contribution rates and requires employers to annually pay those rates in full. Employer rates are calculated every two
years to reflect the cost of benefits as they accrue as well as pay down existing unfunded flabilities, The retirement
system's unfunded fiability is the difference between current assets and the value of benefits already accrued. This
unfunded liability - most of which is being paid off through 2039 — accounts for more than two-thirds of current
employer rates. Any increase in liabilities resuiting from revisions to actuarial assumptions included in the FY 2019
actuarial valuation will be amortized over a 20-year period ending in 2041.
Of all the assumpiions used to estimate the cost of a public pension plan, none has a larger effect on the plan’s
employer contribution rates than the investment return assumption. This is because, over time, earnings from
investments account for a majority of the retirement system's revenues.
in considering the assumed rate of return, NHRS Trustees heard capital market presentations from several
independent, expert sources, including NEPC, the retirement system's investment consultant. GRS, in its role as
consulting actuary, opined that an assumed rate of return within the range of 6,25 percent to 7.0 percent would be
considered as actuarially reasonable.
The fast time the assumed rate of return was changed was May 2046, when it was reduced from 7.75 percent to 7.25
percent.
According to February 2020 data compiled by the National Association of State Retirement Administrators (NASRA)
in its review of the nation’s largest public pension funds, the average assumed rate of return as of February 2020 was
7.22 percent. Among the 130 plans measured, 91, or 70 percent, have reduced their assumed rate of return since
fiscal year 2017, At that time, 15 public pension plans had an assumed rate of return of 6.75 percent or lower,
The 6.75 percent rate represents what NHRS Trustees believe the plan can realistically earn from its investments on
an annual basis, when averaged over the long-term. In any given year, investment-retutns are likely to be higher or
lower than the long-term assumed rate.
About NHRS
NHRS provides retirement, disability, and death benefits to its eligible members and their beneficlaries. The State of
New Hampshire and nearly 470 local government employers participate in NHRS for their employees, teachers,
firefighters, and police officers. NHRS has approximately 48,000 active members and 39,000 benefit recipients.
NHRS administers a defined benefit plan qualified as a tax-exempt entity under sections 401(a) and 501(a) of the
Internal Revenue Code.
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