2017 -- S 0994

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LC002956

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO TOWNS AND CITIES -- RETIREMENT OF MUNICIPAL EMPLOYEES

AND CLOSED MUNICIPAL RETIREMENT PLANS

     Introduced By: Senator Elizabeth A. Crowley

     Date Introduced: June 28, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 45-21-2, 45-21-8, 45-21-16 and 45-21-16.2 of the General Laws in

Chapter 45-21 entitled "Retirement of Municipal Employees" are hereby amended to read as

follows:

     45-21-2. Definitions.

     The following words and phrases as used in this chapter have the following meanings

unless a different meaning is plainly required by the context:

     (1) "Accumulated contributions" means the sum of all amounts deducted from the

compensation of a member and credited to his or her individual account in the members'

contribution reserve account.

     (2) "Active member" means any employee of a participating municipality as defined in

this section for whom the retirement system is currently receiving regular contributions pursuant

to §§45-21-41, 45-21-41.1 or 45-21.2-14.

     (3) "Actuarial reserve" means the present value of all payments to be made on account of

any annuity, retirement allowance, or benefit, computed upon the basis of mortality tables

adopted by the retirement board with regular interest.

     (4) "Beneficiary" means any person in receipt of a retirement allowance, annuity, or other

benefit as provided by this chapter.

     (5) For purposes of this chapter, "domestic partner" shall be defined as a person who,

prior to the decedent's death, was in an exclusive, intimate and committed relationship with the

decedent, and who certifies by affidavit that their relationship met the following qualifications:

     (i) Both partners were at least eighteen (18) years of age and were mentally competent to

contract;

     (ii) Neither partner was married to anyone else;

     (iii) Partners were not related by blood to a degree which would prohibit marriage in the

state of Rhode Island;

     (iv) Partners resided together and had resided together for at least one year at the time of

death; and

     (v) Partners were financially interdependent as evidenced by at least two (2) of the

following:

     (A) Domestic partnership agreement or relationship contract;

     (B) Joint mortgage or joint ownership of primary residence;

     (C) Two (2) of: (I) Joint ownership of motor vehicle; (II) Joint checking account; (III)

Joint credit account; (IV) Joint lease; and/or

     (D) The domestic partner had been designated as a beneficiary for the decedent's will,

retirement contract or life insurance.

     (6) "Effective date of participation" means the date on which the provisions of this

chapter have become applicable to a municipality accepting the provisions of the chapter in the

manner stated in § 45-21-4.

     (7) "Employee" means any regular and permanent employee or officer of any

municipality, whose business time at a minimum of twenty (20) hours a week is devoted to the

service of the municipality, including elective officials and officials and employees of city and

town housing authorities. Notwithstanding the previous sentence, the term "employee", for the

purposes of this chapter, does not include any person whose duties are of a casual or seasonal

nature. The retirement board shall decide who are employees within the meaning of this chapter,

but in no case shall it deem as an employee any individual who annually devotes less than twenty

(20) business hours per week to the service of the municipality and who receives less than the

equivalent of minimum wage compensation on an hourly basis for his or her services, except as

provided in § 45-21-14.1. Casual employees mean those persons hired for an occasional period or

a period of emergency to perform special jobs or functions not necessarily related to the work of

regular employees. Any commissioner of a municipal housing authority, or any member of a part-

time state board commission, committee or other authority is not deemed to be an employee

within the meaning of this chapter.

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     (8) (a) "Final compensation" for members who are eligible to retire on or prior to June

30, 2012 means the average annual compensation, pay, or salary of a member for services

rendered during the period of three (3) consecutive years within the total service of the member

when the average was highest, and as the term average annual compensation is further defined in

subdivision 36-8-1(5)(a). For members eligible to retire on or after July 1, 2012, "final

compensation" means the average of the highest five (5) consecutive years of compensation

within the total service when the final compensation was the highest.

     (b) For members who become eligible to retire on or after July 1, 2012, if more than one

half (1/2) of the member's total years of service consist of years of service during which the

member devoted less than thirty (30) business hours per week to the service of the municipality,

but the member's average compensation consists of three (3) or more years during which the

member devoted more than thirty (30) business hours per week to the service of a municipality,

such member's average compensation shall mean the average of the highest ten (10) consecutive

years of compensation within the total service when the average compensation was the highest;

provided however, effective July 1, 2015, if such member's average compensation as defined in

subsection (a) above is equal to or less than thirty-five thousand dollars ($35,000), such amount

to be indexed annually in accordance with § 45-21-52(d)(1)(B), such member's average

compensation shall mean the greater of: (i) The average of the highest ten (10) consecutive years

of compensation within the total service when the average compensation was the highest; or (ii)

The member's average compensation as defined in subsection (a) above. To protect a member's

accrued benefit on June 30, 2012 under this § 45-21-2(8)(b), in no event shall a member's average

compensation be lower than his or her average compensation determined as of June 30, 2012.

