Committee hears proposal to restore pre‑2011 pension features for public safety tiers; legal challenge noted

The Committee of Conference on the biennial budget heard an extended presentation and discussion about proposed changes to the state retirement system for “group 2” public‑safety employees.

Senator Jeff Gray presented language that would restore a 2.5 percent multiplier for certain members of the system on a phased schedule. He told the committee that the amendments were intended to limit first‑biennium costs to roughly $13–$15 million per year by phasing restorations for different cohorts of workers.

Why it matters: The retirement changes would affect pension benefits for firefighters, police officers and other covered employees. Any change alters the system’s unfunded actuarial liability and could increase employer contribution requirements for municipalities and state employers.

What presenters told the committee

- Senator Jeff Gray (sponsor): Gray described a two‑step approach: partial restorations in the first biennium with additional restorations in the second biennium for different tiers (tier b and tier c public‑safety members). He also advised the committee he had received documents indicating a current lawsuit filed in Merrimack Superior Court challenging related pension changes, and he cautioned that “it is a long standing tradition in the legislature that if we have a suit that's out there, that we don't take action on those things that the suit involves.”

- Mark Kavanaugh, deputy counsel for the New Hampshire Retirement System, summarized prior litigation. He told the committee the previous appellate decisions turned on the so‑called “unmistakability doctrine,” and explained the doctrine’s effect: “if a legislature intends that a provision shall not be altered in the future, it has to be unmistakable in the legislation that that was the intent.” He said the retirement system is not a named defendant in the new suit but that the plaintiffs assert novel theories.

- Actuarial overview: Committee staff and the retirement system’s actuarial advisers described a range of cost estimates. A full, formal valuation was not available in committee; staff described an example from a valuation exercise in May that showed a complete restoration of the multiplier would cost tens of millions (the valuation example cited a $39.8 million estimate for a full multiplier restoration in one option presented), and committee advisers said partial, phased restorations could be roughly a third of that per tranche—illustrative, not definitive—depending on the exact language, timing and the normal‑cost impacts for employers.

What the committee discussed

Members raised legal, fiscal and policy questions: whether restoring the pre‑2011 benefit formulas would prompt new litigation or encourage other cohorts to seek similar changes; how the savings or deferrals proposed by moving effective dates would change near‑term budget pressure; and how much the changes would raise employer contribution rates (the “normal cost”) in later years.

Representative concerns included whether phased restorations would be viewed as a recruitment and retention tool and whether the legislature should wait for the decade‑scheduled retirement review (the “decennial commission”) in 2027 to study the changes with a full actuarial review.

Selected quotes

- Senator Jeff Gray: “It is a long standing tradition in the legislature that if we have a suit that's out there, that we don't take action on those things that the suit involves.”

- Mark Kavanaugh, deputy counsel, New Hampshire Retirement System: “If a legislature intends that a provision shall not be altered in the future, it has to be unmistakable in the legislation that that was the intent.”

- Senator Sweeney (committee member, summary of actuarial guidance): committee discussion referenced the actuary’s view that delaying an effective date by six months would largely defer cost rather than eliminate it.

What the committee will do next

Committee members asked staff and the retirement system for formal, up‑to‑date valuations tied to the actual amendment language under consideration and requested a list identifying the cohorts (by vesting date) that would benefit under the phased approach so lawmakers can see near‑term fiscal exposures and who would be eligible in each tranche.

Because counsel flagged an active court case, several members said they expect further legal review before any final legislative action on the pension language.