Being on the Epsom Budget Committee I have looked into the numbers for the pensions for state employees. I was shocked, and this article only touches the tip of the iceburg. Slowly recovering from our down economy, New Hampshire (and probably other states) is still holding on to a Retirement Benefit Plan. In the private sector, most plans went to Retirement Contribution Plans a long time ago. A benefit plan guarantees benefits at a certain amount, whereas a contribution plan will provide results that are in keeping with the current market. Demanding from the tax payers the support of a defined benefit plan is unreasonable in a down economy. The idea of a pension plan is that money is put in, and through the financial markets, it builds over time. Well, when the economy is bad, the building part suffers. But in a Defined Benefit plan, the retirees are supposed to still get whatever they were promised. See how this cant work? When I saw that the fund was only 60% funded it is obvious that this is not working. Pensions are being paid out on money that was never made (in earnings through investments). This is a big problem. Now, the state employees are up in arms because they are being asked to contribute more to make up for some of the shortfall. Otherwise, the tax payers have to fork it out. If you really want to ruin your breakfast, take a look at the New Hampshire Retirement System Employer and Member Contribution Rates since 1971. Google that and youll find the pdf. You can find this at NHRS.org. In 1990, the employer (that would be the tax payers of New Hampshire - you) contributed 2.30%. Thats 2.30% of the employees gross wages. Seems reasonable. My employer currently matches 3% of my earrings. This is typical. Now, read down through the chart (heres where your breakfast is going to want to make a revival). For 2014, the employer (thats you, again) is paying 12.13% of the employees gross wages for their retirement. What?! What employer in the private sector would match 12% of their employees gross wages in retirement benefits? None. So, why are we doing it for state employees? What youll also see on the chart is the increase in what the employee themselves (state worker) have to contribute. In 1990, they paid 5%. In 2014, they are paying 7%. You see, they dont like paying out more. 2% hurts. 10% really hurts!... and you are the one being hurt. A lot. My question is, how is this money being managed? Im going to keep getting educated about these things, 1) because you elected me to your budget committee, 2) because I kind of dig horror stories.
Posted on: Fri, 12 Dec 2014 15:38:54 +0000
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