Times were good when Marylyn Doyle retired. Her Health and Human Services post brought in healthy $24,000 pension, which rose rougly in line with inflation every year – the so-called “cost of living adjustment.”
That was 2007. In 2010, discovery of a litany of miscalculations brought to light a $4.5 billion hole in the New Hampshire Retirement System, in the thick of economic downturn.
Lawmakers leapt to make overhauls, moving funds, cutting benefits and setting up a 30-year payment plan to address the debt. Among the sacrifices: the yearly cost of living adjustment.
A decade later, Doyle’s annual pension is little changed from its level in 2010.
“This was a promise that they made to people,” the Newbury resident said Tuesday. “I probably would have worked a couple more years had I known that this was going to be steadily eroded.”
This year, pointing to improved economic conditions and a stable amortization plan for the Retirement System, Democratic lawmakers are pushing for an increase.
A bill moving through the House Finance committee would grant a 1.5 percent pension bump for any former state worker who retired before July 2014.
That increase, which would carry forward for life, has been hailed by supporters as necessary to help state retirees struggling to get by. Opponents, meanwhile, have raised concerns that approving the increase could increase burdens for towns and cities down the line.
The bill, House Bill 616, originally passed the House with no income limits. But on Tuesday, members of the House Finance Committee Division I added a cap to limit the 1.5 percent payouts to the first $50,000 of the retirees’ pension, effectively creating a $750 per-person ceiling.
For Democrats, the increase reflects a difficult reality for some New Hampshire retirees.
Bow Rep. Mary Beth Walz recounted meeting a retiree who received only $800 a month on her pension, and had falled back on state welfare programs to help make ends meet.
“I think there’s a role for COLAs in retirees as well to ensure that they have a retirement benefit that will keep them off of state assistance,” Walz said.
Republicans on the committee, however, have bristled at the cost, which they say would fall unfairly on cities and towns.
“So far nobody has talked about the money,” said Rep. Lynne Ober. “Nobody has talked about what this is going to cost the pension system.”
Ober said that the state pension system was never meant to act as a sole source of income, adding that state employees should contribute to a 457(B) plan – a voluntary contribution plan that operates like an individual retirement account.
Others said expanding pensions at a time when the state is still paying off its liability is unwise.
“A promise made is a promise kept,” said Rep. Peter Spanos, Republican of Laconia. “That is the challenge that this Legislature has going forward, regardless of shifting of political winds. I appreciate Rep. Walz’s remarks, but the present model is not sustainable.”
After Tuesday’s amendment, adding a $50,000 cap, it is unclear what the new price tag would be. But an actuarial analysis of the bill’s earlier version – which didn’t have limits – estimated an increase of $67.7 million, according to the analysis. That hike would be spread out over 20 years, resulting in between 0.1 and 0.4 percent increases to the employer contribution rate, depending on the profession, the Retirement System projects.
The analysis found the original bill would have cost cities and towns a total of $4.4 million in Fiscal Year 2022 and $4.5 million in Fiscal Year 2023.
If it became law, the increase would take effect in July. And it would be a one-off, with no guarantees of another raise in the future.
Still, Doyle, who says she’s lost out on about 15 percent of potential pension increases since the overhaul, argued the bump was a worthy investment.
“One and a half percent isn’t going to make up for the 15 percent that we’ve lost, but I think it’s a start,” she said. “I think we ought not to wait another year for this to happen.”