'You're Pushing The Payout to Us'

Frustrated by the increasing costs of the New Hampshire Retirement System, Town Councilors called Monday for state legislators to find a way to relieve some of the burden on municipalities.

"You've got to come up with a solution because it's just fundamentally not fair to expect people who by and large aren't in the retirement system to fund this generous retirement solution when there's no end to the problem because you bicker up there," Councilor Tom Freda told State Sen. Sharon Carson and a representative of the retirement system during Monday's Town Council meeting.

"I have to decide as one vote here where money goes and every year I get less and less of a choice because I get a bill from Concord that says you've got to pay 27 percent to retirement," Freda said. "The people here at this table didn't have anything to do with that. The rates are fixed in Concord, so wherever the blame goes, it's really irrelevant now because you're pushing the payout to us."

Carson and Marty Karlon, the retirement system's public information officer, attended Monday's meeting to answer questions about the system and the rates for next year.

The New Hampshire Retirement System's total employer contribution rates for July 1, 2013 are 27.7 percent for firefighters, 23.8 percent for police officers, 14.2 percent for teachers and 10.8 percent for other employees, according to materials Karlon presented Monday night.

Those rates will continue until June 30, 2015.

The current rates, which will expire on June 30, 2013, are 22.9 percent for fire, 20 percent for police, 11.3 percent for teachers and 8.8 percent for other employees, according to the retirement system website.

Council Chairman John Farrell said the increasing rates have made collective bargaining with town employees more difficult.

"I have to look at (employees) to say, I don't have any money to give you an increase in pay because it's going to your pension and that just breaks even," he said. "And if it doesn't go to your pension, it goes to your medical benefits."

Shortfalls in the retirement system can be traced to flawed methods for determining how much municipalities should contribute to the system over the course of 15 years and poor market conditions limiting the amount of interest earned on the fund, Karlon said.

"The silver lining in all this is that the Legislature realized some of these issues starting about five years ago and there's literally been 60-plus changes to the statute governing the NHRS," he said Monday.

Some of those changes include the closing out of a surplus fund previously used to fund cost of living adjustments and medical subsidies for retirees, Karlon said. He said new hires are no longer offered a medical insurance subsidy upon retirement.

Carson said new hires will now have to work longer and will not be eligible for the same kinds of benefits as their more senior counterparts. She said the board that oversees the retirement system has also been revamped, to remove all legislators and to balance membership between employees and employers. 

"There's no easy answer here," Carson said. "We don't have billions of dollars worth of cash that we can throw right into the system to make it whole again."

But Carson said she is committed to funding the benefits offered to earlier employees.

"We made promises to people and we have to keep those promises," she said. "I think that's very important that we do that. It's just how do we move forward from here."