2012 -- S 2933

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LC01473

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES

     Introduced By: Senator Beatrice A. Lanzi

     Date Introduced: May 03, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 45-21-52 of the General Laws in Chapter 45-21 entitled

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"Retirement of Municipal Employees" is hereby amended to read as follows:

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     45-21-52. Automatic increase in service retirement allowance. -- (a) The local

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legislative bodies of the cities and towns may extend to their respective employees automatic

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adjustment increases in their service retirement allowances, by a resolution accepting any of the

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plans described in this section:

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      (1) Plan A. - All employees and beneficiaries of those employees receiving a service

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retirement or disability retirement allowance under the provisions of this chapter on December 31

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of the year their city or town accepts this section, receive a cost of living adjustment equal to one

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and one-half percent (1 1/2%) per year of the original retirement allowance, not compounded, for

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each calendar year the retirement allowance has been in effect. This cost of living adjustment is

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added to the amount of the retirement allowance as of January 1 following acceptance of this

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provision, and an additional one and one-half percent (1 1/2%) is added to the original retirement

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allowance in each succeeding year during the month of January, and provided, further, that this

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additional cost of living increase is three percent (3%) for the year beginning January 1 of the

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year the plan is accepted and each succeeding year.

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      (2) Plan B. - All employees and beneficiaries of those employees receiving a retirement

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allowance under the provisions of this chapter on December 31 of the year their municipality

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accepts this section, receive a cost of living adjustment equal to three percent (3%) of their

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original retirement allowance. This adjustment is added to the amount of the retirement allowance

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as of January 1 following acceptance of this provision, and an additional three percent (3%) of the

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original retirement allowance, not compounded, is payable in each succeeding year in the month

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of January.

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      (3) Plan C. - All employees and beneficiaries of those employees who retire on or after

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January 1 of the year following acceptance of this section, on the first day of January next

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following the date of the retirement, receive a cost of living adjustment in an amount equal to

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three percent (3%) of the original retirement allowance.

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      (b) In each succeeding year in the month of January, the retirement allowance is

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increased an additional three percent (3%) of the original retirement allowance, not compounded.

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      (c) (1) Notwithstanding any other paragraphs of this section, and subject to paragraph

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(c)(2) below, for all present and former employees, active and retired members, and beneficiaries

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receiving any retirement, disability or death allowance or benefit of any kind by reason of

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adoption of this section by their employer, the annual benefit adjustment provided in any calendar

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year under this section shall be equal to (A) multiplied by (B) where (A) is equal to the

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percentage determined by subtracting five and one-half percent (5.5%) (the "subtrahend") from

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the Five-Year Average Investment Return of the retirement system determined as of the last day

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of the plan year preceding the calendar year in which the adjustment is granted, said percentage

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not to exceed four percent (4%) and not to be less than zero percent (0%), and (B) is equal to the

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lesser of the member's retirement allowance or the first twenty-five thousand dollars ($25,000) of

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retirement allowance, such twenty-five thousand dollars ($25,000) amount to be indexed annually

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in the same percentage as determined under (c)(1)(A) above. The "Five-Year Average Investment

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Return" shall mean the average of the investment returns of the most recent five (5) plan years as

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determined by the retirement board. Subject to paragraph (c)(2) below, the benefit adjustment

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provided by this paragraph shall commence upon the third (3rd) anniversary of the date of

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retirement or the date on which the retiree reaches his or her Social Security retirement age,

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whichever is later; or for municipal police and fire retiring under the provisions of chapter 45-

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21.2, the benefit adjustment provided by this paragraph shall commence on the later of the third

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(3rd) anniversary of the date of retirement or the date on which the retiree reaches age fifty-five

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(55). In the event the retirement board adjusts the actuarially assumed rate of return for the

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system, either upward or downward, the subtrahend shall be adjusted either upward or downward

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in the same amount.

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      (2) Except as provided in paragraph (c)(3) the benefit adjustments provided under this

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section for any plan year shall be suspended in their entirety for each municipal plan within the

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municipal employees retirement system unless the municipal plan is determined to be funded at a

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GASB Funded Ratio equal to or greater than eighty percent (80%) as of the end of the

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immediately preceding plan year in accordance with the retirement system's actuarial valuation

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report as prepared by the system's actuary, in which event the benefit adjustment will be

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reinstated for all members for such plan year.

