June 11, 2013 04:37 PM UTC

New Hampshire Judge: Public Employee Pensions are Protected on Day One. Colorado Legislature: Public Employee Pensions are Not Protected, Even on Day 10,950.

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• by: PolDancer

A New Hampshire judge recently determined that public employee contractual rights to their accrued pension benefits vest immediately upon employment.  This conclusion seems logical.  A worker wants to know what she is earning in salary and deferred pension compensation for each day of labor.  If she does not know this, how can she make an informed, economic decision regarding alternative employment opportunities?  It is truly immoral for an employer to change the rate of compensation (salary or deferred pension compensation) after the employer has already benefited from the worker's labor (See the Colorado bill, SB10-001.)

This New Hampshire judge determined that public pension benefits are legally protected on Day One.  Ironically, the Colorado General Assembly does not consider accrued, earned, contracted Colorado PERA pension benefits to be protected even on Day 10,950 (30 years.)  Thus, the State of Colorado is a defendant in the lawsuit, Justus v. State.

In 2010, a majority of the members of the Colorado Legislature voted to support the breach of the fully-vested public pension COLA contracts of Colorado PERA retirees.  Last year, the Colorado Court of Appeals agreed with the PERA retirees that the Colorado Legislature unconstitutionally seized their COLA benefits.  This lawsuit, Justus v. State, is now pending before the Colorado Supreme Court.

The New Hampshire Decision.

From seacoastonline.com:

"Judge rules in union pension case: Says state workers are protected from Day One of employment."

"CONCORD — A superior court justice has ruled in the lawsuit that state unions filed to block pension reform that state workers are contractually protected beginning at the time of employment."

"Hillsborough County Superior Court Judge Gillian Abramson ruled May 23 in the case of Professional Fire Fighters of New Hampshire et al. vs. the State of New Hampshire and the state Retirement System that 'vesting occurs upon commencement of permanent employee status.'  It is a position long held by the N.H. Retirement Security Coalition, but was challenged when the Republican-led Legislature crafted House Bill 2 in 2011, which made changes to the benefits of current employees."

(My comment: In my opinion, the Colorado Coalition for Retirement Security, an organization that supported SB10-001 [the bill taking contracted COLA benefits from Colorado PERA retirees] believes that Colorado PERA retirees are more "secure" in their retirement when the State of Colorado seizes one-third to one-half of their contracted annuity stream to maintain Colorado's status as a tax haven.  How does having one's property taken, one's contract ignored, bring a person greater "security"?)

New Hampshire decision:

"'Workers with five years in the system are just as committed to their work as those with 20 years in the system, and therefore shouldn't be treated differently by the retirement system. The decision is right to rule in favor of promoting worker retention and recruitment,' said Steve Arnold, a retired Portsmouth police officer and the current state director for the New England Police Benevolent Association."

(My comment: Now that public sector unions in Colorado have argued that the Colorado PERA pension benefits of their [former, “non-dues paying,” retired] members are not constitutionally protected, even after 30 years, how will these public sector unions argue in the future that the PERA pension benefits of their members who have 3 or 7 or 12 years of service are constitutionally protected?  Those who should defend contracted public pension benefits in Colorado argue that Colorado governments should be free to break these contracts at will.)

New Hampshire decision:

"Member unions of the coalition filed suit in court asking a judge to rule that the changes to the state budget that would affect retirement benefits are unconstitutional. They argued that certain sections of the budget bill violate the Contract and Takings Clauses of both the state and U.S. constitutions when it comes to N.H. Retirement System members who reached permanent employment status or retired as of Jan. 1, 2012."

"'According to a statement from the retirement coalition, the court has requested, and the coalition will provide, additional information supporting their argument of the damages the legislative changes make to workers who are 'prepared to give a lifetime of service to the state.'"

Link to complete article:

http://www.seacoastonline.com/articles/20130530-NEWS-305300397

From the New Hampshire Retirement System website:

"Below is a brief summary of pending lawsuits regarding legislative changes to RSA 100-A, the statute governing the New Hampshire Retirement System (NHRS, the retirement system):

HB 2 Benefits suit – Filed February 2012:

Professional Fire Fighters of NH v. State of NH"

"This suit, filed in Hillsborough County Superior Court by a coalition representing active and retired public employees, teachers, police, and firefighters, challenges a number of the pension provisions in House Bill 2, passed in 2011. The State of New Hampshire and NHRS were named as defendants in this lawsuit."

"The Plaintiffs claim HB 2 violates the New Hampshire and U.S. constitutions by substantially impairing vested contract rights, Judge Abramson issued a ruling May 24, 2013, on the pending motions for partial summary judgment filed last August.  In her ruling she stated that that 'vesting' of the plaintiffs’ contract rights occur at the time of employment.  The next step is for her to make a determination whether or not there was a substantial impairment of the contract rights of the plaintiffs.  Previously, in the related HB 2 Contribution suit in Merrimack County, Judge McNamara determined that vesting occurred at 10 years of service."

Thoughts on “substantial” impairments of public pension contracts from the Beerman paper addressing contractual public pension rights at this link:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2131481

“Amy Monahan concludes from her examination of the case law that in general, changes to the level of benefits and changes that affect the rights and responsibilities of employers are held to be substantial impairments. In her view, except perhaps in extraordinary circumstances, changing the method for calculating benefits so that lower benefits are paid is likely to be found to be a substantial impairment of the contract.”

“At the time the contract was made, had the employees’ known that their pension promises were subject to significant revision, they may not have accepted government employment or they may have demanded significantly higher current compensation.”

Link to NHRS:

http://www.nhrs.org/documents/NHRS_Legal_Update_WEB.pdf

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