2014 -- H 7422

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES IN

CENTRAL FALLS

     Introduced By: Representatives Silva, and McLaughlin

     Date Introduced: February 12, 2014

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 45-21 of the General Laws entitled "Retirement of Municipal

Employees" is hereby amended by adding thereto the following sections:

     45-21-67. Definitions – Central Falls retirement plan. -- As used in this chapter:

     (1) "Base retirement allowance" is such amount as is set forth in Appendix A, Appendix

D-A and Appendix E-A under the column labeled "annualized final base pension" attached to the

settlement agreement, as defined herein, including as the same may be amended.

     (2) "City" means: the city of Central Falls, Rhode Island.

     (3) "Existing retirees" means:

     (i) All retirees of the city who participated in a locally administered city pension plan and

who were receiving pension benefits from the city by virtue of said plan as of July 31, 2011 and,

where the context requires, shall also mean and include the beneficiaries of such retirees where

such beneficiaries were receiving such benefits as of such date or where they become entitled to

benefits thereafter; and

     (ii) All employees of the city who were participating in a locally administered city

pension plan and who had submitted their notice of intent to retire under the provisions of said

plan by July 31, 2011.

     (iii) Excluded from this definition are those retirees of the city who receive city pension

benefits guaranteed by John Hancock Life Insurance Company, which as of July 31, 2011,

constituted a class consisting of fewer than eleven (11) individuals. Further excluded from this

definition are those retirees and employees of the city who, as of July 31, 2011, were participating

in or receiving pension benefits from the city's pension plan governed by the provisions of §§ 45-

21-67 through 45-21-75.

     (4) "Member" for purposes of this chapter, shall include existing retirees of the city of

Central Falls, except as may otherwise be provided in this section.

     (5) "Settlement agreement" in this chapter shall mean that certain settlement and release

agreement approved by ninety-one percent (91%) of the existing retirees of the city of Central

Falls and approved by the United States Bankruptcy Court for the District of Rhode Island by

order dated January 9, 2012 which, upon satisfaction of the conditions in sections 15(i)-(iv) of the

settlement agreement, shall be placed on file with the retirement board and the secretary of state

and available for reference in applying the provisions of this chapter.

     45-21-68. Transfer of pension assets - Central Falls retirement plan. -- The city of

Central Falls shall take all necessary measures to facilitate the transfer of all of the existing

retirees' available pension assets to the city of Central Falls retirement system established

pursuant to this chapter as soon as practicable after the date of enactment hereof. For the

purposes of this section, "available pension assets" shall mean and consist of all city pension

assets currently held by John Hancock Life Insurance Company, or any of its affiliates, in excess

of those assets which are required to be reserved for those city pensions previously guaranteed by

John Hancock Life Insurance Company, which as of July 31, 2011 consisted of fewer than eleven

(11) individual pensions. Upon the death of the last remaining beneficiary of said guaranteed

pensions, the city shall take all necessary measures to facilitate the transfer of the remaining

reserved assets, if any, to the city of Central Falls retirement system established pursuant to this

chapter as soon as practicable after the date that notice of said death is provided by the city. For

the purposes of this section, "available pension assets" shall not include those assets currently

held by John Hancock Life Insurance Company for the benefit of active employees of the city of

Central Falls.

     45-21-69. Mode of administration - Central Falls retirement plan. -- The city of

Central Falls retirement system established by §§ 45-21-67 through 45-21-75 shall be

administered in the same manner provided for in §§ 45-21-1 through 45-21-66 provided,

however, that where the provisions of §§ 45-21-1 through 45-21-66 conflict with the provisions

of §§ 45-21-67 through 45-21-75 then the provisions of §§ 45-21-67 through 45-21-75 shall

control. Where the provisions of this chapter conflict with the settlement agreement, the

settlement agreement shall control. The city of Central Falls shall provide a complete list of

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existing retirees who are current participants and beneficiaries of the city's retirement system as

of the date of enactment hereof, as well as all data necessary to administer the retirement system

pursuant to §§ 45-21-67 through 45-21-75 of this chapter, including, but not limited to, names,

addresses, titles, compensation, duties, dates of birth, length of service, and beneficiary

designations of each member, and any other information that the retirement board shall require.

