Thursday, September 20, 2007

Study: New Hampshire Public Pension Costs Escalate

A recent study concludes taxpayers will have to pay more to ensure New Hampshire's retirement system keeps its promises to current and future retired state workers.

"We estimate the legislative promises made to state and local government employees and retirees will be increasingly difficult to honor without increasing state and local taxes," concludes a study of the public pension system by the New Hampshire Center for Public Policy Studies.

The center said the state may have to consider reforming the retirement system by evaluating alternative pension plans for new employees, expanding financial reporting, fully funding any proposed benefit increase and revising the assumed investment return.

The system covers more than 70,000 current and retired teachers, firefighters, police officers and state and local government workers. The study estimates that it is underfunded by $2.5 billion and the deficit is growing.

The center's study suggests that the state shift from the traditional defined benefit plan to a defined contribution plan for new employees, noting that the numbers of retirees is growing faster than employees paying into the pension fund. In addition, the average benefit is increasing, the study found.

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