The Rhode Island government and attorneys representing public employee unions and retiree coalitions challenging changes to the state’s pension system have reached a settlement agreement achieved through court-ordered mediation.
This settlement will resolve six lawsuits challenging 2009, 2010 and 2011 changes to the state’s pension laws.
The agreement retains structural elements of the Rhode Island Retirement Security Act of 2011, including the move to a combined DB and DC plan, an increased retirement age and a cost-of-living adjustment (COLA) suspension until the system is at a stronger funding level.
Settlement changes include the following:
- COLA timing change: While the COLA will still remain suspended until the system is 80% funded, intermittent COLAs will be issued every four years instead of once every five years.
- Employees with 20 or more years of service: These employees will shift back into a DB plan with a 2% annual accrual with higher employee contribution rates.
- Employees with 10 to 20 years of service: Employer contributions to the DC plan increase from 1% to 1.25% for employees with 10 to 15 years of service and 1.5% for employees with 15 to 20 years of service.
- Additional transition rule for retirement age: Members employed on June 30, 2012, will become eligible to retire at age 65 with 30 years of service or their current Rhode Island Retirement Security Act retirement age.
The settlement still needs to be approved by the plaintiffs and the Rhode Island General Assembly.
As this process unfolds, all parties will support and advocate for passage of the proposed legislation and have agreed to advocate only for the passage of the settlement agreement legislation.
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