Division II session clarifies retirement rules for rehired public safety staff; committee approves related HB 2 language

Officials from the New Hampshire Retirement System and the Department of Safety briefed House Finance Division II on proposed language in HB 2 that affects membership classification for select safety‑related positions and how retirement and rehire interact with group 1 and group 2 benefits.

Mark Kavanaugh, deputy counsel and compliance officer for the New Hampshire Retirement System, and Rick Fabrizio, director of communications and legislative affairs for the retirement system, explained that some Department of Safety and fire‑standards positions historically attract experienced group‑2 applicants (the enhanced benefit class used for firefighters and certain public‑safety personnel) even though the positions, as currently classified, do not meet the statutory definition of group‑2. The draft HB 2 language addresses recruitment and classification by allowing certain named positions — instructors, supervisors, and specified division roles — to be treated as group‑2 for membership purposes despite limited frontline exposure.

Kavanaugh told the committee that the statutory mechanics prevent retirees who are restored to full‑time classified service from collecting a pension while simultaneously earning a second full pension; instead, a retiree who returns to covered, full‑time service is “restored to service” and their pension stops while they accrue additional service that is later included in a recalculated pension benefit. “If [a retiree] comes back, these are full‑time positions; they come back, their pension stops and they’re reenrolled,” Kavanaugh said, adding that retirees who return to part‑time roles under the annual hours cap can continue to collect a pension in many cases.

Committee members asked detailed questions about exemptions for appointed officials, employer contribution rates, and limits on post‑retirement work. Officials confirmed that exempt, fixed‑term appointees (for example, certain commissioners) may be treated differently by statute and that employer contribution rates differ by group: “The employer rates are, like, 14% [for group‑1]…the group‑2 for firefighters is…about 30.3%,” Kavanaugh said. The retirement system clarified that federal tax rules and retirement policy create a required 28‑day gap after retirement for many re‑employment scenarios to avoid the appearance of a prearranged return.

After questions, the committee accepted HB 2 sections 150 and 152 as drafted and adopted a new amendment (1112‑h) — requested by Department of Safety representatives — to add the Division of Fire Safety to RSA 100‑A:3(c) so that designated fire‑safety positions will be eligible for the group‑2 membership classification under the bill language. Committee members repeatedly described the change as a recruitment tool, not a general effort to increase benefits: “It’s a recruitment issue,” Kavanaugh said, noting the policy precedents for exempt fixed‑term appointments.

Members also discussed other operational details of post‑retirement employment, including the annual limit of 1,352 work hours for retirees who return to part‑time work (changed in 2019 from a weekly limit), and the department’s practice of counting paid vacation and sick time as part of that hour cap. The committee voted to accept the sections and the amendment in a show‑of‑hands that was recorded as unanimous for each item.

Committee members asked the retirement system to provide follow‑up material on the administrative impact and employer contribution differentials. Officials said the incremental budget impact of reclassifying a small number of positions would be limited to higher employer contribution rates for those positions and would not materially affect the overall state retirement budget.

The committee will incorporate the approved language into the division’s HB 2 recommendations.