Mon December 5, 2011
Public Pension Changes Could be Costly
A new estimate from the state’s public retirement system shows a change in benefits could prove costly.
Earlier this fall, lawmakers asked the retirement system to run some numbers.
They wanted to know how much it would cost employers- that’s the state, cities and towns - if New Hampshire went from a defined benefit plan to a defined contribution plan.
Going from a system where the employers are responsible for guaranteed benefits, to one where employers only guarantee they pay a certain contribution.
Initial numbers from the retirement system’s actuarial firm are sobering.
Over the next 26 years, the switch would end up costing employers at least $237 million dollars more than they currently expect to pay.
Lawmakers will consider legislation next year to switch to a defined contribution plan, based on the assumption that it will save employers money.
State labor leaders are pointing to this report that such a change could put cities and towns on a road to financial instability.