Solutions to New Hampshire’s Public Pension Crisis

The New Hampshire Center for Economic Policy (NHCEP) follows up February’s report on the alarming scope of New Hampshire’s Retiree Funding Crisis with realistic solutions based on reforms that are already working in other states across America.

“Last month, we showed that New Hampshire has an unfunded liability to current and future state retirees of some $13.3 billion, and that this figure will keep growing unless some significant changes are made now,” noted NHCEP president J. Scott Moody.  “The first step we recommend is an Amendment to the State Constitution to guarantee that state employees will have a fully-funded retirement system, and that politicians can no longer manipulate the management of these funds for short-term reasons.  This Amendment, similar to one passed in Maine more than a decade ago, also mandates that state retiree pension funds can never be diverted for other purposes.”

“Another key part of this Constitutional Amendment is that it specifies that the present unfunded liability must be paid down within a fixed 30-year period,” adds Chief Economist Wendy Warcholik.  “This Amendment, plus the other five steps we recommend in today’s report, will bring a professional, business-like approach to state employment, and will create a retirement system that is fair and dependable for state employees, and also transparent to the taxpayers.”

“The solutions we’re recommending today are already working in other states to avoid mass state worker layoffs, employee pension defaults or radical tax increases,” Mr. Moody continued.  “These six steps will correct current problems in New Hampshire’s state employment and retirement systems, avoid new unfunded liabilities and pay down the existing debts.”

Mr. Moody concluded: “Now that we know the problem, see the real danger to the state’s long-term economic prospects, and have workable solutions to correct decades of mismanagement and unfunded promises – we will have no excuses for our children and grandchildren if we don’t act now.”

Read this new report, with specific recommended solutions, here: http://nheconomics.org/wp-content/uploads/2010/08/NHCEP-Liberty-in-Economics-Volume-1-Issue-2-New-Hampshire-Pension-Solutions-031511.pdf

To read the February 17 NHCEP report detailing the state’s growing unfunded liability for retiree pensions and benefits, please click this link:   http://nheconomics.org/wp-content/uploads/2010/08/NHCEP-Liberty-in-Economics-Volume-1-Issue-1-New-Hampshire-Pension-Crisis-021711.pdf

Mr. J. Scott Moody and Dr. Wendy Warcholik are available for press interviews, on-air appearances and in-person presentations of this research.  If you have any questions or would like to arrange a meeting, please contact Martin Sheehan, the Director of Communications via e-mail at martinsheehan@nheconomics.org or by calling 207-650-7335.

New Hampshire’s Growing Public Retiree Funding Crisis

The New Hampshire Center for Economic Policy (NHCEP) issued a new report today which details the size and sources of the state’s growing unfunded liability crisis.

“At the end of the 2010 fiscal year, New Hampshire’s pension and benefits system was underfunded by $4.7 billion, an amount that has grown by 58 percent in just two years,” noted NHCEP president J. Scott Moody.  “One reason for this growth is that the state’s investment revenues were down, just like everyone else in the Great Recession, but expenses, especially for health care, have gone up faster than the state estimated.”

“In addition to the recent expansion of this unfunded portion,” adds Chief Economist Wendy Warcholik, “New Hampshire has been underestimating this long-term liability all along, and should have been paying more into the system to fund the pensions and benefits that have been promised to public sector employees.  This means that over the next 30 years, New Hampshire taxpayers will be paying some $20 billion to pay these expenses and make up the current unfunded liability.”

“The snapshot using today’s numbers is clearly unsustainable,” Mr. Moody continued, “but our research shows that it is actually getting worse every year.  The problem is that the state underestimates future investment revenues by using an anticipated long-term return of 8 percent.  This means they are not setting aside enough to pay future liabilities, which makes the unfunded liabilities even higher.”

“Until flaws in the system are amended to match anticipated revenues with future pension and benefits liabilities, increased payments into the retirement system will never close this gap.” Mr. Moody concluded: “Right now, it’s like pumping more and more air into a flat tire that still has a big hole in it.  Until you remove the nail and fix that hole, you’re not going anywhere.”

To read the complete report by the New Hampshire Center for Economic Policy, please click this link:   http://nheconomics.org/wp-content/uploads/2010/08/NHCEP-Liberty-in-Economics-Volume-1-Issue-1-New-Hampshire-Pension-Crisis-021711.pdf

Mr. J. Scott Moody and Dr. Wendy Warcholik are available for press interviews, on-air appearances and in-person presentations of this research.  If you have any questions or would like to arrange a meeting, please contact Martin Sheehan, the Director of Communications via e-mail at or by calling 207-650-7335.