Employer Alert: Reporting and Payment Penalties

May 08, 2017
  • Employer Notices

For Immediate Release: May 8, 2017
Contact: Heather Fritzky, NHRS Controller, (603) 410-3540; [email protected]

CONCORD, NH – The New Hampshire Retirement System (NHRS, the retirement system) is providing updated guidance regarding the assessment of employer interest penalties for late or inaccurate reporting of active member data and/or late contribution payments.

The integrity of the data NHRS receives from employers is crucial to its ability to effectively administer retirement benefits.  Without timely and accurate payroll information and payment of contributions, the retirement system cannot correctly calculate or finalize pensions for recently retired employees.

Effective August 15, 2017, NHRS will assess penalties for employer files that are not free of exceptions and posted by the 15th of the month. As a courtesy, NHRS will automatically waive the interest penalty for the first three months.  Effective November 15, 2017, employers will need to request a waiver of any penalties in writing.  

Also effective August 15, 2017, the retirement system will require contribution payments be received by NHRS on or before the 15th to avoid an interest penalty.

Data Reporting

Since 2014, NHRS has been authorized under state law to assess an interest penalty when a monthly employer reporting file cannot be processed by the due date because of data reporting errors. However, the retirement system has continued to accept all files as timely and has not assessed an interest penalty as long as the information is submitted by the 15th of the month, regardless of whether the file contains errors. This lenient approach has proven to be a significant administrative burden and, in some instances, caused a delay in finalizing benefit payments to new retirees or issuing refunds to terminated members who have requested one.  

Beginning with employer files submitted with a due date of August 15, 2017, employers will receive an interest penalty assessment notice for files that are not free of exceptions and posted by the monthly due date. This means that any file exceptions must be cleared by the 15th so the file can be posted. Although most employers submit error-free files, the retirement system recognizes this is a change that will impact some employers, so, as noted above, NHRS will waive penalties assessed in the three months following the August 15 effective date of this notification.  The retirement system will also be providing updated instructions on how to correct file exceptions.

Submission of Payments

Currently, payments submitted to NHRS are not subject to a penalty if the payment is postmarked by the 15th of the month. Beginning with payments received for batches with a due date of August 15, 2017, NHRS will no longer be considering the postmark date as the receipt date when determining if a payment is late.  Employers should assure that payment is actually received by NHRS no later than the 15th of each month.

NHRS accepts payments by ACH and encourages all employers to make their contribution payments using this method, which is the most secure and timely payment option available.  See below for more information on the advantages of ACH.

Frequently Asked Questions

The administrative rule says reporting and payments are due by the 15th of each month. How is the due date impacted if the 15th falls on a weekend or holiday?

The 15th is the due date to submit files and payments to NHRS, however, employers may submit their file any time after the last pay date in the previous month up until the due date. As noted, payments by ACH can be scheduled in advance to post on the 15th. If the 15th falls on a weekend or holiday, the file needs to be posted and payment needs to be received no later than the first business day following the weekend or holiday.

Can employers appeal penalty assessments?

Yes. RSA 100-A:16. V states that, “For reasonable cause, the board may abate all or any part of the interest.” The administrative rule further clarifies that a penalty cannot be abated without “showing that the employer had not willfully, intentionally, through gross negligence or through a pattern of negligence failed to timely remit contributions.” Note that while one-time instances of oversight related to items such as staffing issues or data-entry mistakes will typically be abated, repeated requests for a waiver based on the same circumstances may be considered “a pattern of negligence.” 

Do these changes apply to (HB 342) retiree reporting?

No. There is no change to the current policy on retiree reporting, which states that employers may be subject to a penalty of $25 per day for non-compliance with the reporting requirement. For more information on retiree reporting, see: https://www.nhrs.org/faqs/faq-retiree-reporting

Why is NHRS changing the way it assesses employer penalties?

The technology available to NHRS and its employers has significantly improved since the current practices were developed. Employer reporting exceptions can now be identified and corrected almost immediately through the online Data Reporting System and payments can be readily scheduled in advance and sent automatically via ACH. 

Also, as noted above, the current approach of accepting files as timely even if they contain exceptions and cannot be posted has proven to be a significant administrative burden and, in some instances, caused a delay in finalizing benefit payments to new retirees or issuing refunds to terminated members.

What is ACH and how can it benefit me as an employer?

Automated Clearing House (ACH) is an electronic network for financial transactions. ACH credit transfers include direct deposit, payroll and vendor payments. ACH is the quickest, safest, and most cost-effective way to send payments to NHRS. 

As an employer:

  • You could realize a significant cost savings by not printing and mailing checks (saving on check stock, MICR toner, postage and labor)
  • Paying by ACH will provide you better cash management – you assign an effective date so you know exactly when the payment leaves your bank and the funds go directly to NHRS the same day
  • ACH payments are more secure than checks and you can track the status of an ACH payment much faster
  • ACH payments do not require humans to read digits and/or OCR software to electronically read handwriting, which leads to a lower error rate
  • There is less opportunity for fraud with an ACH payment because bank account and ABA number are entered into a secure system and encrypted
  • ACH provides a greater level of expenditure control and eliminates securing unused checks

Please contact Kelly Gladu at (603) 410-3652 if you would like ACH setup instructions.

Additional Background

RSA 100-A:16, 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.

NH Administrative Rule Ret 303.01:

(a) All member/employer contributions shall be remitted to the New Hampshire retirement system monthly.  Remittance reports and payments shall be due in the retirement system by the 15th of the month for the previous month’s contributions.  Any member/employer payments not timely remitted shall be assessed interest as provided in subparagraph (b)

(b) An interest penalty of one percent for each month or fraction thereof that contributions are not timely remitted shall be assessed against the delinquent employer.  In computing interest under this paragraph and under RSA 100-A:16, V, a fraction of a month shall be computed as a full month.

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