‘Retirees needed relief’: Diossa and McKee weigh in on budget bill pension changes

PROVIDENCE, R.I. (WPRI) – The R.I. House of Representatives will debate the state’s proposed budget for the next fiscal year later this week, and part of the attention-grabbing measure is a series of changes to state pension benefits.

The nearly $14 billion tax and spending plan was unveiled Friday night. It includes money to rebuild the westbound Washington Bridge and increases funding for health care and education.

But for many, a key provision is changes to state pensions for retirees. Under the budget bill, retirees who retired before 2012 would receive annual cost-of-living adjustments (COLAs) now instead of waiting until the system is at least 80% funded, according to House Speaker Joseph Shekarchi.

COLAs have been frozen since 2011, when the pension system was overhauled to close a significant funding shortfall. Pensioners have long protested the changes, which were championed by then-Treasurer Gina Raimondo.

In addition, according to Shekarchi, this year’s budget proposal will:

• lower the funding threshold for all retirees to receive COLA from 80% to 75%
• calculate benefits from the highest salary of three years, instead of five years
• move some public safety workers to the better-funded municipal pension fund

“Retirees needed relief,” RI Treasurer General James Diossa told 12 News on Monday. “This is a population that has had no benefits for a long time. Inflation has really caught up with them. They’re struggling and so it’s important to see them get some relief.”

But in a statement on Friday, Diossa also pointed out that the changes could have an impact on the state’s bond rating going forward.

Govt. Dan McKee said Monday that he thinks something needs to change with the current pension plan and the potential long-term effects will be looked at.

“It’s always a concern. Bond ratings are very important,” McKee said. “So we need to take an overall look at what each part of the budget has and the long-term implications in terms of potentially structural deficits.”

According to Diossa’s office, the changes would increase the shortfall in the pension fund by about $417 million and require taxpayers to contribute almost $39 million more next year than they would have to under current policy.