Special Board of Aldermen 09-21-2021 Page 10
city to deliver basic services, schools and everything else. | mean, it's just drives property taxes so high.
But let me let me ask this kind of basic question. Why does it matter so much that we go to 100%? And | pose the
question with this context. You know if GM has a, you know, a big pension system with a huge unfunded liability, |
believe, if they go bankrupt, which could happen, the pensioners don't get paid. | mean, that's a problem, obviously.
Now this New Hampshire retirement system has $11 billion in its coffers, so to speak but with the amount of money you
have coming in and with some degree of investment retum, it seems that you will always have enough to pay current
benefits. The situation | just suggested for GM is never likely going to happen. | mean, the State will never go bankrupt
or never end its existence. And therefore, will never be in a situation where it cannot - even if we just stayed at 61%,
we'll never be in a situation where it actually has to pay out everyone with nothing coming in because the only way that
this system would ever end is if the State ended, which means the United States ended, which means that there is no
pension. Pension assets are worth nothing. You know - stock market. If the country ends, none of this stuff is worth
anything. So aren't we sort of, you know, taking all this pain and all the money that we're putting in to achieve basically
when we're talking about a government entity such as this, a kind of an academic result, which is this idea that we have
to go to 100%. But is that really necessary in the context of a State that is, you know, one of the 50 that comprises the
United States?
Jan Goodwin, Executive Director of NH Retirement System
Yes Alderman, you are correct. We can continue to pay all of the benefits as they come due while being 80% funded.
However, that's not good fiduciary practice. The standard that any actuary will tell you is that you want to be 100%
funded. And one of the reasons why you want to be 100% funded is when you look at your own - the City of Nashua’s
financial statements, you have to pick up a proportion of the unfunded liability of NHRS on the face of your financial
statements. And...
Mayor Donchess
Well that's true but we can deal with that. | mean you're not ask, yeah okay there's this theory put forth by the actuaries
that we should be at 100%. Yes but they don't have to pay the money and they don't have to, you know, it's an
academic issue. That doesn't address the basic question | asked, which is the only way this system would ever end
even if we stayed at 60%, or 65, the only way that it would ever end is if the State went out of existence. | mean and
when that happens, it doesn't matter if we’re at 60% or 80, or at 100 because none of the assets will be worth anything.
So why is it So necessary in the context of a State? For the reasons that I've indicated, why is it so necessary to go to
100%? You'll always be able to pay the benefits as long as the country is still in existence.
Jan Goodwin, Executive Director of NH Retirement System
Right that is correct. However, | would point out to you that one of the things that makes a difference is that the more
fully funded a pension fund is the better it can withstand market downturns. We know they're inevitable. Every few years
- every 10 or 15 years, there's a major correction in the market and the lower your funded ratio is when that financial
event happens, the greater the hit to your funded ratio.
Mayor Donchess
Well yes, that's certainly the case. Now, | think you said that the return for the year ended this past June 30 was 26%.
Jan Goodwin, Executive Director of NH Retirement System
26.8% yes, that's correct.
Mayor Donchess
What impact did that have on the percentage funded, you know, did it drive that up or what happened?
Jan Goodwin, Executive Director of NH Retirement System
At this point, our actuaries are just beginning their work because our books are not yet closed for June 30 because we’re
still awaiting the results of the investments of some of our alternative investments. So those take a bit longer to come in
and so our actuaries are right now are working on assessing what additional liabilities were added during the past year
and the valuation of the assets.
