Puerto Rico Governor Alejandro Garcia Padilla approved several reform measures designed to improve the long-term financial stability of the retirement system, which include:
- Setting a minimum pension of $1,625 for all teachers who retire after the passing of the law;
- Increasing the minimum pension for teachers already retired from $400 to $500 per month;
- Replacing the current defined benefit plan with a defined contribution plan and balancing an increase in contributions of 1% by providing a 10-year, $300 annual salary increase;
- Setting a retirement age of 55, along with 30 years of service, while guaranteeing benefits accrued up to July 31, 2014; and
- Allowing any teacher with 28 years of service to apply for a 70% credit-based pension.
The new law also keeps in place previously accrued benefits, as well as guaranteeing a Christmas bonus of $200, a $100 prescription drug bonus and a medical plan contribution of $1,200 a year.
According to the Office of the Governor, the reforms are designed to stabilize Puerto Rico’s finances and safeguard its public school system by addressing a more than $500 million annual projected shortfall. The governor credits the success of the bill transitioning into law to cooperation between Puerto Rico’s teachers’ unions and legislators.