     Notwithstanding the preceding provisions, in no event shall a member's final

compensation be lower than his or her final compensation determined as of June 30, 2012.

     (9) "Fiscal year" means the period beginning on July 1 in any year and ending on June 30

of the next succeeding year.

     (10) "Full actuarial costs" or "full actuarial value" mean the lump sum payable by a

member claiming service credit for certain employment for which payment is required, which is

determined according to the age of the member and his or her annual rate of compensation at the

time he or she applies for service credit, and which is expressed as a rate percent of the annual

rate of compensation to be multiplied by the number of years for which he or she claims the

service credit, as prescribed in a schedule adopted by the retirement board, from time to time, on

the basis of computation by the actuary. Except as provided in §§ 16-16-7.1, 36-5-3, 36-9-31, 36-

10-10.4, and subdivision 45-21-53: (i) All service credit purchases requested after June 16, 2009

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and prior to July 1, 2012, shall be at full actuarial value; and (ii) All service credit purchases

requested after June 30, 2012 shall be at full actuarial value which shall be determined using the

system's assumed investment rate of return minus one percent (1%).

     (11) "Governing body" means any and all bodies empowered to appropriate monies for,

and administer the operation of, the units as defined in subdivision (1) of this section.

     (12) "Member" means any person included in the membership of the retirement system as

provided in § 45-21-8§§45-21-4.1, 45-21-4.2, 45-21-8, 45-21.2-3.1, or 45-21.2-3.2.

     (13) "Municipality" means any town or city in the state of Rhode Island, any city or town

housing authority, fire, water, sewer district, regional school district, public building authority as

established by chapter 14 of title 37, or any other municipal financed agency to which the

retirement board has approved admission in the retirement system.

     (14) "Participating municipality" means any municipality which has accepted this

chapter, as provided in § 45-21-4§§45-21-4, 45-21-4.1, 45-21-4.2, 45-21.2-3.1, or 45-21.2-3.2.

     (15) "Prior service" means service as a member rendered before the effective date of

participation as defined in this section, certified on his or her prior service certificate, and

allowable as provided in § 45-21-15.

     (16) "Regular interest" means interest at the assumed investment rate of return,

compounded annually, as may be prescribed from time to time by the retirement board.

     (17) "Retirement allowance" or "annuity" means the amounts paid to any member of the

municipal employees' retirement system of the state of Rhode Island, or a survivor of the

member, as provided in this chapter. All retirement allowances or annuities shall be paid in equal

monthly installments for life, unless otherwise specifically provided.

     (18) "Retirement board" or "board" means the state retirement board created by chapter 8

of title 36.

     (19) "Retirement system" means the "municipal employees' retirement system of the state

of Rhode Island" as defined in § 45-21-32.

     (20) "Service" means service as an employee of a municipality of the state of Rhode

Island as defined in subdivision (7).

     (21) "Total service" means prior service as defined in subdivision (15) plus service

rendered as a member on or after the effective date of participation.

     (22) Any term not specifically defined in this chapter and specifically defined in chapters

36-8 through 36-10 shall have the same definition as set forth in chapters 36-8 through 36-10.

     45-21-8. Membership in system.

     Membership in the retirement system does not begin before the effective date of

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participation in the system as provided in § 45-21-4§§45-21-4, 45-21-4.1, 45-21-4.2, 45-21.2-3.1,

or 45-21.2-3.2, and consists of the following:

     (a) Any employee of a participating municipality as defined in this chapter, who becomes

an employee on and after the effective date of participation, shall, under contract of his or her

employment, become a member of the retirement system; provided, that the employee is not

receiving any pension or retirement allowance from any other pension or retirement system

supported wholly or in part by a participating municipality, and is not a contributor to any other

pension or retirement system of a participating municipality. Any employee who is elected to an

office in the service of a municipality after the effective date and prior to July 1, 2012, has the

option of becoming a member of the system, which option must be exercised within sixty (60)

days following the date the employee assumes the duties of his or her office, otherwise that

person is not entitled to participate under the provisions of this section;

     (b) Any employee or elected official of a participating municipality in service prior to the

effective date of participation, who is not a member of any other pension or retirement system

supported wholly or in part by a participating municipality, and who does not notify the

retirement board in writing before the expiration of sixty (60) days from the effective date of

participation that he or she does not wish to join the system, shall automatically become a

member; and

     (c) Any employee of a participating municipality in service prior to the effective date of

participation, who is a member of any other pension or retirement system supported wholly or in

part by a participating municipality on the effective date of participation of their municipality,

who then or thereafter makes written application to join this system, and waives and renounces all

accrued rights and benefits of any other pension or retirement system supported wholly or in part

by a participating municipality, becomes a member of this retirement system and shall not be

required to make contribution under any other pension or retirement system of a participating

municipality, anything to the contrary notwithstanding.

