1. March 2010 1 New Hampshire Retirement System

2. March 2010 2 Overview of Presentation  Structure and Governance  Plan Funding  Legislation  Important Reminders  Health Insurance after Retirement  Working after Retirement

3. March 2010 3  53,000 active and vested deferred members  Employees, teachers, firefighters, police officers  24,500 pension recipients  Retirees and beneficiaries  Growing by 1,500 - 2,000 per year  475 participating employers  State of NH, cities, counties, towns, school districts, and other units of local government Membership Structure

4. March 2010 4  NH Legislature: Plan Sponsor  RSA 100-A serves as plan document  NHRS Board of Trustees and Independent Investment Committee Members serve as fiduciaries  Internal Revenue Code provisions  NH Constitution Art. 36-a protects funds “for the exclusive purpose” of providing benefits  Sununu – Supreme Court ruling Plan Governance

5. March 2010 5 Defined Benefit Plan  Benefits are determined by a specific formula which consists of three components:  Earnings  Creditable Service  Benefit Multiplier

6. March 2010 6 Defined Benefit Plan  Lifetime pension benefits  To retired member  To eligible beneficiary upon retired member’s death (Survivorship Option)  Benefits are not based on investment returns or contributions

7. March 2010 7 Investment Earnings Investment Earnings Benefit Payments Benefit Payments Equation must balance over time Contributions Fiduciary Management + = + Expenses +

8. March 2010 8 Member Contributions  Member Contributions Set by Statute  Group I Members:  Employees* & teachers = 5.0% of earnings  Group II Members:  Firefighters & police officers = 9.3% of earnings *State employees hired on or after July 1, 2009, must contribute 7.0% of gross earnings

9. March 2010 9  Biannual Actuarial Valuation  Calculates funding status and employer rates  Rates based on membership classification  Rates include pension contribution and medical subsidy contribution  Actuarial Experience Study  Conducted every five years  Evaluates underlying assumptions Employer Contributions

10. March 2010 10 Employer Contributions – FY 10 Group I Political Subdivision Employers Member ClassificationPension Medical SubsidyTotal Employees9.09%0.07%9.16% Teachers*  Employer Share  State share Total 6.57% 2.81% 9.38% 0.92% 0.40% 1.32% 7.49% 3.21% 10.70% *The State of NH contributes 30% of the cost for teacher members, and the employer contributes the remaining 70%.

11. March 2010 11 Employer Contributions  State’s share reduced for teachers, firefighters, and police officers of political subdivisions ( Laws of 2009)  From 35% to 30% for fiscal year 2010  To 25% for fiscal year 2011  To revert back to 35% for fiscal year 2012 and each fiscal year thereafter

12. March 2010 12 Employer Assessment  Employer assessment for excess pension benefits  “Spiking”  To address high end of career payments

13. March 2010 13 Employer Assessment “Spiking” Legislation from 2009  Delayed the implementation of employer assessment - “spiking assessment”- to July 1, 2010 (House Bill 223)  NHRS to recommend methodology for determining employer assessment for excess pension benefits (House Bill 641)  Established a study committee to review employer assessments (Senate Bill 108)

14. March 2010 14 Employer Assessment Status of “Spiking” in 2010  Senate Bill 504 recommends delaying spiking assessment to July 1, 2011  NHRS recommended methodology for determining fair assessment  Study committee reviewing employer assessments  Surveying employers, seeking spiking data  Recommends delaying employer assessment one more year

15. March 2010 15 2010 Legislation  House Bill 1576 – employment as a retired member  House Bill 1664-FN – increase in member contribution rates  Senate Bill 108 (retained) - study committee reviewing implementation of employer assessments  Senate Bill 504 - spiking assessment

16. March 2010 16 Important Reminders  Salary Continuance Plans  Contributions must be remitted to NHRS based on the portion of the plan funded by the employer  Member earns service credit  Member is “in service” for certain benefits

17. March 2010 17 Important Reminders  Health Insurance “Buy Outs” and “Payments in lieu of” are not earnable compensation  Do not report those amounts to NHRS  Do not remit contributions on those amounts

18. March 2010 18 Important Reminders  Workers’ Compensation  Report supplemental pay paid by the employer while the member is receiving Workers' Compensation  Contributions must be remitted to NHRS on supplemental pay but not on actual Workers’ Compensation payments

19. March 2010 19 Important Reminders  Active Military Duty  Report military differential pay  Contributions must be remitted to NHRS on differential pay  Members should contact NHRS upon returning to NHRS-covered employment  May be eligible for service credit even if no differential pay

20. March 2010 20 Retiree Health Insurance  NHRS-participating local government employers must allow their retiring employees to participate in their health insurance plan  Employers are not required to pay for the health insurance coverage  Legislative Study Commission re: funding of medical benefits

21. March 2010 21 Retiree Health Insurance  Deductions from pensions for health insurance premiums cannot be pre-tax  Internal Revenue Code regulations  Cafeteria plans for employees only

22. March 2010 22 Medical Subsidy  A payment made by NHRS directly to the former employer or health insurance administrator, applied toward the cost of health insurance for the qualified retired member and qualified spouse  The medical subsidy is not a health insurance plan

23. March 2010 23 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 effective through 6/30/2012

24. March 2010 24 Working after Retirement  May work for non-NHRS employer (such as private sector)  May not occupy NHRS-covered position and receive pension  Pension will cease  Active membership will be restored  Disability Retirement – Contact NHRS for details

25. March 2010 25 Working after Retirement From Retiree to Active Member  Teachers who are “regularly scheduled” for 30 hours per week  Employees who are “regularly scheduled” for 35 hours per week  Teachers who are employed for 30 or more hours per week for 18 weeks during the school year

26. March 2010 26 Working after Retirement From Retiree to Active Member  NHRS-covered position that requires mandatory enrollment  “Under Contract” or “Independent Contractor” to avoid enrollment  “Part-time” but working and/or being paid for full-time work

27. March 2010 27 Communications Initiatives  Outreach and education  Member education sessions  Regional approach - more members  Mailing to employers in March  2009 Law books  Employer newsletter  Website and content enhancements  Online resources  User-friendly information

28. March 2010 28 Does NHRS have your current email address? Send email to: public_relations@nhrs.org public_relations@nhrs.org

29. March 2010 29 NH Retirement System 54 Regional Drive Concord, NH 03301 Phone: 603-410-3500 Toll Free: 877-600-0158 www.nhrs.org info@nhrs.org