Trust Fund

The net assets of the retirement system were valued at $7.46 billion as of June 30, 2016.

Funding for NHRS pension benefits is derived from member contributions, employer contributions and trust fund assets. Investment returns have historically provided the bulk of funding for pension benefits.

Article 36-a of the New Hampshire 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.”

 10-year History of Net Position Held in Trust for Benefits (in millions) 

 Net Assets Available for Benefits

NHRS was 60.0 percent funded at the close of the fiscal year.  This means that the actuarial value of the retirement system’s assets is 60.0 percent of the projected amount needed to pay for current and accrued benefits for retirees and active members. Additional background on NHRS funding and liabilities is available in the “NHRS … Now You Know” section.

10-year History of Funded Ratio 
Pension Plan Funded Ratio History

Note:  Funded ratio impacted by changes to actuarial assumptions in 2011 and 2016.

NHRS paid out $670.4 million in pension benefits to 32,776 retirees or their beneficiaries in fiscal year 2015, which makes the retirement system one of the largest payrolls in the state.  In addition to pension benefits, NHRS paid out $51.8 million in post-retirement Medical Subsidy allowances.

GASB 67

Governmental Accounting Standards Board Statement No. 67, Financial Reporting for Pension Plans (GASB 67), requires disclosures of total pension liability (TPL), fiduciary net position (FNP), net pension liability (NPL), and annual money-weighted rate of return on plan investments, among other disclosures.  The most significant change resulting from GASB 67 is the calculation of the NPL. For accounting purposes, the NPL replaces the Unfunded Actuarial Accrued Liability (UAAL) and is calculated by subtracting the FNP at market value – as opposed to the actuarial value of assets used to determine the UAAL, which “smooths” gains or losses over five years – from the TPL.  

Due to the timing of GASB 67 audit requirements, the TPL of $12.75 billion is based on an actuarial valuation  performed as of June 30, 2015, and rolled forward to the measurement date of June 30, 2016.  The roll-forward procedure increases the June 30, 2015, actuarial accrued liability with normal cost and interest and decreases it with actual benefit payments and administrative expenses paid. The FNP available to pay pension benefits at June 30, 2016, was $7.43 billion, resulting in an NPL of $5.32 billion and a funded ratio of 58.3%. The money-weighted rate of return, which shows investment performance net of fees and is adjusted for the timing of cash flows and the changing amounts actually invested, was 0.9%. For fiscal year 2015, the TPL based on the June 30, 2014, actuarial valuation was $11.47 billion. The FNP at June 30, 2015, was $7.51 billion resulting in an NPL of $3.96 billion and a funded ratio of 65.5%. The money-weighted rate of return was 3.4%.

It is important to note that the disclosures related to GASB 67 are accounting measurements, not actuarial measurements of the funded status of the plan, and are not used to develop employer contribution rates. (Note: The NHRS Board of Trustees adopted revised actuarial assumption in May, 2016. This change is the primary driver of changes to the TPL, NPL, FNP, and funded ratio.)

GASB reporting schedules are available at: www.nhrs.org/employers/gasb/gasb-67-68-reports