Rumor Mill: Earnable Compensation

Apr 04, 2016

NHRS continues to receive periodic inquiries about a rumor that’s been circulating since 2011. The rumor is that members who were vested prior to January 1, 2012, have to retire by July 1, 2016, because certain end-of-career payouts will be excluded from the definition of Earnable Compensation after that date. THIS IS NOT TRUE.

In 2011, the New Hampshire Legislature made a number of significant changes regarding eligibility for NHRS benefits under RSA 100-A.  One change that was proposed but not enacted would have eliminated certain end-of-career payouts from the definition of Earnable Compensation, effective July 1, 2016, for members who were vested prior to January 1, 2012.

Payouts of unused vacation and sick time, severance pay, cash incentives paid by employers to encourage members to retire and end-of-career additional longevity pay are not considered Earnable Compensation for members who were not vested prior to January 1, 2012.

However, the payouts listed above remain Earnable Compensation for members who were vested prior to January 1, 2012, and will be used in the pension benefit calculation, subject to the 150% earnings limitation enacted in 1991.