Taft-Carter approves pension settlement, sends to G.A.

SUPERIOR COURT JUDGE SARAH TAFT-CARTER has approved the settlement of the combined lawsuits over the state's pension reform efforts, saying that the agreement
SUPERIOR COURT JUDGE SARAH TAFT-CARTER has approved the settlement of the combined lawsuits over the state's pension reform efforts, saying that the agreement "is fair, reasonable and adequate." The settlement now moves on the General Assembly for approval. / COURTESY R.I. JUDICIARY/CRAIG N. BERKE

PROVIDENCE – A Superior Court judge on Tuesday approved the state’s controversial pension reform settlement, passing it on to the General Assembly, which has final say.

In a decision that she says isn’t “perfect,” Superior Court Associate Justice Sarah Taft-Carter issued a 68-page written decision approving the proposed settlement of the lawsuits over the state’s pension reform efforts of 2011 and earlier. The decision, which came following a five-day fairness hearing held last month, is the culmination of a slew of back-and-forth lawsuits that have cluttered the state’s legal system for years.

“The court finds that the 2015 Settlement Agreement is fair, reasonable and adequate,” Taft-Carter concluded in her decision.

Gov. Gina M. Raimondo released a statement following Taft-Carter’s ruling that said, in part, that “Today’s decision approving the pension settlement is another important step toward providing certainty for our public employees and our cities and towns.”

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The proposed settlement, now with the blessing of the courts, is now in the hands of the General Assembly for a final vote. Pending legislative approval, the settlement would go into effect on July 1.

The legal battles have been about the legality of the Rhode Island Retirement Security Act of 2011 and earlier legislative actions, which were challenged in court as well. The 2011 act revamped several facets of the state’s pension system, including re-calculating retirement benefits and changing cost of living adjustments.

Lawsuits ensued and the fight over pension reform has been at the forefront of public discussion in Rhode Island ever since. In April, nearly every party agreed to a proposed settlement and Taft-Carter’s Tuesday approval pushes the settlement one-step closer to being finalized.

Pending legislative approval, according to the written decision, the pension agreement makes changes to existing law as follows:

  • One-time COLA: A one-time COLA payment of 2 percent applied to the first $25,000 of the pension benefit and that amount added to the base benefit will be paid to retirees (or their beneficiaries) who participate in a COLA program and who retired on or before June 30, 2012, as soon as administratively reasonable following the passage of the legislation based on the amount of benefit payable on the effective date of the legislation.
  • Annual COLAs: For funds that are not already 80 percent funded, the settlement shortens the time intervals between suspended COLA payments from once every five years to once every four years. The settlement also improves the COLA limitation for current retirees whose COLA is suspended. The settlement also requires a more favorable indexing of the COLA Cap for all current and future retirees. The settlement also changes the COLA calculation to one more likely to produce a positive number and dictates that the COLA formula will be calculated annually, regardless of funding level, and when paid, the COLA will be compounded for all receiving a COLA.
  • Stipend: Current retirees (or their beneficiaries) who have or will have retired on or before June 30, 2015, will receive two payments: a one-time $500 stipend (not added to the COLA base) within 60 days of the enactment of the legislation approving the terms of the settlement; and a one-time $500 stipend payable one year later.
  • For state workers, teachers and general people covered by the Municipal Employees’ Retirement System, the settlement: adds another calculation to reduce the minimum retirement age; improves the available accrual rate for employees with 20 years or more of service as of June 30, 2012; requires increased contributions by the employer to the Defined Contribution Plan for employees with 10 or more years of service (but less than 20) as of June 30, 2012; waives the administration fee for any employees participating in the Defined Contribution Plan who make $35,000 or less; and adds another calculation designed to limit the impact of the “anti-spiking” rule imposed by the RIRSA on part-time employees.
  • For MERS firefighters (excluding Cranston firefighters), the settlement: lowers the age and service requirements for retirement; increases the accrual rate for firefighters who retire at age 57 with 30 years of service.
  • For state correctional officers, the settlement increases the accrual rate for correctional officers with fewer than 25 years of service as of June 30, 2012.
  • The settlement reduces the impact of an early retirement.
  • The settlement allows municipalities to “re-amortize,” that is, partially refinance, to be able to pay for the increased cost of the settlement.

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Other than the proposed changes, RIRSA shall remain the same, according to the decision.

Taft-Carter received about 400 written objections to the proposed settlement and another 69 people requested the opportunity to address the court at a fairness hearing, but objections have been overruled, according to the decision.

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