PROVIDENCE — The much-anticipated pension reform bill will be presented to a joint session of the General Assembly tomorrow.
Early reports of the plan to be presented by Gov. Lincoln Chafee and General Treasurer Gina Raimondo indicate that it will include shifting state employees and teachers from the defined benefit plan they have now to a “hybrid” scheme that has components of both a defined benefit and a 401(k)-type defined contribution plan. This would affect contributions as well as benefits.
Workers would not be eligible to retire until the Social Security retirement age, which currently ranges from 66 to 67, depending on the year a person is born. Extra contributions will be made by both the employee and employer for those not eligible for Social Security.
Cost of living adjustments (COLAs) would be suspended until the fund, which is currently 48 percent funded, reaches the 80-percent funding level, which could take as long as 15 years. After that, the COLAs would vary from 0 to 4 percent, depending on how the fund’s investments fare in a given year. Most retirees have been receiving 3 percent COLAs compounded each year.
It is not yet known whether the package will include reform of municipal pensions that are not part of the state system. Chafee has said he wants those plans taken care of now as well.
As Raimondo has promised in speeches across the state to drum up support for her plan, workers would not lose any benefits accrued through June 30 of next year.
Pension rules, such as retirement age, would be different for state police and local police and firefighters who are part of the Municipal Employees Retirement Plan, which is part of the state system.
Chafee said Friday the 200-plus page bill he and Raimondo will give to lawmakers next week should be given an up-or-down vote. If legislators start picking apart individual pieces, he said, the plan will not achieve the desired level of savings or would not provide the necessary retirement security to workers.
Identical versions of the bill will be introduced in the House and Senate Tuesday and immediately referred to committees for study and for public hearings. Chafee and Raimondo plan to address the joint session on Tuesday.
Tuesday’s sessions will be broadcast by Capitol Television, which can be seen on Channel 15 for Cox Communications and Full Channel cable subscribers and Channel 34 for Verizon viewers.