Editorial: A better rule for the double dip

Sunday, January 21, 2018

Last week, by a 17-7 majority, the Senate voted to require that so-called “double dippers” and their employers pay into the state’s retirement fund, which is underfunded to the tune of $5 billion.

Should the bill become law it will mean yet another state turn of the screw on the local property tax vise, but it’s the right thing to do.

The shortfall in the retirement fund is a debt that should not be passed on to future public employees and taxpayers. Enacting House Bill 561 would be another small step toward solvency for the fund.

Contributing to public employee retirement costs is expensive. A city that pays an employee $100,000 must also pay $29,430 to the state’s retirement fund. Public employees who retire, collect a pension and then return to work for a public sector employer are cheaper to hire, since neither municipality nor employee pay into the fund. The bill would change that.

Currently, by law, retirees collecting a state pension are allowed to work up to 1,664 hours per year, or roughly 32 hours per week. Exceed that limit however, and essentially nothing happens because the Legislature never attached a penalty to the law. Retirees who work more than they should are sent a warning letter, but that’s it.

HB 561 reduces the work limit to 1,300 hours, or about 25 hours per week, but it grandfathers existing retirees who, unless they change public sector jobs, can continue to work 32 hours per week without penalty. The bill, whose next stop is the House Finance Committee, would require future retirees who work between 25 and 32 hours per week in a job covered by the retirement system to pay 3 percent of their salary into the retirement system. Employers would pay at the rate of 5 percent. Both rates, depending on the worker’s job classification, are a fraction of the usual rate.

Though fewer than 500 state system retirees are working more than 25 hours per week in public-sector jobs, many are in top positions. In the debate before the Senate vote, Sen. John Reagan of Deerfield, who opposed the change because it would be costly for cities and towns, blamed support for the bill on jealousy.

“We’re jealous because retirees are making more money than we think they should, or more money than we earn, and we think we should correct that by punishing them,” Reagan said. He has a point. The median household income in New Hampshire is $65,000. Many retired police chiefs, fire chiefs and top state and local officials enjoy pensions tens of thousands of dollars more than that and then collect six-figure salaries in their new part-time public job. But envy is no reason to enact legislation.

Hiring retirees allows cities and towns to employ highly experienced workers who might be unaffordable if their employers had to pay 11.55 percent of their salary into the retirement system. Hiring retirees also saves taxpayers money, until that is, the time comes to pay the retirement system piper. The system is underfunded for several reasons, the biggest being that for nearly two decades employers paid too little into it. It will take, the actuaries who’ve studied the system say, paying higher rates for several more decades to make the retirement fund whole.

That day will come a bit sooner with the passage of HB 561.