2013 -- S 0528

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LC01130

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO PUBLIC OFFICERS AND EMPLOYEES - RETIREMENT BENEFITS

     Introduced By: Senators Pichardo, and Crowley

     Date Introduced: February 28, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 36-10-35 of the General Laws in Chapter 36-10 entitled

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"Retirement System-Contributions and Benefits" is hereby amended to read as follows:

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     36-10-35. Additional benefits payable to retired employees. -- (a) All state employees

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and all beneficiaries of state employees receiving any service retirement or ordinary or accidental

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disability retirement allowance pursuant to the provisions of this title on or before December 31,

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1967, shall receive a cost of living retirement adjustment equal to one and one-half percent

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(1.5%) per year of the original retirement allowance, not compounded, for each calendar year the

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retirement allowance has been in effect. For the purposes of computation, credit shall be given for

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a full calendar year regardless of the effective date of the retirement allowance. This cost of living

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adjustment shall be added to the amount of the retirement allowance as of January 1, 1968, and an

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additional one and one-half percent (1.5%) shall be added to the original retirement allowance in

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each succeeding year during the month of January, and provided further, that this additional cost

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of living increase shall be three percent (3%) for the year beginning January 1, 1971, and each

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year thereafter, through December 31, 1980. Notwithstanding any of the above provisions, no

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employee receiving any service retirement allowance pursuant to the provisions of this title on or

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before December 31, 1967, or the employee's beneficiary, shall receive any additional benefit

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hereunder in an amount less than two hundred dollars ($200) per year over the service retirement

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allowance where the employee retired prior to January 1, 1958.

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      (b) All state employees and all beneficiaries of state employees retired on or after

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January 1, 1968, who are receiving any service retirement or ordinary or accidental disability

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retirement allowance pursuant to the provisions of this title shall, on the first day of January next

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following the third anniversary date of the retirement, receive a cost of living retirement

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adjustment, in addition to his or her retirement allowance, in an amount equal to three percent

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(3%) of the original retirement allowance. In each succeeding year thereafter through December

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31, 1980, during the month of January, the retirement allowance shall be increased an additional

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three percent (3%) of the original retirement allowance, not compounded, to be continued during

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the lifetime of the employee or beneficiary. For the purposes of computation, credit shall be given

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for a full calendar year regardless of the effective date of the service retirement allowance.

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      (c) (1) Beginning on January 1, 1981, for all state employees and beneficiaries of the

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state employees receiving any service retirement and all state employees, and all beneficiaries of

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state employees, who have completed at least ten (10) years of contributory service on or before

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July 1, 2005 pursuant to the provisions of this chapter, and for all state employees, and all

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beneficiaries of state employees who receive a disability retirement allowance pursuant to

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sections 36-10-12 -- 36-10-15, the cost of living adjustment shall be computed and paid at the rate

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of three percent (3%) of the original retirement allowance or the retirement allowance as

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computed in accordance with section 36-10-35.1, compounded annually from the year for which

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the cost of living adjustment was determined to be payable by the retirement board pursuant to

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the provisions of subsection (a) or (b) of this section. Such cost of living adjustments are

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available to members who retire before October 1, 2009 or are eligible to retire as of September

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30, 2009.

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      (2) The provisions of this subsection shall be deemed to apply prospectively only and no

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retroactive payment shall be made.

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      (3) The retirement allowance of all state employees and all beneficiaries of state

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employees who have not completed at least ten (10) years of contributory service on or before

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July 1, 2005 or were not eligible to retire as of September 30, 2009, shall, on the month following

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the third anniversary date of retirement, and on the month following the anniversary date of each

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succeeding year be adjusted and computed by multiplying the retirement allowance by three

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percent (3%) or the percentage of increase in the Consumer Price Index for all Urban Consumers

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(CPI-U) as published by the United States Department of Labor Statistics determined as of

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September 30 of the prior calendar year, whichever is less; the cost of living adjustment shall be

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compounded annually from the year for which the cost of living adjustment was determined

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payable by the retirement board; provided, that no adjustment shall cause any retirement

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allowance to be decreased from the retirement allowance provided immediately before such

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adjustment.

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      (d) For state employees not eligible to retire in accordance with this chapter as of

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September 30, 2009 and not eligible upon passage of this article, and for their beneficiaries, the

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cost of living adjustment described in subsection (3) above shall only apply to the first thirty-five

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thousand dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon

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the third (3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five

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(65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by

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the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

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published by the United States Department of Labor Statistics determined as of September 30 of

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the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand

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dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of

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increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the

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United States Department of Labor Statistics determined as of September 30 of the prior calendar

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year or three percent (3%), whichever is less, on the month following the anniversary date of each

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succeeding year. For state employees eligible to retire as of September 30, 2009 or eligible upon

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passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not

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apply.