The city shall give prompt notice of all appointments, removals, deaths, resignations, leaves of

absence, and changes in pay of members.

     45-21-70. Retirement allowances for existing retirees - Central Falls retirement plan.

– (a) All existing retirees shall receive a retirement allowance subject to the provisions of §§ 45-

21-67 through 45-21-75 of this chapter, and as set forth in Appendix A, Appendix D-A and

Appendix E-A (including as the same may be amended) to the settlement agreement as follows:

Notwithstanding Appendix A, Appendix D-A, and Appendix E-A, or any provision to the

contrary in this chapter, it is expressly provided that no retiree shall receive less than the

following percentage of the pension allowance received by each retiree on July 31, 2011:

     2016 (75.60%) 2017 (76.95%) 2018 (78.30%)

     2019 (79.65%) 2020 (81.1%) 2021 (82.36%)

     2022 (83.71 %) 2023 (85.06 %) 2024 (86.41 %)

     2025 (87.76 %) 2026 (89.11 %) 2027 (90.46 %)

     2028 (91.81%) 2029 (93.16%) 2030 (94.52%)

     2031 (95.87 %) 2032 (97.22 %) 2033 (98.57 %)

     2034 (99.92%) 2035 (101.27%)

     (b) Beginning on the first day of the July, 2036, fiscal year, and continuing on the first

day of each successive fiscal year, the total pension allowance for each retiree shall increase at no

less than two percent (2%), not compounded, based on the pension allowance received in 2035.

     (c) Maximum reduction of pension payments pursuant to this section. – No pension

benefit being paid to an existing retiree prior to the enactment of this chapter was reduced by

more than fifty-five percent (55%) as described in the settlement agreement, nor was any such

benefit reduced if the existing amount was already less than ten thousand dollars ($10,000)

annually. In no event did a reduction as described in the settlement agreement result in a

retirement allowance of less than ten thousand dollars ($10,000) annually.

     (d) Spousal or dependent children benefits shall be provided pursuant to § 45-21.3-1, as

such statute provided on July 31, 2011, with spousal benefits being payable to the surviving

spouse of a deceased existing retiree until said spouse shall remarry, at the rate of sixty seven and

one-half percent (67.5%) of the amount of the existing retiree's retirement allowance at the time

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of his or her death, and if there is no surviving spouse or if the surviving spouse shall remarry,

then said benefit shall be paid to the dependent children of the deceased existing retiree until said

children shall attain the age of eighteen (18) years of age.

     (e) Existing retirees shall be exempt from the provisions of § 45-21-54 and are expressly

permitted to obtain employment with the state or any municipality, whether or not said

municipality participates in this system, without the interruption of pension benefits.

     (f) Existing retirees shall be exempt from the provisions of § 45-21-23. Notwithstanding

any other provision herein to the contrary, an existing retiree's disability retirement allowance

may be revoked by the retirement board in the event that, following adherence to all procedural

steps and processes provided under law, a court of competent jurisdiction (or appropriate

governing agency or body) enters a final order, decree or determination, in accordance with

applicable law, that is not then stayed, appealed or subject to an appeal:

     (1) Determining that the disability retirement allowance of such existing retiree was

awarded as a result of fraud or misrepresentation, the standard as provided in the settlement

agreement; and

     (2) Determining the amount to be forfeited. If any amounts are ordered to be recovered as

a result of this provision, said funds (net of reasonable attorney's fees, costs and expenses

incurred by the city as a result thereof) shall be deposited into the "Participating Retirees'

Restricted Five (5) Year Account" as defined in the settlement agreement, and shall not be

forfeited in the manner specified in § 45-21-46.