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      In determining whether a funding level under this paragraph (c)(2) has been achieved,

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the actuary shall calculate the funding percentage after taking into account the reinstatement of

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any current or future benefit adjustment provided under this section. "GASB Funded Ratio" shall

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mean the ratio of the actuarial value of assets to the actuarial accrued liability.

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      (3) Notwithstanding paragraph (c)(2), for each municipal plan that has a GASB Funded

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Ratio of less than eighty percent (80%) as of June 30, 2012, in each fifth plan year commencing

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after June 30, 2012 commencing with the plan year ending June 30, 2017, and subsequently at

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intervals of five (5) plan years, a benefit adjustment shall be calculated and made in accordance

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with paragraph (c)(1) above until the municipal plan's GASB Funded Ratio exceeds eighty

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percent (80%).

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      (d) Upon acceptance of any of the plans in this section, each employee shall on January 1

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next succeeding the acceptance, contribute by means of salary deductions, pursuant to section 45-

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21-41, one percent (1%) of the employee's compensation concurrently with and in addition to

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contributions otherwise being made to the retirement system.

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      (e) The city or town shall make any additional contributions to the system, pursuant to

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the terms of section 45-21-42, for the payment of any benefits provided by this section.

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      (f) The East Greenwich town council shall be allowed to accept Plan C of section 45-21-

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52(a)(3) for all employees of the town of East Greenwich who either, pursuant to contract

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negotiations, bargain for Plan C, or who are non-union employees who are provided with Plan C

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and who shall all collectively be referred to as the "Municipal-COLA Group" and shall be

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separate from all other employees of the town and school department, union or non-union, who

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are in the same pension group but have not been granted Plan C benefits. Upon acceptance by the

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town council, benefits in accordance with this section shall be available to all such employees

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who retire on or after January 1, 2003.

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     SECTION 2. Section 45-21.2-5 of the General Laws in Chapter 45-21.2 entitled

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"Optional Retirement for Members of Police Force and Fire Fighters" is hereby amended to read

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as follows:

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     45-21.2-5. Retirement on service allowance. -- (a) Retirement of a member on a service

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retirement allowance for members eligible to retire on or before June 30, 2012 shall be made,

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subject to paragraph (a)(11) below, by the retirement board as follows:

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      (1) Any member who has attained or attains age seventy (70) shall be retired as stated in

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section 45-21-16 subject to the discretions contained in that section; provided, that any member

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who is a member of the Woonsocket fire department who has attained or attains an age of sixty-

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five (65) years shall be retired. Retirement occurs on the first day of the next succeeding calendar

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month in which the member has attained the age of sixty-five (65) years.

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      (2) Any member may retire pursuant to this subdivision upon written application to the

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board stating at what time the member desires to retire; provided, that the member at the specified

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time for retirement has attained an age of fifty-five (55) years and has completed at least ten (10)

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years of total service, and notwithstanding that the member may have separated from service.

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      (3) Any member may retire pursuant to this subdivision upon written application to the

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board stating at what time the member desires to retire; provided, that the member at the specified

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time for retirement has completed at least twenty-five (25) years of total service, and

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notwithstanding that the member may have separated from service.

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      (4) Any member may retire pursuant to this subdivision upon written application to the

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board stating at what time the member desires to retire; provided, that the member at the specified

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time for retirement has attained an age of fifty (50) years and has completed at least twenty (20)

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years of total service, notwithstanding that the member may have separated from service;

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provided, that the service retirement allowance, as determined according to the formula provided

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in section 45-21.2-6, is reduced one-half of one percent ( 1/2%) for each month that the age of the

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member is less than fifty-five (55) years.

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      (5) Any member of the South Kingstown police department may retire pursuant to this

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subdivision upon written application to the board stating at what time the member desires to

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retire; provided, that the member at the specified time for retirement has earned a service

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retirement allowance of fifty percent (50%) of final compensation pursuant to section 45-21.2-

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6.1.

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      (6) Any member of the Johnston police department may retire pursuant to this

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subdivision upon written application to the board stating at what time the member desires to

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retire; provided, that the member at the specified time for retirement has earned a service

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retirement allowance of fifty percent (50%) of final compensation pursuant to section 45-21.2-

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6.2.

