Additional hearings will he held on

·  Wednesday, April 23^rd starting at 1:00 pm (location TBA; this hearing will focus on proposals affecting the NHRS Board of Trustees and its Investment Committee) and

·  Monday, April 28^th starting at 1:00 pm in LOB Room 305 (this hearing will focus on the proposal to eliminate COLAs)

HB 1645 would dramatically reduce benefits for current and future retirees. 

1.         Many county and municipal retirees receive a “medical subsidy” to help them afford health insurance after they retire.  Under current law, the amount of this medical subsidy automatically increases by 8% every year – which helps offset double-digit increases in the cost of health insurance.  HB 1645 would freeze the amount of the medical subsidy at current levels, so individual retirees would have to absorb the full cost of insurance increases every year from now on.

2.         HB 1645 would essentially eliminate the annual Cost of Living Adjustments (COLAs) which are provided to retirees. 

Under current law, the Joint Legislative Fiscal Committee or the Legislature sets the amount of the COLA, which is then added to each retiree’s base annuity payment.  For example, in FY2006 the median retirement benefit for state employees was $9,718.  The 2006 COLA was set at 1%, which brought that retirement benefit to $9,815.  Last year’s COLA was 2.25%, which brought that retirement benefit to $10,036.

HB 1645 would replace this increase-to-base with a one-time increase referred to as a “13^th check”.  Any future adjustments for inflation would only increase the “13^th check” – rather than increasing the base retirement benefit. 

But HB 1645’s mechanism for calculating that 13^th check doesn’t work for retirees in the employees group (which includes state employees, as well as many SEA members in county and municipal units).  The bill sets a “minimum” amount of $500 – but also sets a “maximum” amount equaling 2.5% of the median retirement benefit.  For the “employees” group, the median retirement benefit is $10,036 – which means the “maximum” amount of the “13^th check” would be about $250 (or, roughly half of the “minimum” amount).  Hopefully, the Senate ED&A Committee will consider this contradiction during its hearing on April 28^th.

The bigger issue is that

·  under current law, retirement benefits will usually rise by a hundred or two hundred dollars each year. 

·  under HB 1645, the retirement benefit will rise by about $10 or $20 a year.  For example,

if the 13^th check is $250 and the inflation rate is 3%, the annual increase would be $7.50.

if the 13^th check is $500 and the inflation rate is 4%, the annual increase would be $20.00.

We need to convince the Senate ED&A Committee that HB 1645 will cause harm to current retirees, while doing little to strengthen the long-term financial stability of the System.

Please take the time to come to one of the ED&A Hearings, or contact Committee members and let them know your concerns about this bill.  (Please be sure to call or email Legislators from your home, not your worksite.)