     (d) Notwithstanding the provisions of this section, present firefighters employed by the

town of Johnston shall establish a pension plan separate from the state of Rhode Island retirement

system. If the town of Johnston is thirty (30) days or more late on employer or employee

contributions to the pension plan, the auditor general is authorized to redirect any Johnston funds

to cover the shortfall or to deduct that amount from any moneys due the town from the state for

any purpose other than for education. Disability determinations of present firefighters shall be

made by the state retirement board, subject to the provisions of § 45-21-19, at the town of

Johnston's expense. All new firefighters hired by the town of Johnston shall become members of

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the state retirement system.

     (e) Notwithstanding the provisions of this section, any city of Cranston employees who

are presently members of Teamsters Local Union No. 251, hired between the dates of July 1,

2005, and June 30, 2010, inclusive, and who are currently members of the retirement system

established by this chapter may opt out of said retirement system and choose to enroll in a defined

contribution plan (i.e., a 403 (b) plan or equivalent thereof) established by the city of Cranston.

     (f) Notwithstanding the provisions of this section, any city of Cranston employees who

are presently members of the Laborers International Union of North America Local 1322 hired

between the dates of July 1, 2008, and June 30, 2013, inclusive, and who are currently members

of the retirement system established by this chapter may opt out of said retirement system and

choose to enroll in a defined contribution plan (i.e., a 403(b) plan or equivalent thereof)

established by the city of Cranston.

     (g) Notwithstanding the provisions of this section, any city of Cranston employees who

will be members of Teamsters Local Union No. 251, hired after June 30, 2010, shall be enrolled

in a defined contribution plan (i.e., a 403 (b) plan or equivalent thereof) established by the city of

Cranston and shall not be a member of the retirement system established by this chapter.

     (h) Notwithstanding the provisions of this section, any city of Cranston employees who

are presently members of the Laborers International Union of North America Local 1322 hired

after April 23, 2013, shall be enrolled in a defined contribution plan (i.e., 403(b) plan or

equivalent thereof) established by the city of Cranston and shall not be a member of the

retirement system established by this chapter.

     (i) Notwithstanding the provisions of this section, any city of Cranston employees

defined in (e) and (f) of this section shall be precluded from purchase of service credit for time

served on or after July 1, 2010, while participating in the defined contribution plan (i.e., a 403 (b)

plan or equivalent thereof) established by the city of Cranston should the member cease

employment with the city of Cranston or Teamsters Local Union No. 251 and re-enter the system

with another participating employer who has accepted the provisions as defined, in § 45-21-4.

     (j) Notwithstanding the provisions of this section, any town of Middletown employees,

who will be members of the Teamsters Local Union No. 251 bargaining unit, hired after June 30,

2012, and any town of Middletown employees who are employed as full-time civilian

dispatchers, hired after June 30, 2012, and any town of Middletown employees who are not

affiliated with any recognized collective bargaining representative or union hired after June 30,

2012, shall be enrolled in a defined contribution plan (i.e., a 403(b) plan or equivalent thereof)

established by the town of Middletown and shall not be members of the retirement system

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established by this chapter. Said town of Middletown employees defined herein shall be

precluded from the purchase of service credit for time served on or after July 1, 2012 while

participating in the defined contribution plan (i.e., a 403(b) plan or equivalent thereof) established

by the town of Middletown should the member cease employment with the town of Middletown

or in the Teamsters Local Union No. 251 bargaining unit and re-enter the system with any

participating employer who has accepted the provisions as defined in § 45-21-4.

     (k) Notwithstanding the provisions of this section, any town of Middletown employees,

who will be members of the Middletown Municipal Employees Association NEARI Local 869

bargaining unit hired after June 30, 2012, shall be enrolled in a defined contribution plan (i.e., a

403(b) plan or equivalent thereof) established by the town of Middletown and shall not be

members of the retirement system established by this chapter. Said town of Middletown

employees defined herein shall be precluded from the purchase of service credit for time served

on or after July 1, 2012, while participating in the defined contribution plan (i.e., a 403(b) plan or

equivalent thereof) established by the town of Middletown should the member cease employment

with the town of Middletown or in the Middletown Municipal Employees Association NEARI

Local 869 bargaining unit and re-enter the system with any participating employer who has

accepted the provisions as defined in § 45-21-4.

