I. GROUP I MEMBERS, TEACHERS, AND EMPLOYEES, ARE ACTUALLY ENTITLED TO FOUR CATEGORIES OF BENEFITS UNDER NHRS
- Retirement Pension Payments
- Disability Pension Payments
- Death Benefits
- Health Insurance Continuation
II. NHRS IS A DEFINED BENEFIT PLAN
As a defined benefit plan, NHRS pays members a monthly benefit for their lifetime. This is different from a Defined Contribution Plan (such as a 403b or 401k), which is limited to the amount the member puts in their account. When a defined contribution account is emptied, the payments end. By comparison, as a Defined Benefit Plan, the NHRS pension provides a set amount of monthly income for the member’s lifetime, (it may be adjusted for cost-of-living increases). The amount of the monthly pension paid is calculated based upon a formula of factors including Creditable Service (years of service in an NHRS job) and the member’s Average Final Compensation (an average of the highest three or five years based on year of vesting).
III. CREDITABLE SERVICE (ALSO REFERRED TO AS “SERVICE CREDIT”) IS A KEY VARIABLE IN DETERMINING A MEMBER’S NEW HAMPSHIRE RETIREMENT SYSTEM (NHRS) PENSION BENEFITS
Members earn creditable service, while they are contributing to NHRS through their NHRS-covered employment, or when they are contributing to NHRS on their earnings from an NHRS employer-funded disability plan.
Members may also be able to purchase or add back service credit lost in certain circumstances such as when an employee loses service credit for time away from work due to military service or workers’ compensation, or if an employee loses credit due to an employer’s enrollment oversight or due to a withdrawal of contributions due to termination of employment followed by a return to NHRS employment.
The rules for these circumstances vary and the members must seek advice as to whether they might be eligible and/or how to take advantage of this right. However, it is an important right to consider as creditable service is a primary factor in the calculation of pension benefits and it’s important to get credit for all years served in the system.
