Tavares, a Democrat, is seeking to limit the cost-of-living adjustments (COLA) given to many of today’s workers when they retire – a sharp contrast to the Republican Governor of the state, who only wants to institute changes for new workers, according to the Providence Journal.
Under Tavares’ plan, anyone not already eligible to retire by the start of July will have to wait until the age of 62 to receive their first COLA. He is also seeking to tie such adjustments for future retirees to the federal Consumer Price Index for Urban Consumers, up to a maximum of 3%. Governor Donald Carcieri also wants to institute such a cap.
Of the other changes, only those with less than 10 years of service would be affected, according to a news release by Tavares. These potential changes would institute a minimum retirement age and roll back the benefits formula. Workers would have to wait until they had accrued thirty years of service and be a minimum of 58 to collect a pension, or age 62 with at least five years of service.
Currently, there is no minimum retirement age for teachers and state workers, who can quit at any age with 28 years of service.
Tavares’ plan would allow workers to retire as young as 55 after at least 20 years of service with a reduced pension – 8% for every year before year 62 on average, according to the Journal. He also wants to get rid of the state’s Social Security “bonus”, which credits employees who retired before such benefits kick in with additional state benefits.
Projections for the Tavares plan indicate that the state would have to only make payments of $90.5 million next year, as opposed to $110.7 million as currently stated. This year, contributions were $74.2 million, according to the paper.
The Tavares plan would also reduce state and municipal contributions to teachers’ pension funds.Under his proposal, state and local contributions would be cut by $58.2 million in FY 2006 and $313 million over a five-year period. Cities and towns would realize a net savings of $18.2 million in FY 2006, Tavares said in his news release.