Lawmakers, actuaries debate HB 2 pension changes as cost estimates rise

Lawmakers and retirement-system staff spent an extended session analyzing provisions in House Bill 2 that would change how average final compensation (AFC) and other benefit formulas are calculated and that would restore earlier definitions in effect before 2011.

The discussion centered on three linked provisions in HB 2: reverting AFC from a five‑year to a three‑year average; restoring certain end‑of‑career pay items (unused sick and vacation time, severance, longevity where applicable) into ‘‘earnable compensation’’ for Group 2 members; and removing a limit that capped pay‑above‑base used for AFC when that pay spiked only in final years. Retirement‑system staff said those elements together would increase benefit costs and that the items interact, so actuaries can’t simply add independent dollar impacts for each feature.

The session reviewed anecdotal…