State employees who retired before July 2014 will be getting a modest boost to their pensions soon, after the signature of a bill by Gov. Chris Sununu on Friday.
At a ceremony in Manchester, Sununu signed into law House Bill 616, which delivered a pension increase of 1.5% for those in state government – the first increase to the pension system since 2010.
The increase would kick in for all retirees within the date range, but it would apply only up to the first $50,000 of their retirement allowance. Those receiving over $50,000 would be capped to a 1.5% increase on that first $50,000 – a maximum $750 bump per person.
Representatives of state employees praised the move. At hearings and demonstrations, advocates of the increase had pointed to former state workers who have been struggling to get by at present rates, despite joining the state workforce with the expectation of a pension.
“Our retirees have waited a long time for this – when this goes into effect, it will have been 10 years since the last COLA,” said Rich Gulla, president of the state employees association, referring to the bill’s “cost-of-living adjustment.”
Still, Gulla said, the increase is not a panacea. State retirees face other rising costs such as health care, he noted.
“While this is a great step forward, we know that more must be done to make sure that our retirees, who spent long careers in public service, are not left behind,” he said.
But while the bill attracted Democratic support, it had a tough time earning bipartisanship. In signing the bill, Sununu bucked the position of many members of his own party, who said it added unsustainable burdens on cities and towns.
Those concerns were shared by the New Hampshire Municipal Association, which opposed the increase. In an interview Friday, Margaret Brynes, the executive director of the association, pointed to an estimated $116 million increase in pension liabilities over the next 20 years added to towns by the bill.
The issue was not the cost of living increase, Byrnes said, but the way it was funded. Since 2011, in the shadow of a recession, the state has stopped giving supplemental funds to towns to help with teachers, police and firefighter pensions, creating long-standing tensions between town officials and legislators.
“We were not opposed to retirees getting a COLA,” Brynes said. “We were only opposed to the cost that would be incurred by municipalities.”
The Municipal Association has been pressing for a partial restoration of state payments into the retirement fund – 30% of which used to be supplemented by state coffers. But a bill this year to bring back a contribution of 15% was retained in the House Finance Committee to be worked on in the next session.
Now, Brynes argues, municipalities “still are feeling the effects of a recession, because they’re still getting the amounts that were cut when we had a recession.”
Others have downplayed the impact of the COLA on cities and towns, pointing out that the amount paid into the New Hampshire Retirement System’s unfunded liability has dropped since last year, offsetting to some extent the impact of a pension bump.
Still, even with long-term funding questions in the air, representatives of state employees celebrated the moment.
In a statement, the New Hampshire Retirement Security Coalition, which represents 80,000 retirees, pointed to the economic benefits of raising pensions for state retirees, arguing that most of the money would stay in the state and boost the economy.
And Bill McQuillen, president of the Professional Fire Fighters of New Hampshire, said the increase would go a long way to help retirees keep up with the rising cost of “everyday items such as food, medicine and housing.”
“HB 616 was much-needed, and we thank the Legislature for their leadership in making this legislation a reality,” he said.
The bill also made brief political allies of two political foes: Sununu, who is running for a third term as governor, and Democratic Sen. Dan Feltes, who is running to unseat him.
“For nearly 10 years, our state’s retirees have been without an actual cost-of-living adjustment that directly goes towards the base payment of their benefits,” Sununu said. “The time to act is now – and that’s what we have done with today’s bill signing.”
Feltes gave more measured praise. “While there is a lot more work to do, this modest cost-of-living adjustment is a small step toward treating our retired workers with the respect they earned,” he said.