The Associated Press reports that under a revised proposal reviewed by lawmakers, retirees could receive a pension increase in five years – much sooner than the earlier proposal. The legislation submitted last month by Governor Lincoln Chafee and Treasurer Gina Raimondo would have suspended automatic annual cost-of-living pension increases until the troubled pension system regains its fiscal footing (see RI Pension Overhaul Proposal Includes Move to Hybrid Plan), which could take 19 years, according to financial projections.
According to the AP, under the new proposal, retirees would see pension increases every five years as long as the state’s pension fund meets investment goals. The increases would be based on the pension funds’ rate of return. Automatic annual increases would return in about two decades.
State Senator Daniel DaPonte, chairman of the Senate Finance Committee, said the changes are meant to respond to public workers who warned that suspending increases for 19 years could leave some retirees destitute. However, the proposed change failed to win over the support of public-sector unions; officials said the revisions represent an improvement over the original proposal, but don’t assuage all of their concerns.
In September, a lower court in Rhode Island decided in favor of government worker retirees and indicated the state cannot freeze government pensions (see Rhode Island Court Rules in Favor of Government Worker Retirees). The court allowed eight public worker unions to proceed in their lawsuit, which seeks to block recent pension reductions.