N.H. lawmakers hope credit card could help pay down pension fund shortfall
New Hampshire’s public employee pension system faces an unfunded liability estimated at $4.6 billion, and officials expect it’ll take decades to fill that hole.
Some state lawmakers think a specially branded credit card could make it happen a little sooner.
Sen. Nancy Stiles, a Hampton Republican, plans to introduce a bill next year in the Legislature creating an affinity credit card program that would direct $10 per card, plus a percentage of all purchases, to the New Hampshire Retirement System.
“Because we have such a huge unfunded liability in our retirement system, we were looking for ways to bring in some new revenue that didn’t create a new tax or increase rates on either employers or employees,” Stiles said.
The New Hampshire Retirement System is open to the idea, but notes it’s hardly a silver bullet.
“We always welcome any input on paying down our unfunded liability,” said spokesman Marty Karlon. “But with over $4½ billion in unfunded liability, I’m not sure . . . what kind of impact that would make.”
The New Hampshire Retirement System runs the defined-benefit pension plan for public employees in New Hampshire. It has more than 85,000 active and retired members – police officers, firefighters, teachers, municipal workers and other government employees.
As of June 30, it held an estimated $6.5 billion in net assets. But based on actuarial calculations, Karlon said, the gap between its expected future payments and its ability to make them is estimated at $4.6 billion.
The system has a plan to address the unfunded liability, which officials blame in part on a flawed formula used to calculate employer contributions from 1991 to 2007. Higher contributions from public employers are expected to fill the hole by 2039; at the moment, Karlon said, more than two-thirds of the rates being paid by employers are directed to the unfunded liability.
Stiles said she’d love to get there faster, and she’s been working with Bob Preston, a former Democratic state senator from the Seacoast, on the credit card proposal for months.
The final text of the bill isn’t yet available, but the idea is similar to affinity credit card programs already offered by colleges, universities and many other groups across the country, Stiles said.
The state Department of Administrative Services would hire a bank to create and run the program. Anyone could opt to get the credit card, with a per-card bonus and a percentage of each purchase going into the retirement system fund, minus any administrative expenses.
Karlon said he’s not aware of other pension funds trying anything similar.
“There’s a lot of affinity card programs for a lot of things,” he said, “but to the best of my knowledge there’s nothing like this for a pension system.”
But it could work, Stiles said. She said she’s aware of one affinity program that has 25,000 credit card users who generate $500,000 a year for its associated group.
“If we can get people to use it, half a million a year is not a bad hunk of change to pull in,” Stiles said.
Preston proposed something similar decades ago, Stiles said: an affinity credit card that would have helped pay state education costs.
That plan didn’t go anywhere, but this time around, the idea has powerful supporters. Senators and representatives from both parties are co-sponsoring Stiles’s bill, including Senate President Chuck Morse, a Salem Republican; Senate Majority Leader Jeb Bradley, a Wolfeboro Republican; and Sen. Lou D’Allesandro, a Manchester Democrat.
“I think we all want to get that unfunded liability down as quickly as possible,” Stiles said.
(Ben Leubsdorf can be reached at 369-3307 or email@example.com or on Twitter @BenLeubsdorf.)