATES | PENSION BENFITS | OTHER POST-EMPLOYMENT BENEFITS | MEMBER SERVICES

Overview

The New Hampshire Retirement System (NHRS, the retirement system) was established in 1967 as a contributory, public employee defined benefit pension plan qualified under section 401(a) of the Internal Revenue Code (Code) and funded through a trust which is exempt from tax under Code section 501(a).  The plan provides lifetime pension benefits that are determined at retirement under formulas prescribed by law; the pension benefit is not based on investment returns or contributions.

The retirement system provides service, early service, disability, and vested deferred retirement benefits, as well as pre- and post-retirement death benefits. It also provides a post-retirement Medical Subsidy to eligible members and beneficiaries. 

NHRS does not provide health insurance for retirees or their beneficiaries.

Benefit formulas and eligibility requirements are set by state law (RSA 100-A).  The retirement system is also governed by administrative rules, policies adopted by the NHRS Board of Trustees, and the Internal Revenue Code. 

NHRS benefits are funded by member contributions, employer contributions, and net investment returns.   Investment returns have historically provided the bulk of funding for pension benefits. 

The retirement system trust fund stood at $6.43 billion at the close of the fiscal year ending June 30, 2013. 

The retirement system realized a 14.5 percent return on its assets in fiscal year 2013.  The three-year, five-year, 10-year, and 20-year returns for the periods ended June 30, 2013, were 12.4 percent, 5.6 percent, 7.2 percent, and 7.9 percent, respectively.

NHRS paid out $573.5 million in pension benefits to 29,729 retirees or their beneficiaries in fiscal year 2013, which makes the retirement system one of the largest payrolls in the state.  In addition to pension benefits, NHRS paid out $55 million in post-retirement Medical Subsidy allowances.

For more information:

Vision, Mission, and Values

Member benefit information
Retiree benefit information
2013 Annual Reports

RSA 100-A

Summary of Legislative Changes to NHRS, 2007-13
NHRS Administrative Rules
NHRS Policies
NHRS … Now You Know: Three key facts about NHRS


Membership

NHRS has 86,951 members.  There are 48,688 active members, who, along with their participating employers, contribute into the retirement system.  The remaining members are either pension beneficiaries or former members no longer working in NHRS-eligible positions.  Some of these non-contributing former members are “vested,” meaning they have earned the right to a future pension based on their previous service or age; others are not vested.  To be vested, a member must have a minimum of 10 years of creditable service or be working beyond the NHRS normal retirement age.

Retirement system members are state, county and municipal employees, teachers, police officers, and firefighters.  The membership consists of two groups, Group I (Employee and Teacher) and Group II (Police and Fire). 

Group I members make up 88.1 percent of the total active membership (51.0 percent Employee, 37.1 percent Teacher).

Group II members make up 11.9 percent of the total active membership (8.6 percent Police, 3.3 percent Fire).

In most cases of full-time employment, membership in the retirement system is mandatory.  However, the law governing the retirement system provides that membership is not mandatory for a limited number of full-time positions.  Examples include officials appointed to Group I Employee positions for fixed terms; employees who

work for the Legislature or the governor’s office; and certain officials whose elected Group I Employee position meets the criteria of full-time employment. Also, with a vote by a board of selectmen or city council, a chief administrative officer (i.e. town manager) position may also be made membership-optional.

 

The membership breakdown at the close of fiscal year 2013 was:

  • 48,688 active, contributing members.

  • 29,729 retirees or beneficiaries receiving pension benefits.

  • 1,261 members no longer working in NHRS-eligible positions who are “vested,” meaning they have earned the right to a future benefit.

  • 7,273 members no longer working in NHRS-eligible positions who are not vested.  (Regardless of vesting status, former workers may keep their accumulated contributions with the retirement system, or they may withdraw them.)

NHRS has 476 active participating employers – the State of New Hampshire, individual communities, school districts, counties, and others. Not every political subdivision in New Hampshire participates in the retirement system for its Employee members, although most do.  Participation is mandatory for Police, Fire, and Teacher members.