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      (e) All legislators and all beneficiaries of legislators who are receiving a retirement

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allowance pursuant to the provisions of section 36-10-9.1 for a period of three (3) or more years,

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shall, commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to

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a retirement allowance, in an amount equal to three percent (3%) of the original retirement

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allowance. In each succeeding year thereafter during the month of January, the retirement

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allowance shall be increased an additional three percent (3%) of the original retirement

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allowance, compounded annually, to be continued during the lifetime of the legislator or

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beneficiary. For the purposes of computation, credit shall be given for a full calendar year

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regardless of the effective date of the service retirement allowance.

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      (f) The provisions of sections 45-13-7 -- 45-13-10 shall not apply to this section.

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      (g) (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph

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(g)(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, the annual benefit

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adjustment provided in any calendar year under this section shall be equal to (A) multiplied by

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(B) where (A) is equal to the percentage determined by subtracting five and one-half percent

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(5.5%) (the "subtrahend") from the Five-Year Average Investment Return of the retirement

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system determined as of the last day of the plan year preceding the calendar year in which the

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adjustment is granted, said percentage not to exceed four percent (4%) and not to be less than

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zero percent (0%), and (B) is equal to the lesser of the member's retirement allowance or the first

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twenty-five thousand dollars ($25,000) of retirement allowance, such twenty-five thousand

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dollars ($25,000) amount to be indexed annually in the same percentage as determined under

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(g)(1)(A) above. The "Five-Year Average Investment Return" shall mean the average of the

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investment returns of the most recent five (5) plan years as determined by the retirement board.

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Subject to paragraph (g)(2) below, the benefit adjustment provided by this paragraph shall

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commence upon the third (3rd) anniversary of the date of retirement or the date on which the

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retiree reaches his or her Social Security retirement age, whichever is later. In the event the

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retirement board adjusts the actuarially assumed rate of return for the system, either upward or

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downward, the subtrahend shall be adjusted either upward or downward in the same amount.

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      (2) Except as provided in paragraph (g)(3), the benefit adjustments under this section for

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any plan year shall be suspended in their entirety unless the GASB Funded Ratio of the

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Employees' Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the

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State Police Retirement Benefits Trust, calculated by the system's actuary on an aggregate basis,

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exceeds eighty percent (80%) in which event the benefit adjustment will be reinstated for all

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members for such plan year.

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      In determining whether a funding level under this paragraph (g)(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 (g)(2), in each fifth plan year commencing after June 30,

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2012 commencing with the plan year ending June 30, 2017, and subsequently at intervals of five

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plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (g)(1)

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above until the GASB Funded Ratio of the Employees' Retirement System of Rhode Island, the

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Judicial Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by

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the system's actuary on an aggregate basis, exceeds eighty percent (80%).

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      (4) Notwithstanding any other provision of this chapter, the provisions of this paragraph

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(g) of section 36-10-35 shall become effective July 1, 2012 and shall apply to any benefit

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adjustment not granted on or prior to June 30, 2012.

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     (5) Notwithstanding subdivisions (g)(1), (g)(2), (g)(3), and (g)(4), the annual benefit

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adjustment shall be calculated and made in accordance with subdivisions (c)(3) and (d)(1) for all

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members whose annual retirement allowance is at or below one hundred fifty percent (150%) of

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the federal poverty level. In order to receive the annual benefit adjustment, the retiree must

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provide a certified earnings statement that proves their annual income from the defined benefit

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plan(s) is one hundred fifty percent (150%) below the federal poverty level to the retirement

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system.

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     SECTION 2. 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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     (g) Notwithstanding subdivision (c)(2), the annual benefit adjustment shall be calculated

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and made in accordance with subdivision (c)(1) for all members whose annual retirement

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allowance is at or below one hundred fifty percent (150%) of the federal poverty level. In order to

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receive the annual benefit adjustment the retiree must provide a certified earnings statement that

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proves their annual income from the defined benefit plan(s) is one hundred fifty percent (150%)

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below the federal poverty level to the retirement system.

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     SECTION 3. This act shall take effect upon passage.

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LC01130

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC OFFICERS AND EMPLOYEES - RETIREMENT BENEFITS

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     This act would restore cost of living adjustments for retired state and municipal

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employees if their annual retirement allowance is at or below one hundred fifty percent (150%) of

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the federal poverty level.

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     This act would take effect upon passage.

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LC01130

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