HB 211-FN - AS INTRODUCED 2021 SESSION 21-0387 10/05 HOUSE BILL 211-FN AN ACT revising certain benefit provisions in the city of Manchester employees contributory retirement system. SPONSORS: Rep. Long, Hills. 10 COMMITTEE: Executive Departments and Administration ───────────────────────────────────────────────────────────────── ANALYSIS This bill establishes new benefit provisions for the employees' contributory retirement system of the City of Manchester originally established in 1973, 218 for participants who commence service on or after January 1, 2021. This bill increases the member contribution for participants until the plan reaches a 100 percent funded ratio and increases the normal retirement age. This bill will also mitigate the cost to the Manchester employees' contributory retirement system for early retirement and adjust the final average earning calculation. --------------------------------------------------------------------------- Explanation: Matter added to current law appears in bold italics. Matter removed from current law appears [in brackets and struckthrough.] Matter which is either (a) all new or (b) repealed and reenacted appears in regular type. HB 211-FN - AS INTRODUCED 21-0387 10/05 STATE OF NEW HAMPSHIRE In the Year of Our Lord Two Thousand Twenty One AN ACT revising certain benefit provisions in the city of Manchester employees contributory retirement system. Be it Enacted by the Senate and House of Representatives in General Court convened: 1 1 Manchester Retirement System; Definition; Final Average earnings. Amend 1973, 218:4, X as 2 amended by 2002, 194:1 to read as follows: 3 X. "Final average earnings" for members who commenced service before January 1, 4 2022, means the greater of (a) the average annual earnings received by a member during the 3 5 highest calendar years during the 10 years preceding the member's normal retirement date, date of 6 actual retirement or date, of termination of employment, or (b) the average annual earnings received 7 by a member during the highest 36 consecutive calendar months during the 10 years preceding the 8 member's normal retirement date, date of actual retirement, or date of termination of employment. 9 The 3 highest years or highest 36 consecutive months shall be selected by the member, it being the 10 intent and purpose of this method of computing final average earnings to afford the highest benefits 11 to the member. If a member has not worked 10 years at the time of the commencement of benefits, 12 the benefit shall be based upon the earnings during the greater of the highest 36 consecutive months 13 or the 3 highest calendar years. [This section shall be effective for members whose retirement date 14 is after January 1, 2003.] For members who commenced service on or after January 1, 2022, 15 “final average earnings” means the greater of (a) the average annual earnings received by 16 a member during the 5 highest calendar years during the 10 years preceding the member's 17 normal retirement date, date of actual retirement, or date of termination of employment, or 18 (b) the average annual earnings received by a member during the highest 60 consecutive 19 calendar months during the 10 years preceding the member's normal retirement date, date 20 of actual retirement, or date of termination of employment. The 5 highest years or highest 21 60 consecutive months shall be selected by the member, it being the intent and purpose of 22 this method of computing final average earnings to afford the highest benefits to the 23 member. If a member has not worked 10 years at the time of the commencement of benefits, 24 the benefit shall be based upon the earnings during the greater of the highest 60 25 consecutive months or the 5 highest calendar years. 26 2 Definitions; Normal Retirement Date. Amend 1973, 218:4, XIII as amended by 2002, 194:1 27 and 2002, 147:4 to read as follows: 28 XIII. "Normal retirement date" shall mean the first day of the month coinciding with or next 29 following a member's sixtieth birthday for members who commenced service before January 1, HB 211-FN - AS INTRODUCED - Page 2 - 1 2022, otherwise the first day of the month coinciding with or next following a member's 2 sixty-second birthday. 3 3 Employees to Whom the Act Applies. Amend 1973, 218:7, III as amended by 2002, 194:1 and 4 2008, 90:3 to read as follows: 5 III. Any eligible employee in the employment of the city on January 1, 1974, who elected not 6 to participate shall only be admitted to the retirement system upon completion of an application for 7 participation, majority consent of the retirement board, passing a prescribed physical examination, 8 and completion of a service buyback. Any such eligible employee who elects to participate 9 subsequent to January 1, 2022 shall participate under the retirement system statutory 10 provisions in effect for members who commenced service as of that date. 11 4 Contributions by Employees. Amend 1973, 218:9, I as amended by 2002, 194:1 to read as 12 follows: 13 I. The rate of contributions by each member who commenced service prior to January 1, 14 2022 shall be 3.75 percent of that portion of earnings received during each calendar year or portion 15 thereof; otherwise the rate of contributions shall be 5.75 percent and continuing until such 16 time as the board of trustees certify to the executive director on the basis of an actuary’s 17 valuation, which shall be based on sound actuarial funding methods, assumptions and 18 principals that the actuarial funded ratio of the Manchester's employees' contributory 19 retirement system has reached a 100 percent funding level. The contribution rate shall 20 return to 3.75 percent as of the start of the City’s fiscal year immediately following the 21 board of trustee’s certification of the 100 percent funding level. 