Retired Public Workers Oppose RI Pension Changes

Jim Gillis worked for the state of Rhode Island for three decades and retired believing the state would automatically increase his pension to keep up with inflation.

Now, a proposal from state leaders to suspend automatic increases for up to 19 years has the 69-year-old wondering whether he'll be able to afford the retirement he planned on. Gillis receives a $36,000 annual pension.

"When you get a job at the state, this is part of the package," said Gillis, of Warwick, R.I. "Now they're saying 19 years? I could be dead by then."

Under current law, most public retirees see a pension increase of up to 3 percent a year. But a pension overhaul proposal from Gov. Lincoln Chafee and Treasurer Gina Raimondo would suspend the increases until the state's underfunded pension system meets certain funding targets.

Projections indicate that might not happen until 2030.

The proposal would also raise retirement ages for most workers not now eligible to retire, and create a new system for active employees that combines traditional pensions with 401(k)-style retirement accounts.

The plan would save taxpayers $3 billion over the next 10 years, Raimondo said, and ensure current and future employees have benefits when they retire. The state faces an unfunded pension liability of $7 billion. If nothing is done, lawmakers may have to raise taxes or slash government services to keep up with ever-increasing pension costs, Raimondo said.

Her message to dismayed retirees? "For a period of time we're asking you, for the good of this state, to hold off on a raise," she said. "The crisis is now. We've put forward a plan to fix it. ... if we don't do that, we will collapse as a state."

Tia Scigulinsky taught European history in Newport public schools for 31 years before she retired in 2005. She understands the state must rein in pension costs, but said lawmakers should phase in pension changes to soften the blow on retirees.

"Let's not rush into this," she said. "There's no reason we have to fix this in the next three weeks. It's too much of a burden on too many people."

Supporters of the plan say the state can't afford to make piecemeal changes. Gary Sasse, former director of administration for former Gov. Donald Carcieri, said public retirees should remember what the economic downturn has done to retirement accounts of non-public workers.

"Compare this to what's happening in the private sector," said Sasse. "The alternative is a $300 million increase in state spending next year, and more the year after that. The alternative would just be fiscal catastrophe."

Raimondo pointed out that retired workers will keep all benefits they've earned so far. "The check will never get smaller," she said.

But the value of that check will get smaller if it isn't adjusted for inflation, said AFL-CIO President George Nee. He predicted that public sector retirees or workers would likely challenge the plan in court if passed by the General Assembly.

"That was the deal, the contract, the circumstances they went to work under," Nee said of public retirees.

Under the Raimondo-Chafee plan, pension increases for most retirees will return when the state's pension system is 80 percent funded. Retirees who receive a pension of less than $20,000 a year will receive increases when the system is 70 percent funded.

The system is currently 48 percent funded, and projections show that it's likely to take 12 years for the funding level to hit 70 percent, and 19 years before it hits 80 percent.

Marion Parker left the private sector to work for the state as an accountant, in large part because of the promise of generous and secure retirement benefits. The 78-year-old Warwick woman is raising her 15-year-old granddaughter. The proposal to halt her annual pension increase has her wondering what a loaf of bread might cost in five, 10 or 20 years.

"I'll have to do with a lot less," she said. "I took less money than I was making in private industry because I wanted to plan for the future. I based my retirement on that."

Lawmakers are set to hold hearings on the pension proposal next week. A vote on the legislation is likely weeks away.




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