1 new hampshire retirement system presentation to nhsaa september 25, 2008
TRANSCRIPT
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New Hampshire Retirement System
Presentation to NHSAA
September 25, 2008
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52,900 active membersEmployees, Teachers, Firefighters, Police Officers
24,350 pension payments Retirees and Beneficiaries
476 participating employersState of NH, cities, counties, towns and other units of
local government
Based on data available September 2008
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Active Members by Council District
District # of Members1 12,3442 15,5423 8,083 4 7,989 5 7,941
Total 52,899
Based on data available September 2008
Active Members
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Retired Members by Council District
District # Retirees Monthly Annuity
1 5,202 $ 5,997,635
2 6,135 $ 7,303,190
3 3,056 $ 4,312,329
4 2,883 $ 4,311,014
5 2,757 $ 3,874,285
Totals 20,033 $25,798,454
Based on data available September 2008
Retired Members
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Teachers receiving initial payments on July 1st
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008
Teachers
731
597
449389367
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HB 1643
Pursuant to HB 1643, to be qualified for the medical subsidy, a teacher or political subdivision (such as a school district, county, town, or other units of local government) employee must:– Have accumulated at least 20 years of medical
subsidy eligible creditable service as a Group I teacher or political subdivision employee as of July 1, 2008; AND
– Be eligible to retire on or before July 1, 2008 AND – Retire on or before July 1, 2009.
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Medical Subsidy Rates
Type of Plan Rate1 Person $375.562 Person $751.121 Person $236.84(Medicare supplement)
2 Person $473.68 (Medicare supplement)
Rates through 6/30/2012
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Pursuant to HB 1645, starting
July 1, 2008 the medical
subsidy amounts payable shall
not be increased for four years.
Effective July 1, 2012 and each
July 1st thereafter, the rate of medical
subsidy will increase by 4% for
eligible retired members.
Medical Subsidy
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Subsidy recipients who retired from
towns, cities, school districts, counties
or other local government employers will
also receive annual supplemental
payment each year from 2008 through
2011.
Medical Subsidy
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HB 1645
Active Commissions
Cost-of-Living Adjustment (COLA) Study Commission
Medical Subsidy Study Commission Effective 2017
Decennial Retirement Commission
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HB 1645
$250 million was transferred from the Special Account to the State Annuity Accumulation Fund, as directed by RSA
100-A:16, II (j)Earnable Compensation Definition125% Calculation for Employers
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Trust Fund Equation
Contribution
InvestmentIncome
BenefitPayments
$ $ $ $Fund
$ $ $ $
Contributions + Investment Income = Benefit Payments
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Funding for NHRS Pension
Employer ContributionsPursuant to RSA 100-A:16
The employer contribution rates shall change, as necessary, to maintain the funded ratio of assets to liabilities
Medical Subsidy Rates
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Funding for NHRS Pension
Employer Contributions*
*The State of NH contributes 35% of the cost for firefighters, police officers and teachers; the employer contributes the remaining 65%.
FY 08-09 FY 10-11 Medical Subsidy
Employees - Municipalities 8.74% 9.09% 0%
Employees – State 8.74% 12.12% 3.03%
Teachers 8.93% 10.70% 1.32%
Firefighters 24.49% 24.69% 2.17%
Police Officers 18.21% 19.51% 2.17%
Included in Rate
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Plan Funding
Employee and employer contributions combined equal approximately 35% of the benefit payout
65% of the benefit payout is derived from investment performance
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NHRS Funding
Factors which impact funding:Economic
• Assumed rate of 8.5% v. actual rate of return
Demographic
• Demographic assumptions v. actual demographics
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Funded Ratio History
Actuarial Value Assets to Actuarial Value Liabilities
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
2002 2003 2004 2005 2006 2007
67%61%
82%
75%71%
60%
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Trust Fund Assets
$4,391.3 $4,728.6$5,112.3
$5,597.6$5,967.9
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Investment Initiatives
• Streamlined the equity and fixed income portfolios:
– Reduced the number of investment managers for efficiency and selected replacement managers, as needed
– Shifted approximately one-third of the assets to three index fund portfolios to complement existing structure
• Reduced investment fees by $4 million in calendar year 2007
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Investment Initiatives
• New asset allocation policy adopted to achieve long-term objectives of the fund:
– Increase real estate holdings and diversify investments by property type and geography
– Increase alternative investment portfolio, including private equity and absolute return strategies to seek higher return
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Actuarial Assumptions
Retirement, disability and death ratesTurnover ratesLife expectancyInvestment returnsInflationSalary increasesMember population growth
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Special Account
RSA 100-A:16, II(h) established a Special Account to fund additional benefits, separate from pensions,
such as the cost-of-living adjustments (COLAs)
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Special Account Funding
Currently, the assumed rate of return set by the NHRS Board of Trustees is 8.5%
Pursuant to HB 653, once the funding ratio is 85% or above, actuarial returns in excess of 10.5% will be credited to the Special Account
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Focus
Growing retirement-eligible populationRising demand for pension plan
informationImplementation of legislative changesRepositioning of Investment ProgramIndependent Investment Committee
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NHRS Strategic Plan
On-going initiatives:Deliver quality member and
employer servicesMaintain long-term strategic
investment objectivesMeet statutory obligations and
fiduciary responsibilities
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Email Updates
Visit www.nhrs.org
Enter Information in section entitled: “NHRS Email Updates”
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For further questions please contact:
NH Retirement System54 Regional Drive
Concord, NH 03301Phone: 603-410-3500
Toll Free: [email protected]