NH Supreme Court Rules in Pension Case

State’s highest court upholds 2007-08 changes to earnable compensation, COLAs

Feb 23, 2015
  • Legal

For Immediate Release: January 16, 2015
Contact: Marty Karlon, Public Information Officer, 603-410-3594; [email protected]

CONCORD, N.H. – The New Hampshire Retirement System (NHRS, the retirement system) has released the following statement concerning today’s New Hampshire Supreme Court decision in American Federation of Teachers v. State of NH, commonly referred to as the “HB 1645 Case” after the legislation that spurred the initial litigation, House Bill 1645 (Chapter 300, Laws of 2008):

The New Hampshire Supreme Court released a unanimous decision earlier today upholding amendments to RSA 100-A – the law governing the retirement system – enacted in 2007 and 2008 regarding cost-of-living adjustments (COLAs) and the definition of “earnable compensation.”

A COLA is an increase to a pension benefit intended to offset inflation. Earnable compensation is the compensation paid to a member on which member and employer contributions are assessed and which is included in calculating a pension benefit.

As a result of the decision, the legislative changes remain in effect.

The Supreme Court decision, written by Chief Justice Linda Dalianis, upheld a superior court ruling that the statute dealing with COLAs (RSA 100-A:41-a) did not contain an unmistakable contractual obligation to provide a COLA.

The decision also reversed a superior court ruling that legislative changes to the definition of earnable compensation (RSA 100-A:1, XVII) violated the contract clause of the state and federal constitutions for “vested” members with 10 or more years of creditable service in the retirement system on or before the effective date of the legislation. The court wrote that, “we find no unmistakable language that the legislature intended, as the trial court concluded, that once a member ‘vests,’ a contractual commitment has been established whereby none of the terms of his or her future benefit may ever be modified prospectively by a change in the law.”

This lawsuit was initially filed in Merrimack County Superior Court in August 2009 by a number of NHRS members and their respective unions. The State of New Hampshire and NHRS were named as defendants. The plaintiffs initially claimed that HB 1645 unconstitutionally impaired vested contract rights by amending the provisions of RSA 100-A. In May 2010 the plaintiffs filed an amended complaint that raised additional claims. Although NHRS was named as a party in this case, the retirement system took no position with respect to the constitutionality of the changes.

Merrimack County Superior Court Judge Richard McNamara issued a decision on the case in 2013 which was appealed to the Supreme Court by both the State and the plaintiffs. The Supreme Court heard oral argument on the case on November 13, 2014.
The parties have 10 days to file a motion for reconsideration with the Supreme Court.

The Supreme Court decision is available at:
http://www.courts.state.nh.us/supreme/opinions/2015/2015006americanfederationofteachers.pdf

About NHRS

The New Hampshire Retirement System provides retirement, disability, and death benefits to its eligible members and their beneficiaries.  The State of New Hampshire and more than 470 local government employers participate in NHRS for their employees, teachers, firefighters, and police officers.  NHRS has approximately 48,500 active members and 31,000 pension recipients. NHRS administers a defined benefit plan qualified as a tax-exempt entity under sections 401(a) and 501(a) of the Internal Revenue Code.

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