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Pension reform clears panels

Last modified: 6/7/2011 12:00:00 AM
House and Senate lawmakers have reached an agreement on wide-ranging reforms to the state retirement system set to be voted on by both chambers tomorrow.

The pension reform bill, which affects public employees at the state and local level, has been a high priority of the Republican majority. Special committees in the House and Senate crafted separate plans before hashing out a compromise over the course of nine meetings in the past month.

Rep. Ken Hawkins, a Bedford Republican who chaired the House's pension reform committee, was part of a team of legislators in 2008 that took an earlier stab at making the retirement system more sustainable.

"I think, after eight, nine years of working this, that we finally got some comprehensive reform," Hawkins said yesterday.

Those reforms include an increase in employee contribution rates of about 2 percent effective July 1. The move is intended to lower the burden to towns and school districts, softening the blow from the state's 2012-2013 budget proposal that ends its current practice of paying a quarter of local pension costs.

In hopes of curbing so-called double dipping - when public employees retire from their full-time positions to collect their pension and return in a part-time role - another aspect of the plan limits part-time employees to 32 hours a week. An exception would allow part-time employees to work more than 32 hours a week at seasonal events, such as Bike Week in Laconia, but cap their yearly allotment at 1,300 hours.

The plan would also increase from three years to five the number of highest paid years used to calculate pension payments of nonvested employees and new hires after Jan. 1, 2012.

For new hires of nonemergency personnel, such as teachers and clerks, the retirement age to receive full pension would be raised from 60 to 65. Nonvested emergency personnel such as police and firefighters would have to work 25 years to retire at 50 instead of currently being able to retire at 45 after 20 years, Hawkins said.

Another move puts into the system's general fund about $250 million from a special account that collects excess earnings to pay cost-of-living increases, Hawkins said. Altogether, the reforms should save public employers throughout the state about $350 million over four years, he said.

Rep. Neal Kurk, a Weare Republican who sat on the committee, said the compromise bill is more reflective of the Senate's plan, describing it as "somewhat weaker" by not heeding the House's proposal to raise retirement ages for all current employees in the system.

"It doesn't strengthen the retirement system as much as the House did. It doesn't reduce the cost of the whole system as much as the House did," Kurk said.

However, Kurk said the bill still makes the state's system more sustainable.

"The bill made significant steps in improving the financial health of the retirement system so that money to pay pensions to those who are relying on that will be there at the time those folks retire," Kurk said.


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