NH Supreme Court Rules in Pension Benefits Case

Oct 14, 2016
  • Legislation

For Immediate Release: October 14, 2016
Contact:  Marty Karlon, Public Information Officer, (603) 410-3594; [email protected]

CONCORD, NH – The New Hampshire Supreme Court released a unanimous decision yesterday that upheld several changes to New Hampshire Retirement System (NHRS, the retirement system) benefit provisions enacted by the Legislature in 2011.

The New Hampshire Supreme Court order in Professional Fire Fighters of New Hampshire v. State of NH – commonly referred to as the “HB 2 benefits case” or “Firefighters 2” – affirmed a superior court decision to dismiss the case because there was no “unmistakable intent by the Legislature to contractually bind itself against prospectively changing the terms contained” in RSA 100-A, the retirement system’s governing statute.

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

The plaintiffs – a coalition representing active and retired public employees, teachers, police, and firefighters –  claimed that changes to NHRS benefits enacted in House Bill 2 (Chapter 224, laws of 2011) violated the New Hampshire and U.S. constitutions by substantially impairing vested contract rights.

The same claim was made in two prior cases regarding legislative changes to RSA 100-A that were decided by the New Hampshire Supreme Court in late 2014 and early 2015. In those cases, the Court also found no unmistakable language in the statute establishing a contractual relationship.

The provisions being challenged in the HB 2 benefits case included changing the definition of earnable compensation, increasing the average final compensation (AFC) period from 3 to 5 years, reducing the maximum initial pension benefit to 85% of AFC, and increasing the Group II (Police and Fire) normal retirement age with a corresponding reduction in the formula used to determine the pension benefit.

This lawsuit was initially filed in Hillsborough County Superior Court in 2012. The State of New Hampshire and NHRS were named as defendants. Although NHRS was named as a party in this case, the State was the primary defendant and the retirement system took no position with respect to the constitutionality of the changes.

In February 2016, Hillsborough County Superior Court Judge Gillian Abramson, citing the prior Supreme Court cases, granted the State’s motion to dismiss the HB 2 benefits case. That ruling was appealed to the Supreme Court.

The plaintiffs have 10 days to file a motion for reconsideration with the Supreme Court. The Supreme Court decision is available here.

About NHRS

NHRS provides retirement, disability, and death benefits to its eligible members and their beneficiaries.  The State of New Hampshire and nearly 470 local government employers participate in NHRS for their employees, teachers, firefighters, and police officers.  NHRS has approximately 48,000 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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