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      (7) Any member of the Cranston fire department hired after July 1, 1995, or any member

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of the Cranston fire department with five (5) years or less of service effective July 1, 1995, may

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retire pursuant to this subdivision upon written application to the board stating at what time the

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member desires to retire; provided, that the member at the specified time for retirement has

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earned a service retirement allowance of fifty percent (50%) of final compensation for at least

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twenty (20) years service; final compensation for Cranston fire department members is based on

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the compensation components of weekly salary, longevity and holidays with longevity of the

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members highest year of earnings and members shall receive a three percent (3%) escalation of

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their pension payment compounded each year on January 1st following the year of retirement and

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continuing on an annual basis on that date; further, any illness or injury not covered in title 45 of

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the general laws relating to the presumption of disability is governed by the collective bargaining

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agreement between the City of Cranston and members of the Cranston fire department.

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      (8) Any member of the Cranston police department hired after July 1, 1995, or any

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member of the Cranston police department with five (5) years or less of service effective July 1,

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1995, may retire pursuant to this subdivision upon written application to the board stating at what

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time the member desires to retire; provided, that the member at the specified time for retirement

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has earned a service retirement allowance of fifty percent (50%) of final compensation for at least

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twenty (20) years service; final compensation for Cranston police department members is based

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on the compensation components of weekly salary, longevity and holidays with longevity of the

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members highest year of earnings and members shall receive a three percent (3%) escalation of

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their pension payment compounded each year on January 1st following the year of retirement and

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continuing on an annual basis on that date; further, any illness or injury not covered in title 45 of

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the general laws relating to the presumption of disability is governed by the collective bargaining

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agreement between the City of Cranston and members of the Cranston police department.

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      (9) Any member of the Hopkinton police department may retire pursuant to this

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subdivision upon written application to the board stating at what time the member desires to

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retire; provided, that the member at the specified time for retirement has earned a service

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retirement allowance of fifty percent (50%) of final compensation for at least twenty (20) years

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service; final compensation for Hopkinton police department members is based on the

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compensation components of weekly salary, longevity and holidays with longevity of the

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members highest year of earnings and members shall receive a three percent (3%) escalation of

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their pension payment compounded each year on January 1st following the year of retirement and

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continuing on an annual basis on that date.

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      (10) Any member of the Richmond police department may retire pursuant to this

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subdivision upon written application to the board stating at what time the member desires to

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retire; provided, that the member at the specified time for retirement has earned a service

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retirement allowance of fifty percent (50%) of final compensation for at least twenty-two (22)

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years' service pursuant to section 45-21.2-6.3.

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      (11) Notwithstanding any provision in this section to the contrary, for any service on or

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after July 1, 2012, final compensation shall be defined in accordance with section 45-21.2-2, and

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no benefit adjustments shall be provided except as set forth in subsection 45-21-52(c).

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      (b) Retirement of a member on a service retirement allowance eligible to retire on and

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after July 1, 2012 shall be made by the retirement board as follows:

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      (1) Any member may retire pursuant to this subdivision upon written application to the

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board stating at what time the member desires to retire; provided, that the member at the specified

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time for retirement attained the age of at least fifty-five (55) years and has completed at least

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twenty-five (25) years of total service, and notwithstanding that the member may have separated

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from service.

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      (2) Any member with contributory service on or after July 1, 2012, who has completed at

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least five (5) years of contributory service but who has not completed twenty-five (25) years of

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service, shall be eligible to retire upon the attainment of the member's Social Security retirement

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age.

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      (3) If a member had ten (10) or more years of contributory service and attained age

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forty-five (45) prior to July 1, 2012 and would have been eligible to retire at or prior to age fifty-

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two (52) in accordance with the rules in effect prior to July 1, 2012, the member may retire upon

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attainment of age fifty-two (52).

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      (4) A member who has completed twenty (20) or more years of total service who has

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attained an age within five (5) years of the eligible retirement age under subparagraphs (b)(1) or

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(b)(2) above, may elect to retire provided that the retirement allowance shall be reduced

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actuarially for each month that the age of the member is less than the eligible retirement age

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under subparagraphs (b)(1) or (b)(2) above.

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      (5) Notwithstanding any other provisions of this section, a member on June 30, 2012,

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may elect to retire at his or her eligible retirement date as determined under the rules in effect on

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June 30, 2012 provided that a member making an election under this paragraph shall receive the

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member's retirement benefit determined and calculated based on the member's service and final

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compensation as of June 30, 2012. This provision shall be interpreted and administered in a

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manner to protect a member's accrued benefit on June 30, 2012.

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     SECTION 3. This act shall take effect upon passage.

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LC01473

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES

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     This act would eliminate the requirement of attaining the age fifty-five for receipt of cost-

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of-living adjustment by municipal police and fire employees and also for retirement eligibility.

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     This act would take effect upon passage.

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LC01473

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