Donna Perry: Road to Reform Reaches Retirees
Thursday, September 08, 2011
A new front in what is shaping up to be Rhode Island’s political battle of the autumn was opened this week by a potent army that is well manned and well financed.
Despite months of red flag warnings that even those already retired would likely feel the effects of the state’s now frantic attempt to defuse its pension system time bomb, a sense of alarm seems to have now taken hold of the primary advocate organization for all retirees, both private and public sector.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe state chapter of the AARP has launched a public relations campaign to highlight its concerns about the potential for changes to the pension benefits of current retirees that includes an open letter to Governor Chafee and print and radio ads.
The public campaign portrays both Treasurer Gina Raimondo’s Pension Advisory Panel’s work and the approaching special legislative session as elements of a “looming threat” on the horizon which could undo the “benefits you were promised.”
But the Treasurer remained impressively determined to stay on point when responding in recent days to the AARP’s ramped up public relations offensive.
When she launched the Pension Reform Advisory Panel , Raimondo also released the carefully constructed “Truth in Numbers” Report, which not only detailed the scope of the state’s deep unfunded liability, ($9.4 Billion for state and local employees) but also addressed the fact that even presently retired public sector workers would very likely be included in the pension reform process. The Report laid out the very likely prospect that COLA’s, even to vested and retired workers, could need to be suspended. She attached a projected savings of $1 billion dollars if done system wide. Other proposed changes stated in the Report, including modifying formulas used to set the benefit, hiking the retirement age to match social security (67) and changes to the annual accrual rate for workers, were aimed at current workers, not the retirees.
But it seems the COLA, which the AARP seems to have set sights on, has been identified as an after retirement benefit that can be modified. The point is the very possible suspension of the COLA’s for those currently retired seems not only inevitable, but has not been a secret as a discussion point for the Panel. It would also seem the coming court rulings on union litigation over the very question of whether benefits can in fact be changed and whether an annual COLA constitutes a contractual retirement promise that can never be “broken” may ultimately change the discussion for all interested parties.
Just look at the current bankruptcy proceedings for Central Falls, where retirees, many who are well past working ages, are now facing up to 50% --or more—in reductions to their pensions. Raimondo this week cited the Central Falls debacle as the ultimate cautionary tale as she responded to the AARP’s concerns. In other words, it’s far better to rein in the existing benefits structure now, out of the realm of court, rather than continue the fantasy and have a court process make the changes—which could be much more drastic-- later on.
A Display Of Willpower Needed
Whenever the rhetoric gets too heated, Raimondo has thus far been able to cool the conversation down by bringing it back to the math, plain and simple.
Governor Chafee seems to have joined Raimondo in telegraphing that “everything remains on the table” and that this fall’s pension reform legislative session will likely affect those now retired.
The AARP, in fairness, certainly is doing what it should be doing to advocate for its constituency, the retiree. Though it has a long record of success and certainly is the premier retiree organization, it is not historically associated with public sector workers but rather all retirees, including those from the private sector. What the Treasurer seems to be saying is she may need to take steps that will fairly represent the interests of all retirees also. That includes the private sector taxpayers whose own retirement has become increasingly less secure and costly as they continue to foot the annual pension bill. That tab is fast approaching a billion dollars a year in Rhode Island for the retirements of their public sector neighbors and friends.
What it now boils down to is regardless of whether it is difficult, deemed unfair, hugely unpopular, or seems not to have been ever expected by current retirees, ultimately it doesn’t matter.
But what will matter this fall will be a display of willpower on the part of elected leaders and the state Legislature to act in the name of all retirees.
Donna Perry is a Communications Consultant to RI Statewide Coalition (www.statewidecoalition.com)
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