Unions Challenge R.I. Pension Changes with Lawsuits

June 25, 2012 (PLANSPONSOR.com) - Lawsuits challenging last year's reform of Rhode Island's public pension system will continue.

However, labor unions were unable to stop the changes from taking effect on July 1. Reuters reports that Rhode Island Superior Court Judge Sarah Taft-Carter denied the request for a temporary restraining order, a spokesman said, just hours after unions launched three coordinated lawsuits on behalf of at least 30,000 state employees, retirees and emergency responders.  

The unions claim that state officials violated employment contracts and did not first try less severe measures before passing the Rhode Island Retirement Security Act, according to Robert Walsh, executive director of the National Education Association’s Rhode Island chapter. State officials could have tried “more reasonable alternatives” first, Walsh told Reuters, including tax hikes, raising the expected rate of return on the pension funds, and tweaks to mortality tables and the retirement age.  

The reforms, passed in November, suspended cost-of-living adjustments, raised the retirement age, lowered the assumed rate of return on pension funds to 7.5% from 8.25% and moved state employees onto a hybrid pension benefit plan (see “RI Lawmakers make Changes to Pension Proposal”).  

State treasurer Gina Raimondo and Governor Lincoln Chafee were among those named in the litigation.  

The unions could challenge the judge’s denial of a temporary restraining order, but Walsh said they had not yet decided whether to appeal. A court hearing is scheduled for July 16 as the case moves ahead.