Fiscal Year 2013 Membership Snapshot

ACTIVE
  Employee Teacher Police Fire Total
Members

24,809

18,084

4,187

1,608

48,688

-Vested

11,583

10,223

2,088

959

24,853

-Non-vested

13,226

7,861

2,099

649

23,835

Avg. Age

49.1

46.4

39.3

41.1

47.0

Avg. Service

11.1

13.3

10.9

13.0

12.0

Avg. Annual Pay

$43,502

$57,506

$63,715

$72,007

$51,383

RETIRED
Retirees/Beneficiaries

14,712

10,407

3,163

1,447

29,729

Avg. Age

70.8

69.5

62.8

65.1

69.2

Avg. Annual Benefit

$12,758

$21,355

$34,859

$36,595

$19,279



Membership Trends, 2001-2013

Year Actives Retirees Vested Deferred Inactive
2013 48,688 29,729 1,261 7,273
2012 48,625 28,454 1,372 7,041
2011 49,738 27,100 1,496 6,272
2010 50,467 25,845 1,515 5,677
2009 51,032 24,501 1,391 5,353
2008 50,988 22,870 1,423 3,333
2007 50,802 21,248 1,049 4,717
2006 51,738 19,711 1,107 4,961
2005 51,060 18,950 617 9,880
2004 50,420 17,790 375 6,697
2003 50,910 17,005 639 6,697
2002 46,187 16,670 515 NA
2001 47,689 15,416 653 NA

For more information:
NHRS Participating Employers Data (Pages 124-131)

Governance

NHRS has a unique status in state government. It is not a state agency under the executive branch; it is a component unit of the state governed by statute and overseen by a Board of Trustees. Trustees are fiduciaries bound by law to act solely in the interest of the participants and beneficiaries of the pension plan.  In addition to the trustees, the retirement system’s executive director, fund managers, and consultants are fiduciaries.

The 13-member NHRS Board of Trustees consists of:

  •  Four public members, one of whom serves as chair. Dr. Richard Gustafson is the current chair.

  •  One member each representing the Employee, Teacher, Police, and Fire membership groups.

  •  One member each representing state, county, municipal, and school employers.

  •  The state treasurer.

Trustees are nominated by the Governor and must be approved by the Executive Council with the exception of the state treasurer, who serves as an ex officio voting member.

An executive director appointed by the Board of Trustees oversees the day-to-day operation of the retirement system.  George P. Lagos is the executive director.

Article 36-a of the New Hampshire State Constitution prescribes that retirement system funds are to be used for the “exclusive purpose of providing for such (retirement and related benefits) and shall not be encumbered for, or diverted to, any other purposes.”

The retirement system’s role is to provide information and factual analysis on the impact of proposed legislation.  Neither NHRS staff nor the Board of Trustees take a position for or against any changes to RSA 100-A proposed by the Legislature unless the proposal would violate the Internal Revenue Code or conflict with the board’s fiduciary obligations.

NHRS administrative expenses are paid out of the retirement trust fund, not the General Fund.

For more information:
NHRS Board of Trustees

Funding

NHRS benefits are funded by member contributions, employer contributions, and net investment returns.   Investment returns historically provide the majority of funding for pension benefits. 

The retirement system trust fund stood at $6.43 billion at the close of the fiscal year ending June 30, 2013.

NHRS was 56.7 percent funded at the close of the fiscal year.  This means that the actuarial value of the retirement system’s assets is 56.7 percent of the projected amount needed to pay for current and accrued benefits for retirees and active members.

To be considered healthy, most experts say pension plans should be at least 80 percent funded.  Some of the current $4.6 billion unfunded liability is related to investment performance in 2008-09, however, a significant portion of the funding gap is the result of two public policy factors: First, a flawed funding methodology in effect from 1991-2007 that led to the long-term underpayment of employer contributions; second, the diversion of roughly $900 million in investment earnings into the Special Account over roughly the same period.

Despite the unfunded liability, retirement benefits for members of NHRS are secure and guaranteed in the state constitution.  Funds are available to pay present benefits and a funding mechanism is in place to pay down the unfunded liability on a level percent of payroll basis through fiscal year 2039. 

For more information:

Actuarial Valuations

Investments

NHRS pursues an investment strategy designed to meet its long-term funding requirements.  The Board of Trustees, with research and input from NHRS investment staff, outside experts, and a recommendation from the Independent Investment Committee (IIC), set an investment policy that includes asset allocation targets and acceptable ranges. 

The five-member IIC, which was established by statute on Jan. 1, 2009, manages investments based on the trustees’ policies, continuously monitors and evaluates performance, and makes determinations regarding the hiring and retention of fund managers. The IIC consists of three public members and two representatives of the Board of Trustees. Public members are nominated by the Governor and must be approved by the Executive Council. Trustee members are appointed by the chairperson of the Board of Trustees. By law, all IIC members must have “substantial experience in the field of institutional investment or finance.”

