New Hampshire Retirement System

The New Hampshire Retirement System (NHRS) was signed into the New Hampshire Constitution in 1985, making retirement benefits for government employees a legal requirement. Since 1985, the NHRS has undergone reforms including a shift from the use of the Open Group Aggregate equation to the Entry Age Normal equation, methodologies used to determine the funding necessary to support the NHRS. Before the transition to the more accurate Entry Age Normal equation, the state of New Hampshire incurred a large unfunded liability. As the unfunded liability grew and New Hampshire’s budget deficit widened, reforms to the NHRS were deemed necessary. In 2011, comprehensive pension reform removed all state funding for NHRS and shifted the financial burden onto employers, in this case local governments and school boards. Many municipalities find it challenging to come up with the necessary funds to cover the increased costs of employee benefits. This report seeks to better understand the impact of recent NHRS changes on municipalities in New Hampshire and how the governance structure and demographics of municipalities present challenges and provide certain solutions.