FOR THE MONITOR

I have it on good authority that “the private sector is doing fine.” But America’s public pension systems are struggling. The New Hampshire Retirement System recently downgraded the expected rate of return on its investments from 8.5 percent a year to 7.75 percent. Returns for Fiscal Year 2012 were just 0.7 percent.

New Hampshire’s pension plan isn’t yet the smoldering crater of California or Illinois, which means we still have to fix it. An off year for the stock market isn’t reason to panic. The expected rate of return is a long-term average, and last year saw spectacular returns of 23 percent. The New Hampshire Retirement System did a little better than the market last year and slightly worse this year, but basically we rode the same waves as other investors.

Today the House Special Committee tasked with studying the implementation of a Defined Contribution Plan (essentially a 401k style plan) for new state employees.

The meeting, which was largely organizational and laid out the path the committee will take over the next three months. Two sub-committees were set up, one to deal with the projected $1.2 billion increased unfunded liability issue, dubbed the PC3 Committee (Pension Closing Cost Containment) by its chair Rep Neal Kurk, and the other with working on the design of the defined contribution plan as well as reaching out to firms who might be interested in responding to either an RFI or RFP.

The San Bernardino, California City Council voted yesterday to seek bankruptcy protection after being told by the interim City Manager, that it would not be able to make payroll through the summer months.
San Bernardino, a city of more than 200,000 was not the first major city in California to move forward with bankruptcy proceedings nor [...]

A bill that would have created a new 401(k) style plan for State Employees has been amended to scrap the original proposal over concerns over a possible $1.2 Billion transition cost and instead create a 17 member Study Commission to look at such a plan in more detail.
Members of the Commission will include legislators, representatives [...]

Earlier this morning, the New York assembly passed a modified version of Gov. Cuomo’s pension reform proposal.
Tier VI, the system for all new incoming employees, will increase employee contributions by as much as 3 percent for workers making over 45,000 and raise the retirement age from 62 to 63 and will save taxpayers roughly [...]

As reported by Bloomberg, the New York Assembly has rejected Gov. Cuomo’s retirement reform plan. While Republicans were in favor of the reform, Democrats who control the body were opposed to the measure.

Pension reform is a hot topic both here in NH and across the country. Here are some of the reform measures currently underway in other states:

This morning the Josiah Bartlett Center released this new study on the current financial state of the New Hampshire Retirement System.