The goal is to meet or exceed the retirement system’s assumed rate of return over the long term, while at the same time managing the risk, return and liquidity of the portfolio.  The current assumed rate of return is 7.75 percent.

The retirement system realized a 14.5 percent return on its assets in fiscal year 2013.  The three-year, five-year, 10-year, and 20-year returns for the periods ended June 30, 2013, were 12.4 percent, 5.6 percent, 7.2 percent, and 7.9 percent, respectively.

Compared to its peers in the Public Defined Benefit Net Universe, which represents 197 plans totaling more than $638 billion in assets, NHRS performed better than 90 percent of its peers over the one- and three-year periods and better than 70 percent its peers over the five-year period.

For more information:
Investment Strategy
Funding and Allocation
Quarter-end Investment Report
Annual financial reports and annual investment reports


Rates

Members: Member rates are set by statute.  Group I (Employee and Teacher) members contribute 7 percent of their salary to the retirement system.  Group II (Police and Fire) members contribute 11.55 percent and 11.80 percent, respectively, of their salary to the retirement system.  Note: Police and Fire members are not eligible for Social Security.

Employers: While member contributions are broken down by Group I and Group II, employer contributions are assessed at five different rates, one each for State Employees, Political Subdivision Employees, Teachers, Police, and Fire. Employer rates are certified by the NHRS Board of Trustees every two years after a biennial actuarial valuation is conducted.  The valuation is a model of expected liabilities based on reasonable actuarial assumptions, including the rates of investment return and payroll growth, eligibility for the various classes of benefits, and the projected life expectancies of members and retirees. State law requires that NHRS trustees use this valuation to set employer contribution rates at a level necessary to keep the retirement system on track to meet its constitutional long-term obligations. The rates for fiscal years 2014-15, which were based on the actuarial valuation of June 30, 2011, were certified by trustees in September 2012. Employer rates for 2016-17 will be certified by trustees in September 2014.

For more information:
Current employer rates
Historical employer rates, 1970-2013

Member and Employer Contributions, 1991-2013
Actuarial Valuations

Pension Benefits

The retirement system provides service, early service, disability, and vested deferred retirement benefits. 

In fiscal year 2013, the average annual NHRS pension benefit was $19,279. The highest annual pension benefit paid in calendar year 2013 was $135,916.  The lowest annual pension benefit paid in the same period was $66.  More than 95 percent of pension recipients receive an annual pension benefit under $50,000, 69 percent receive an annual pension benefit under $25,000, and practically one-third (32 percent) receive an annual pension benefit under $10,000. Less than one percent of pension recipients receive more than $75,000 per year.

About 80 percent of pension recipients live in New Hampshire.

The average annual pension benefit by member classification as of June 30, 2013, is:

 

Group I

  • Employee: $12,758 (14,172 pension recipients)

  • Teacher: $21,355 (10,407 pension recipients)

Group II *

  • Police: $34,859 (3,163 pension recipients)

  • Fire: $36,595 (1,447 pension recipients)

* Group II members do not receive Social Security benefits.

About 87 percent of NHRS retirees receive service or early service retirement pensions.  Service, early service, and vested deferred retirement pension benefits are calculated based on three factors: years of creditable service, average final compensation (AFC) – which is the average of a member’s three or five highest-paid years (depending on vested status January 1, 2012) – and a benefit factor that is different for members of Group I and Group II.

For more information:
Member benefit information
Retiree benefit information
Printable benefits summaries:

Group I

Group I (Employee and Teacher) Member Benefits for members vested prior to January 1, 2012

Group I (Employee and Teacher) Member Benefits for members in service prior to July 1, 2011 and not vested prior to January 1, 2012

Group I (Employee and Teacher) Member Benefits for members hired on or after July 1, 2011
Group II

Group II (Police and Fire) Member Benefits for members vested prior to January 1, 2012

Group II (Police and Fire) Member Benefits for members in service prior to July 1, 2011 and not vested prior to January 1, 2012

Group II (Police and Fire) Member Benefits for members hired on or after July 1, 2011


Other Post-Employment Benefits (OPEB)

Medical Subsidy: The Medical Subsidy is a payment made by NHRS directly to the eligible retiree’s former employer or their health insurance administrator that goes toward the cost of health insurance for the qualified retired member and qualified spouse.  The Medical Subsidy is not a health insurance plan.