22 5 Service Buybacks. Amend 1973, 218:10, III, as amended by 2002, 194:1 and 2006, 115:4, to 23 read as follows: 24 III. A member who ceases to be a member, withdraws his or her member contributions 25 pursuant to section 11 of this act, and later becomes a member again, may make a request after the 26 member's return to city employment for service buyback of prior service credit for the previous time 27 served as a member. If a service buyback is not made, the member's benefit shall be based solely on 28 the member's years of service and final average earnings after the break in service. For former 29 members who return to service on or after January 1, 2022, the cost of the buyback shall be 30 determined by dividing the value of refunded contributions by the contribution rate in 31 effect during their withdrawn period of service, multiplying the results by the contribution 32 rate in effect under paragraph I of section 9, and then applying interest at the rate in effect 33 as determined by the board. Members who withdrew more than 5 years of service earned 34 prior to January 1, 2022, who return to service on or after January 1, 2022 shall pay 35 member contributions at the contribution rate in effect under paragraph I of section 9 for 36 other new hires, however, the returning member shall retain his or her original normal 37 retirement age of 60, and will have their earnings averaged over 3 years for benefit HB 211-FN - AS INTRODUCED - Page 3 - 1 calculation purposes. Former members who return to service on or after January 1, 2022 2 who withdrew with less than 5 years of service earned prior to January 1, 2022 shall be 3 subject to the 5-year earnings average and a normal retirement age of 62. 4 6 Retirement Benefits Amend 1973, 218:12, I, as amended by 2002, 147:5 and 2002, 194:1 to 5 read as follows: 6 I. Any member who commenced service prior to January 1, 2022, who either has 7 attained the age of 60 years or having been in the service of the city on January 1, 1974, has 8 completed at least 20 years of service, shall be eligible for a normal retirement benefit under the 9 provisions of this act. Any member who commenced service on or after January 1, 2022, who 10 has attained the age of 62 years, shall be eligible for a normal retirement benefit under the 11 provisions of this act. Any such member may retire by filing with the retirement board a written 12 statement duly attested setting forth at what time subsequent to the date of filing thereof, the 13 member desires to be retired, or the retirement board may, at its option, retire any such eligible 14 member, furnishing written notice thereof at least 60 calendar days in advance of the specified date 15 of such retirement. 16 7 Rehirees. Amend 1973, 218:12, III, as amended by 2002, 194:1 to read as follows: 17 III. The retirement system shall not pay retirement or disability benefits to city employees 18 who again become eligible to participate in the retirement system under the act. A member shall 19 notify the retirement system of the member's rehire immediately. Upon rehire after a period of 20 termination, all disbursements under the plan to that member shall cease and the member shall 21 resume making contributions to the retirement fund at the contribution rate in effect at 22 resumption of city service as of the first pay period following the member's rehire. Rehired 23 members shall have their benefits determined in accordance with section 13 of this act. 24 8 Normal Retirement; Pension Payable. Amend the introductory paragraph of 1973, 218:12, V, 25 as amended by 2002, 194:1 to read as follows: 26 V. Members who qualify for a normal retirement benefit shall receive an annual pension 27 payable during the member's lifetime and determined by the member’s initial commencement 28 of service date, in an amount equal to the sum of: 29 9 Restoration to Service Benefits. Amend 1973, 218:13, as amended by 2002, 194:1 to read as 30 follows: 31 218:13 Restoration to Service Benefits. 32 I. If a formerly disabled member or any other member who has commenced receiving 33 benefits from the retirement system again becomes eligible to participate, the member's benefits 34 shall cease. The member shall resume making contributions to the retirement fund at the 35 contribution rate in effect at resumption of city service and the member shall become eligible 36 to receive a normal retirement benefit determined in accordance with this section. HB 211-FN - AS INTRODUCED - Page 4 - 1 II. A member whose benefit is governed by this section shall receive a normal retirement 2 benefit equal to the sum of (a) the benefit calculated based on years of service and final average 3 earnings prior to the [break in] resumption of service and (b) the benefit calculated based on years 4 of service and final average earnings after the [break in] resumption of service. If a member has 5 less than [3 years of service] the required number of years used to calculate final average 6 earnings under the retirement system statutory provisions in effect at the member’s initial 7 date of hire after the break in service, the member's benefit after the break in service shall be based 8 upon the earnings of the member for all weeks of service until the retirement date, divided by the 9 number of weeks of service and multiplied by 52. 