Fixing Rhode Island’s broken pension system became a personal issue to Nortek Inc. Senior Vice President and Treasurer Edward J. Cooney earlier this year when, facing the soaring cost of obligations to its retirees, the state cut funding for services for people with disabilities.
“I have a special-needs son and I saw the cuts in services to the developmentally disabled community,” Cooney said. “I said it was time to do something about it, to be a voice to help solve the challenges.”
So Cooney helped form an alliance of business and social-service organizations, now called Engage Rhode Island, pushing for a complete overhaul of the state pension system. While not every executive has personal ties to the reform effort, many have joined the push to repair the pension system, making the business community one of the strongest and most important allies of state officials trying to pass a comprehensive pension reform bill this fall.
“The business community has been very supportive, but now is when we really need them to show up,” said Treasurer Gina Raimondo, the primary architect of the overhaul lawmakers are expected to begin debating this week.
The central elements of the bill introduced on behalf of Raimondo and Gov. Lincoln D. Chafee last week freeze the growth of retirement benefits over time while shifting much of the risk in funding the plans from the government to employees through a hybrid defined-benefit and defined-contribution plan.
Of the 14 people whose support for the proposed legislation was cited by Raimondo in a memo introducing the bill, eight were in some way connected with the business community.
“This is a well-thought-out plan which will protect taxpayers, provide for employees, and most importantly allow companies like Gilbane to grow and prosper without the threat of increased taxes, service cuts or a depleted infrastructure,” said Paul Choquette Jr., vice president of the Gilbane Building Co. in the memo.
For many Rhode Island businesses, the scariest part of the pension crisis is the uncertainty it could bring to the state economy if not addressed.
“Pension reform means that the state where we conduct our business will be more stable,” Cooney said. “The current situation puts more pressure on employees to carry more of the burden in property taxes and income taxes. It certainly doesn’t bode well for the economic environment and attracting new employers.”
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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