1. 1 New Hampshire Retirement System Presentation to NHSAA September 25, 2008

2. 2  52,900 active members  Employees, Teachers, Firefighters, Police Officers  24,350 pension payments  Retirees and Beneficiaries  476 participating employers  State of NH, cities, counties, towns and other units of local government Based on data available September 2008

3. 3 Active Members by Council District District # of Members 1 12,344 2 15,542 3 8,083 4 7,989 5 7,941 Total 52,899 Based on data available September 2008 Active Members

4. 4 Retired Members by Council District District # Retirees Monthly Annuity 1 5,202 $ 5,997,635 2 6,135 $ 7,303,190 3 3,056 $ 4,312,329 4 2,883 $ 4,311,014 5 2,757 $ 3,874,285 Totals 20,033 $25,798,454 Based on data available September 2008 Retired Members

5. 5 Teachers receiving initial payments on July 1st 731 597 449 389 367

6. 6 HB 1643  Pursuant to HB 1643, to be qualified for the medical subsidy, a teacher or political subdivision (such as a school district, county, town, or other units of local government) employee must: –Have accumulated at least 20 years of medical subsidy eligible creditable service as a Group I teacher or political subdivision employee as of July 1, 2008; AND –Be eligible to retire on or before July 1, 2008 AND –Retire on or before July 1, 2009.

7. 7 Medical Subsidy Rates Type of PlanRate 1 Person $ 375.56 2 Person $ 751.12 1 Person $ 236.84 (Medicare supplement) 2 Person $ 473.68 (Medicare supplement) Rates through 6/30/2012

8. 8 Pursuant to HB 1645, starting July 1, 2008 the medical subsidy amounts payable shall not be increased for four years. Effective July 1, 2012 and each July 1st thereafter, the rate of medical subsidy will increase by 4% for eligible retired members. Medical Subsidy

9. 9 Subsidy recipients who retired from towns, cities, school districts, counties or other local government employers will also receive annual supplemental payment each year from 2008 through 2011. Medical Subsidy

10. 10 HB 1645 Active Commissions  Cost-of-Living Adjustment (COLA) Study Commission  Medical Subsidy Study Commission Effective 2017  Decennial Retirement Commission

11. 11 HB 1645  $250 million was transferred from the Special Account to the State Annuity Accumulation Fund, as directed by RSA 100-A:16, II (j)  Earnable Compensation Definition  125% Calculation for Employers

12. 12 Trust Fund Equation Contribution Investment Income Benefit Payments $ $ Fund $ $ Contributions + Investment Income = Benefit Payments

13. 13 Funding for NHRS Pension Employer Contributions Pursuant to RSA 100-A:16  The employer contribution rates shall change, as necessary, to maintain the funded ratio of assets to liabilities  Medical Subsidy Rates

14. 14 Funding for NHRS Pension Employer Contributions* *The State of NH contributes 35% of the cost for firefighters, police officers and teachers; the employer contributes the remaining 65%. FY 08-09FY 10-11 Medical Subsidy Employees - Municipalities8.74%9.09%0% Employees – State8.74%12.12%3.03% Teachers8.93%10.70%1.32% Firefighters24.49%24.69%2.17% Police Officers18.21%19.51%2.17% Included in Rate

15. 15 Plan Funding  Employee and employer contributions combined equal approximately 35% of the benefit payout  65% of the benefit payout is derived from investment performance

16. 16 NHRS Funding Factors which impact funding:  Economic Assumed rate of 8.5% v. actual rate of return  Demographic Demographic assumptions v. actual demographics

17. 17 Funded Ratio History 67% 61% 82% 75% 71% 60%

18. 18 Trust Fund Assets $4,391.3 $4,728.6 $5,112.3 $5,597.6 $5,967.9

19. 19 Investment Initiatives Streamlined the equity and fixed income portfolios: –Reduced the number of investment managers for efficiency and selected replacement managers, as needed –Shifted approximately one-third of the assets to three index fund portfolios to complement existing structure Reduced investment fees by $4 million in calendar year 2007

20. 20 Investment Initiatives New asset allocation policy adopted to achieve long-term objectives of the fund: –Increase real estate holdings and diversify investments by property type and geography –Increase alternative investment portfolio, including private equity and absolute return strategies to seek higher return

21. 21 Actuarial Assumptions  Retirement, disability and death rates  Turnover rates  Life expectancy  Investment returns  Inflation  Salary increases  Member population growth

22. 22 Special Account RSA 100-A:16, II(h) established a Special Account to fund additional benefits, separate from pensions, such as the cost-of-living adjustments (COLAs)

23. 23 Special Account Funding  Currently, the assumed rate of return set by the NHRS Board of Trustees is 8.5%  Pursuant to HB 653, once the funding ratio is 85% or above, actuarial returns in excess of 10.5% will be credited to the Special Account

24. 24 Focus  Growing retirement-eligible population  Rising demand for pension plan information  Implementation of legislative changes  Repositioning of Investment Program  Independent Investment Committee

25. 25 NHRS Strategic Plan On-going initiatives:  Deliver quality member and employer services  Maintain long-term strategic investment objectives  Meet statutory obligations and fiduciary responsibilities

26. 26 Email Updates  Visit www.nhrs.orgwww.nhrs.org  Enter Information in section entitled: “NHRS Email Updates”

27. 27 For further questions please contact: NH Retirement System 54 Regional Drive Concord, NH 03301 Phone: 603-410-3500 Toll Free: 877-600-0158 www.nhrs.org info@nhrs.org