NEA-NH President Testifies for Retirement Commission

“…educators hired after July 1, 2011 will never receive 100% of their expected pension.”

Today, NEA New Hampshire President Megan Tuttle provided testimony for the New Hampshire Decennial Retirement Commission.  The text of her comments is provided below.


Mr. Chairman, Members of the Commission,

My name is Megan Tuttle and I am the President of the National Education Association of New Hampshire. Prior to becoming NEA-NH President last March, I taught for 19 years in the Keene and Pembroke School Districts. 

I want to thank you for the opportunity to speak before you here today. I wish to raise a couple of issues with you and ask that in your deliberations you consider the effect of certain changes made to the retirement system that have a negative impact not only on New Hampshire’s educators, but also the long-term economy of the state and the small businesses who rely on retiree pension dollars to stay open.

New Hampshire is an aging state. Because of this, it is incumbent on this commission to take into consideration the long-term and short-term effects changes to retirement benefits has not only had on retirees, but also on the economic vitality of New Hampshire. Data has been submitted to various commissions and legislative committees demonstrating that the business activity generated by retiree spending actually outpaces the total amount of retiree spending. In short, businesses profit from this spending. If this commission recommends changes to retiree benefits it will be to the detriment of individuals and families who have dedicated their careers to working for the people of New Hampshire and to the local and state economy retirees support.

This committee is charged with certain specific responsibilities. One of them is to examine the ten percent permanent pension reduction to which Group I employees are subject to when they reach age 65. When the retirement system was established, these employees were eligible to receive Social Security payments at age 65. At the same time, the retiree experienced a ten percent permanent reduction in their pension.  Because they had become eligible for Social Security benefits, the impact of the reduction in their pension was lessened.

That is not the case now. The age for collecting Social Security benefits has risen and the result, the age 65 pension reduction is no longer partially offset by Social Security benefits. This situation is simply untenable and unjustifiable. We believe the legislature recognized this and charged this committee to find a solution which will make retirees whole. We look forward to working with you as you rectify this.

When the legislature moved the retirement age for hires after July 1, 2011 to age 65, the practical effect was to move them into an immediate ten percent reduction in their pension benefits. In short, these retirees will not have the opportunity, at all, to collect a pension higher than 90% of what they paid for over their careers. But it gets worse.

Along with raising the retirement age to age 65, the legislature did create a window for hires after July 1, 2011 who have 30 years of experience to retire early. When creating that allowance, the legislature said their pension would permanently be reduced ¼ of one percent for every month calculated from the month they retire to the month they turn 65.

The math is simple. If a teacher retired at age 60, and remember they must have at least 30 years of experience to do this, their pension is permanently reduced by 15%.

Then at age 65 it is permanently reduced by another 10% for a total 25% reduction in their pension. Compounding this is their inability to collect Social Security for another two or three years, if not longer.

The combined result of these two factors means that educators hired after July 1, 2011 will never receive 100% of their expected pension.  If they retire at the standard age of 65, their pension will only ever be 90% of their promised retirement benefit.  If they opt for early retirement, their pension will be 3% less than full for every year they retire early.  It seems to me that at some point, a retiree should be able to receive 100% of the pension that they signed up for.

If I may add a little more context to this. When the legislature changed the age of retirement and when it added this enhanced early retirement penalty, employee contributions were not reduced to reflect the reduction in their pension payments over their lives, it was in fact increased. Our members are paying more for a potential permanent reduction of up to 25% in their pension benefit.

Finally, without a plan for COLAs, either given annually as a part of the pension benefit or as a thirteenth check, there is no mechanism for pensions to keep rise with inflation. This commission is charged with addressing that need as well. The answer needs to be something more specific then we have no solution or options.

A stable, secure, knowable pension attracts good minds to the education profession. The consequences, in the case of teachers and other education employees who are in the retirement system, benefits the school children of New Hampshire.  As I said at the beginning of my remarks, pension checks benefit our economy as a whole. Well-educated students are the foundation for our future. Ensuring that the best and brightest teachers remain in our classrooms to teach them is crucial to their success. One part of doing that is by provided stability and survivability for teachers on their retirement. Please take this into consideration as your work progresses.

Thank you for allowing me to testify, and I will be happy to work with the commission on this, or any other issue, going forward.


About the New Hampshire Retirement System and Decennial Retirement Commission:

For fifty years, the New Hampshire Retirement System has provided a secure retirement to thousands of teachers, firefighters, and other public employees throughout the Granite State. NHRS currently serves over 48,000 active employees and provides benefits to nearly 33,000 retirees and other beneficiaries. The average annual benefit for a retire is $20,694. As of June 30, 2016, the fund had earned a 25 year rate of return of 8.2 percent on its investments. (Source: National Public Pension Coalition)

As a provision of a law passed in 2007, it was decided that a commission would meet every ten years “to make recommendations to ensure the long-term viability of the New Hampshire retirement system.”