DC Plan More Expensive Than Current DB Plan, House Report Says

Tony Case / flickr

Republicans have been trying to pass legislation transitioning new employees to a defined contribution retirement plan, in order to reduce the cost of the state’s retirement system. However, a report commissioned by the House subcommittee on the subject suggests the Republicans’ plan needs revision.

“Total pension funding costs will rise as the State implements the DC plan for new hires,” writes The Segal Group, a benefits and human resources consulting firm contracted by the House subcommittee.

The Segal Group’s findings were consistent with those of Gabriel Roeder Smith & Company, whose report was commissioned by the New Hampshire Retirement System in Jan., 2011.

The report included recommendations for ways to make the DC plan less expensive – such as lowering employer contribution rates for younger employees. The report also suggested nontraditional defined benefit and DC/DB hybrid plans that combine aspects of both methods.


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