Current Monthly Medical Subsidy Amounts

  • One-Person: $375.56

  • Two-Person: $751.12

  • One-Person (Medicare-eligible): $236.84

  • Two-Person (Medicare-eligible): $473.68

Group I (Employee and Teacher) members who are not yet retired are not eligible for the Medical Subsidy.  Some active Group II (Police and Fire) members who meet statutory eligibility requirements will qualify for the Medical Subsidy at retirement.

There are 10,264 pension recipients or beneficiaries currently receiving a Medical Subsidy.  Of those, 7,978 are age 65 or older. The breakdown by member group is: Group I – 7,678 (6,638 post-65); Group II – 2,586 (1,340 post-65).

 

Cost-of-living adjustments (COLA): COLAs and/or other Temporary Supplemental Allowances (TSAs) for NHRS retirees are subject to legislative approval. COLAs are a permanent addition to a pension benefit; TSAs are one-time, lump sum payments based on specific criteria. If approved, COLAs and TSAs typically become effective July 1 of each year.

COLA History 1997-2012

  Employee Teacher Police Fire
2013 No COLA
2011-12

No COLA

$500/$1K TSA for political subdivision retirees receiving Medical Subsidy ($300/$600 for Medicare-eligible political subdivision retirees receiving Medical Subsidy)

2008-2010 1.5% COLA on first $30K of base pension, plus:
- $1K TSA if base pension is less than $20K and retiree had at least 15 years of creditable service
- $500 TSA if retired before 1/1/93
- $500/$1K TSA if receiving Medical Subsidy($300/$600 for Medicare-eligible political subdivision retirees receiving Medical Subsidy)
2007 2.25% 2.25% 2.25% 2.25%
2006 1% 1% 1% 1%
2005 1% 1% 1% 1.5%
2004 1% 1% 1% 2.5%
2003 2% 2% 2% 3.5%
2002 2% 3% 2% 3%
2001 3.5% 3.5% 3.5% 3.5%
2000 4.5% 4.5% 4.5% 4.5%
1999 4% 4% 4% 4%
1998 4% 4% 4% 4%
1997 5% 5% 5% 5%

Other Benefits: NHRS provides certain pre- and post-retirement death benefits to the beneficiaries of eligible members.

 

NOTE ON HEALTH INSURANCE: A common misconception about NHRS is that it provides health insurance for retirees.  This is not the case. 

NHRS-participating employers – with the exception of the state itself – must allow retiring members to continue to participate in the employer’s group health insurance plan. Employers are not required to pay any of the cost of coverage under RSA 100-A, although some may. In most cases, a retiree must elect whether or not to continue coverage upon retirement.

Some state members, depending on their date of hire, length of service, and membership classification, may be eligible for post-retirement health care coverage through the state under a law (RSA 21-I:30) that is separate from the retirement system. NHRS does not administer this benefit.

For more information:
Medical Subsidy
Cost-of-Living Adjustments
Summary of NHRS pre- and post-retirement death benefits
FAQ on state employee health insurance eligibility from the Department of Administrative Services

Member Services

NHRS leadership and the Board of Trustees are committed to meeting the retirement system’s long-term obligations and making decisions based on the best interests of all stakeholders.

The retirement system has worked diligently in recent years to improve service through increased employer, member, and retiree outreach and education. 

There are several ways for members to learn more about NHRS and stay abreast of issues affecting their retirement:

Education Sessions: NHRS offers member education sessions throughout the state. During these general information programs, members of all ages and in various stages of their career will be provided with information about NHRS benefits.

Online Presentations: Members and employers with Internet access can learn about various NHRS-related topics at their convenience.

Email Updates: News releases, newsletters, and other important notices from the retirement system are delivered to subscribers via email.

Newsletters: NHRS produces newsletters twice a year for active members (Spring/Fall) and retirees (Summer/Winter) and quarterly for employers.

My Account: Through this secure website, members and retirees may access their personal account information online, including account balances, demographics (i.e. address, phone number, email), beneficiary information, and an online benefit calculator.

Personal Appointments:  Members close to retirement may schedule a one-on-one appointment with a member benefits specialist to review benefit estimates and retirement-related documents.

For more information:

Member Service Policy







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