     (g) Existing retirees shall be exempt from the provisions of § 45-21-24. No income offset

shall reduce the benefits payable to an existing retiree who engages in gainful employment, or has

received, or in the future shall receive, income from another source.

     (h) Existing retirees shall be exempt from the provisions of § 45-21-31 and shall not be

subject to any offset of benefits hereunder for workers' compensation or personal injury recovery

for injuries sustained while in the performance of their duties.

     45-21-71. Automatic increase in retirement allowances - Central Falls retirement

plan. -- Existing retirees subject to the provisions of §§ 45-21-66 through 45-21-75 of this

chapter, shall receive an increase equal to up to two percent (2%) per year of the member's base

retirement allowance, not compounded, in each calendar year the retirement allowance has been

in effect pursuant to this chapter. This increase shall be added to the base retirement allowance on

the first day of July 2013 and in each succeeding calendar year starting on the first day of

January, 2014, not compounded, but added to the preceding year's retirement allowance. The

amount of the increase shall equal the percentage of increase in the Consumer Price Index for all

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

determined as of March 31 of the same calendar year, or two percent (2%), whichever is less,

applied to the base retirement allowance.

     45-21-72. Accidental disability retirements - Central Falls retirement plan. --

Existing retirees who have been receiving accidental disability benefits on account of becoming

physically or mentally incapacitated from the performance of their job duties as a result of an

illness or injury sustained while, or resulting from, the performance of their job duties, and not as

a result of age or length of service, are listed on Appendix A and Appendix D-A (including as the

same may be amended) of the settlement agreement and were placed on accidental disability

retirement after medical examinations and certification that the retiree is physically or mentally

incapacitated as a result of injuries or illness sustained while, or resulting from the performance

of their job duties, which prevented them from performing their duties as police officers or

firefighters.

     45-21-73. Tax exemption – Fraudulent claims - Central Falls retirement plan. -- The

provisions of § 45-21-45 subject to exclusions from income for disability pensions § 45-21-46

and the provisions of § 45-21-70(d) and § 45-21-47 are expressly made applicable to and

controlling over this chapter.

     45-21-74. Settlement agreement controls - Central Falls retirement plan. – Except as

otherwise provided herein, the provisions of the settlement agreement shall control as to existing

retirees. Further, nothing herein shall be deemed to derogate from the full effect of the inclusion

in the settlement agreement of various general law provisions (as in effect on July 31, 2011) that

are incorporated or referenced therein, which provisions shall control over any provisions of

chapter 45-21 and over any general law provisions that may be incorporated or referenced herein.

     45-21-75. Liability of the city of Central Falls - Enforcement. -- (a) The city is liable

to the retirement system for the cost of funding a retirement system for its existing retirees who

are members of the system under this section and chapter.

     (b) The liability of the city under this section and chapter is enforceable by the retirement

board against the city through appropriate action in the superior court.

     (c) The state is further empowered to withhold from the city that amount of the city's

portion of any shared taxes or state aid which is sufficient to satisfy its liability hereunder.

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     SECTION 2. This act shall take effect upon passage and be subject to satisfaction of the

conditions in sections 15(i) – (iv) of the settlement agreement, which shall be evidenced by the

joint filing by the state-appointed receiver and counsel to the existing retirees of an attested copy

of the settlement agreement with the retirement board and the secretary of state's office.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES IN

CENTRAL FALLS

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     This act would provide a process for the city of Central Falls locally-administered

municipal employee retirement plans to transition existing retirees, and at their option active

employees, to a state-administered municipal employees retirement system in order to secure the

fiscal stability and proper administration of said pension plan.

     This act would take effect upon passage and be subject to satisfaction of the conditions in

sections 15(i) – (iv) of the settlement agreement which would be evidenced by the joint filing by

the state-appointed receiver and counsel to the existing retirees of an attested copy of the

settlement agreement with the retirement board and the secretary of state's office.

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