Solutions to Rising Retirement Costs Could Involve Public Employees, Retirees
Thursday, March 25, 2021
CONCORD, N.H. -- Cities and towns are struggling to keep up with increases in the amounts they're tasked with contributing to the state retirement system, and advocates for pensions argue retirees need a seat at the table.
After decades of underfunding, New Hampshire passed a law in 2018 to require the New Hampshire Retirement system to fully pay back its debt, what's called "unfunded liability," which is now roughly $6 billion, within 20 years.
Brian Ryll, president of the Professional Fire Fighters of New Hampshire, pointed out municipalities may need to increase property taxes to help bring down that debt.
"You look at what the taxpayers had to endure financially because of the global pandemic, downshifting additional costs based on an increase in employer rates is only going to hurt them worse," Ryll contended.
Currently, more than 80% of employer contributions go straight to the unfunded liability rather than into benefits for current retirees. When the debt is paid off, cities, towns and school districts will all be able to provide retirement benefits at just 18% of what they're paying now.
Part of what led to the underfunding were lower-than-expected returns on investments by the Independent Investment Committee, charged with growing the retirement system's funds.
Ryll noted the committee does not have any retired voting members, and the Retirement System Board of Trustees in 2011 reduced employee representation by half.
"When you look at benefits and benefit decisions and investments and investment allocations, it's extremely important to have somebody who has a vested interest in this be a part of the decision-making process," Ryll asserted.
Research has shown when retirement systems are managed by those who rely on their benefits, they often report higher returns.
Ryll confirmed he's seen that with the Professional Fire Fighters of New Hampshire's own retirement plan, which he claimed has higher returns because it's managed by firefighters for firefighters.
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