Providence Council Passes Massive Pension Overhaul
Tuesday, May 01, 2012
The Providence City Council on Monday voted 12-0 to give final passage to a sweeping overhaul of the city’s pension system and Mayor Taveras quickly signed the ordinance following the meeting.
The reform package, which is expected to be challenged in court, included seven changes expected to save the city $16 million in fiscal year 2013. The most notable change strips retirees of their annual cost-of-living-adjustment (COLA) until the city’s retirement system is 70 percent funded. COLAs will likely be suspended for over two decades.
“Through months of research, analysis, and expert testimony, it has been the Council’s goal to find a solution to the problems of the pension system that is fair to both taxpayers and retirees,” said Pension Subcommittee Chairman David A. Salvatore. “By passing these reforms tonight, the Council has achieved that goal and has taken a huge step toward long-term sustainability for our retirement system.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe changes in the reform package, which take effect July 1, include:
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Suspension of all COLAs on all pensions until the retirement pension system reaches a funding level of 70 percent;
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Contributions from all pension system members continue beyond the current requirement of 25 years of service and, instead, continue as long as members continue to accrue pension credits;
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The base pension benefit will now be an average of the highest five consecutive years of earnings during the final 10 years of a member’s employment.
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Disability pensions will go from 66⅔% of the participant’s final compensation to 50% of the participant’s final compensation;
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Pension benefits will not exceed 150 percent of the state median household income;
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A formal process for considering and accepting an assumed rate of return on pension investments will be adopted; and
- Elected officer pensions will end.
Council Majority Leader Seth Yurdin praised the changes to the system.
“These are common sense reforms which directly address the underlying problems in the pension system,” Yurdin said. “The Pension Sustainability Subcommittee did incredible work putting this legislation together on these urgent and necessary reforms.”
Council President Michael Solomon stressed the broad base of support the reforms have received.
“In addition to being approved unanimously by the Committee on Ordinances and the Subcommittee on Pension Sustainability, these amendments have the support of the public employees union, Local 1033,
and received the endorsement of Mayor Angel Taveras in his budget address, as well,” Solomon said. “This is a positive example of what can be achieved we all work together for a common purpose.”
