Hearing on COLA for Group 2 retirees draws support from firefighters but budget cost and unfunded liability questions remain

Senate Bill 242, presented by Senator Regina Bartzell on behalf of Senator Bill Gannon, would establish a 2025 cost-of-living adjustment (COLA) for retired Group 2 members or beneficiaries, paid on the first $50,000 of a retired allowance and funded from the state general fund. Bartzell noted the sponsor’s concern about the proposal’s estimated present-value cost to the retirement system.

Representatives of retired and active firefighters and police testified in support. Arthur Beaudry, a retired Manchester Fire Department captain and past trustee of the New Hampshire Retirement System, urged the committee to grant a COLA to long-serving Group 2 retirees, outlining the legislative history of COLA funding and the elimination of the special account that had previously funded cost-of-living increases. Beaudry said that while Group 1 retirees (many of whom receive Social Security) have received relief in the form of a $500 stipend and earlier COLAs, Group 2 police and firefighters—who generally do not receive Social Security—have received substantially less adjustment and have seen purchasing power erode during long stretches of inflation. Beaudry cited the system’s historical transfers and the elimination of the special account and noted retirees received a 1.5% COLA in 2010 but few increases since.

Mark Kavanaugh, deputy counsel and chief compliance officer for the New Hampshire Retirement System, said the system takes no position on policy and pointed out there is another COLA bill in the House that covers both Group 1 and Group 2 members; he cautioned the committee about passing overlapping proposals. Kavanaugh and other staff explained the difference between an ongoing COLA (which changes base benefits and affects present-value calculations) and one-time supplemental payments, and noted that the $98 million (cited in sponsor remarks) is the present-value cost of a plan paid from the general fund (actuarial present-value figures). Committee members asked how a COLA would affect the retirement system’s unfunded liability; witnesses said the retirement system’s unfunded liability is approximately $5 billion and that actuarial mechanisms exist to amortize funding changes.

Supporters from the Professional Firefighters of New Hampshire and other groups emphasized retirees’ continued contribution to local economies, paying property taxes and buying goods and services. Testimony also included illustrative numbers comparing how a $30,000 pension would have tracked with CPI increases versus current pension indexation.

No committee vote on the bill was recorded in the public-hearing segment. Committee members asked for additional fiscal context and noted competing budget priorities; some members suggested waiting for the governor’s budget or other fiscal materials before taking action.