NEW: Governor and Treasurer Unveil Pension Reform
Tuesday, October 18, 2011
Today, Governor Lincoln D. Chafee and General Treasurer Gina M. Raimondo unveiled their long-awaited pension reform legislation, the Rhode Island Retirement Security Act of 2011 (RIRSA), before a joint session of the General Assembly. Among the reforms are a suspension of COLAs, a slight increase in the amortization schedule, and the creation of a defined benefit and defined contribution plan.
“I am pleased that General Treasurer Raimondo and I will be presenting a proposal that is truly comprehensive,” Governor Chafee said. “Our fundamental goal throughout this process has been to provide retirement security through reforms that are fair to the three main interested parties: retirees, current employees and the taxpayer…I join the General Treasurer in urging the General Assembly to take decisive action and adopt these reforms.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAccording to a press release from the Treasurer's office, RIRSA is designed to provide a secure retirement for all 66,000 members of the state retirement system. It seeks to distribute the current cost burdens, which are now most heavily concentrated on the backs of taxpayers and younger employees, across all stakeholders.
“Re-designing the state pension system is in the interest of every Rhode Islander and is critical to moving toward a thriving economy,” Treasurer Raimondo said. “The Rhode Island Retirement Security Act is the culmination of months of thoughtful analysis focused on creating a healthy pension system that is affordable, sustainable and secure for retirees, employees and taxpayers.”
Among the changes contained in the legislation are:
- A suspension of COLAs until the system is "healthy and at actuarially acceptable funding levels."
- An increase in the current amortization schedule by six years (from 19 to 25).
- A reduction in the amount teachers contribute out of each paycheck towards their retirement from 9.5 percent to 8.75 percent--the same amount currently contributed by state employees.
- state employees and teachers will contribute 3.75 percent of pay toward a pension, for which the vesting requirements have been reduced from 10 years to five years of contributing service.
According to the Treasurer's press release, the passing of RIRSA will:
- Reduce the unfunded liability of Rhode Island’s pension system by $3 billion and increase its funding status to over 60 percent immediately
- Level taxpayer contributions to the pension system in FY2013 (approximately $300 million)
- Save taxpayers at least $3 billion over the next decade
- Immediately save municipalities approximately $100 million through decreased contributions to the teacher and MERS pension systems and at least $1 billion over the next decade
- Strengthen and modernize the state-administered pension system to ensure that earned retirement benefits are there for hard-working public employees, and that the state will be able to attract and retain the best and the brightest employees
- Lower the cost of borrowing, enabling the state to invest in other key initiatives
-
Require those independent municipal pension plans with funding levels below 60% to create a solvency