10 10 Early Retirement Option. Amend 1973, 218:14, I, as amended by 2002, 147:6 and 2002, 11 194:1 to read as follows: 12 I. Each member who commenced service before January 1, 2022, whose age plus years 13 of service equal 80, or who attains age 55 with a minimum of 20 years of service, may have the 14 option, to be exercised by a written notice to the retirement board, to retire at any time thereafter, 15 prior to the member's normal retirement date. The amount of retirement benefits payable to such 16 retired member shall be computed as provided in section 12 of this act, except that the date of such 17 early retirement shall be used in determining the member's service, and the amount thus obtained 18 will be reduced for each month by which the date on which benefits commence precedes the month 19 after which the member attains 60 years of age by 1/6 of one percent. Each member who 20 commenced service on or after January 1, 2022, whose age plus years of service equal 80, or 21 who attains age 55 with a minimum of 20 years of service, may have the option, to be 22 exercised by a written notice to the retirement board, to retire at any time thereafter, prior 23 to the member's normal retirement date. The amount of retirement benefits payable to 24 such retired member shall be computed as provided in section 12 of this act, except that the 25 date of such early retirement shall be used in determining the member's service, and the 26 amount thus obtained will be reduced for each month by which the date on which benefits 27 commence precedes the month after which the member attains 62 years of age by 7/12 of one 28 percent. 29 11 Disability Benefits. Amend 1973, 218:15, III, as amended by 2002, 194:1 to read as follows: 30 III. If such total disability is shown, to the satisfaction of the retirement board, to have been 31 sustained during the performance of duties pertaining to the member's employment by the city, the 32 member shall be entitled to retirement for disability irrespective of the duration of employment. In 33 order for a member to receive disability benefits under this section, the member shall submit an 34 application for disability benefits within 60 days of termination of employment. However, any 35 member receiving a disability benefit on account of total and permanent disability sustained during 36 the performance of duties pertaining to employment by the city, as provided herein, shall receive a 37 benefit equal to the greater of the sum of the amounts determined in accordance with (a) and (b) of HB 211-FN - AS INTRODUCED - Page 5 - 1 paragraph II, or 50 percent of final average earnings. If a member commenced service prior to 2 January 1, 2022 and has less than 3 years of service at the time of becoming totally disabled in the 3 performance of duties pertaining to the member's employment by the city, the member's pension 4 shall be based upon the member's annualized disability earnings. If a member commenced 5 service on or after January 1, 2022 and has less than 5 years of service at the time of 6 becoming totally disabled in the performance of duties pertaining to the member's 7 employment by the city, the member's pension shall be based upon the member's annualized 8 disability earnings. The disabled member may also receive his or her disability benefit in the form 9 of a contingent annuity as described in section 17. 10 12 Accidental Death Benefits. Amend 1973, 218:16, I(a), as amended by 2002, 194:1; 2003, 16:1; 11 and 2011, 21:1 to read as follows: 12 (a) If, upon the receipt by the board of trustees of proper proof of the death of a member 13 in service indicating that such death was the natural and proximate result of an accident occurring 14 while in the performance of duty at some definite time and place, the board decides that death was 15 the result of an accident in the performance of duty and not caused by the member’s own gross 16 negligence, recklessness, or willful misconduct, the member’s surviving spouse shall be entitled to 17 the larger of an annual benefit equal to 50 percent of the member’s final average earnings paid in 18 equal monthly installments or a monthly benefit computed according to the member’s creditable 19 service and final average earnings for the 100 percent contingent annuitant option inclusive of the 20 early retirement reduction set forth in section 14 of this act [of 2 percent per year] which 21 corresponds with the member’s service commencement date, for each year prior to member’s 22 normal retirement age. In lieu of either option, the member’s surviving spouse may instead elect a 23 lump sum payment as described in paragraph I(c). 24 13 Ordinary Death Benefits. Amend 1973, 218:16, II(b) and (c), as amended by 2002, 194:1; 25 2003, 16:1; and 2011, 21:1 to read as follows: 26 (b) If at the time of death, the member has at least 5 years of creditable service or 27 qualifies to retire under the retirement provisions of section 12 or section 14 of this act, and has a 28 spouse, the member’s spouse shall be entitled to receive a monthly lifetime benefit equal to the 29 greater of either 50 percent of the service retirement benefit straight life option without reduction 30 that would have been payable to the member had they been eligible to retire immediately prior to 31 death based upon final average earnings and creditable service or, a monthly benefit computed 32 according to the member’s creditable service and final average earnings for the 100 percent 33 contingent annuitant option inclusive of the early retirement reduction of 2 percent per year for each