Pension Bill Out of Committees: Will it Pass?
Friday, November 11, 2011
The House and Senate Finance Committees approved an amended version of the pension reform bill submitted by Governor Lincoln Chafee and General Treasurer Gina Raimondo Thursday, allowing for the possibility of intermittent cost-of-living adjustments every five years until the plan is 80 percent funded, moving most employees to hybrid pension plans, increasing the retirement age for those not currently eligible to retire and beginning the effort to move municipal plans toward solvency.
The House Finance Committee voted 13 to 2. The vote was 10 to 1 in the Senate Finance Committee. On the House side, Representatives William San Bento and John Carnevale voted against the measure. On the Senate side, only Senator Frank Ciccone was opposed to the bill.
Under the revised plan, pension recipients may receive up to a four percent COLA on the first $25,000 of income every five years as long as the state meets investment goals and the retirement age now varies depending on how close a public employee is to retirement. The majority of workers will also be moved to 401k-style hybrid plans.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTTreasurer Raimondo estimates the sweeping overhaul of the state’s pension system will save taxpayers $3 billion over the next decade and put the pension system on track to being nearly fully funded by 2042. Raimondo has also projected that the expected taxpayer contribution to the pension system will remain at $300 million for the coming year.
Support for Plan
Among those offering praise for the plan Thursday was Rhode Island Statewide Coalition executive director Harriet Lloyd, who called the changes to the system “historic and dramatic.”
“The state took a major step forward Thursday evening toward containing its central fiscal crisis,” Lloyd said. “Though we recognize modifications to key provisions were made in the final days, we still believe this bill, if it attains final passage, represents a historic and dramatic improvement of the state’s pension system from where we stand today.”
Earlier in the day, EngageRI, the pro-pension reform group that has raised over $500,000 in its quest to convince the General Assembly to support the pension overhaul, released a statement supporting to changes to the original bill.
“We have had an opportunity to review the changes made to the Rhode Island Retirement Security Act of 2011 and EngageRI will support the revised version,” said Ed Cooney, Senior Vice President at Nortek and Co-Chairperson of EngageRI. “We commend the Joint Finance Committee for their hard work and appreciate that although substantive changes were made, the result of implementing RIRSA will be actuarially similar to the original bill. Once enacted, RIRSA will put the pension fund on the path to fiscal health.”
Next Steps
The bill will now be forwarded to the full House and Senate, which are expected to return to session Thursday, Nov. 17, to debate the bill (2011-H 6319A/2, 2011-S 1111A/2). The House is scheduled to begin at 2 p.m. and the Senate at 4 p.m.
Passage by the committees followed nearly 29 hours of testimony by fiscal advisors, municipal leaders, union representatives, retirees and citizens over the legislation that aims to stabilize the state pension system.
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