     (l) Notwithstanding the provisions of this section, any Cranston public school employees

who will be members of National Association of Government Employees (NAGE), Local RI-153,

hired after June 30, 2012, shall be enrolled in a defined contribution plan (i.e., a 401(a) plan or

equivalent thereof) established by the Cranston school department and shall not be a member of

the retirement system established by this chapter.

     (m) Notwithstanding the provisions of this section, any Cranston public school

employees defined in subsection (h) shall be precluded from the purchase of service credit for

time served on or after July 1, 2012, while participating in the defined contribution plan (i.e., a

401(a) plan or equivalent thereof) established by the Cranston public schools should the member

cease employment with the Cranston public schools or National Association of Government

Employees (NAGE), Local RI-153 and re-enter the system with another participating employer

who has accepted the provisions as defined in § 45-21-4.

     45-21-16. Retirement on service allowance.

     Retirement of a member on a service retirement allowance shall be made by the

retirement board as follows: (1) (i) Any member who is eligible to retire on or before June 30,

2012, may retire upon the member's written application to the retirement board as of the first day

of the calendar month in which the application was filed, provided the member was separated

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from service prior to the application, and provided, further, that if separation from service occurs

during the month in which application is filed, the effective date is the first day following the

separation from service, provided that the member at the time so specified for the member's

retirement has attained the applicable minimum retirement age and has completed at least ten (10)

years of total service or who, regardless of age, completed thirty (30) years of total service, and

notwithstanding that during the period of notification the member has separated from service. The

minimum ages for service retirement (except for employees completing thirty (30) years of

service) is fifty-eight (58) years. (ii) Effective July 1, 2012, the following shall apply to all

members not eligible to retire prior to July 1, 2012: (A) A member with contributory service on or

after July 1, 2012, shall be eligible to retire upon the completion of at least five (5) years of

contributory service and attainment of the member's Social Security retirement age. (B) For

members with five (5) or more years of contributory service as of June 30, 2012, with

contributory service on and after July 1, 2012, who have a retirement age of Social Security

Retirement Age, the retirement age will be adjusted downward in proportion to the amount of

service the member has earned as of June 30, 2012, but in no event shall a member's retirement

age under this subparagraph (B) be prior to the attainment of age fifty-nine (59) or prior to the

member's retirement age determined under the laws in effect on June 30, 2012. The proportional

formula shall work as follows: (1) The formula shall determine the first age of retirement

eligibility under the laws in effect on June 30, 2012 which shall then be subtracted from Social

Security retirement age; (2) The formula shall then take the member's total service credit as of

June 30, 2012 as the numerator and the projected service at retirement age in effect on June 30,

2012 as the denominator; (3) The fraction determined in (2) shall then be multiplied by the age

difference determined in (1) to apply a reduction in years from Social Security retirement age. (C)

Effective July 1, 2015, a member who has completed twenty (20) or more years of total service

and who has attained an age within five (5) years of the eligible retirement age under

subparagraphs (ii)(A) or (ii)(B) above or subsection (iii) below, may elect to retire provided that

the retirement allowance shall be reduced actuarially for each month that the age of the member is

less than the eligible retirement age under subparagraphs (ii)(A) or (ii)(B) above or subsection

(iii) below in accordance with the following table:

Year Preceding Cumulative Annual Cumulative Monthly

Retirement Reduction Reduction

For Year 1 9% .75%

For Year 2 8% .667%

For Year 3 7% .583%

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For Year 4 7% .583%

For Year 5 7% .583%

     (D) (1) Notwithstanding any other provisions of section 42-21-16(1)(ii) §45-21-16(1)(ii),

a member who has completed ten (10) or more years of contributory service as of June 30, 2012,

may elect to retire at his or her eligible retirement date as determined under paragraph (i) above

provided that a member making an election under this paragraph shall receive the member's

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

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

manner to protect a member's accrued benefit on June 30, 2012. (iii) Notwithstanding any other

provisions of subsection (ii) above, effective July 1, 2015, members in active service shall be

eligible to retire upon the earlier of:

     (I) The attainment of at least age sixty-five (65) and the completion of at least thirty (30)

years of total service, or the attainment of at least age sixty-four (64) and the completion of at

least thirty-one (31) years of total service, or the attainment of at least age sixty-three (63) and the

completion of at least thirty-two (32) years of total service, or the attainment of at least age sixty-

two (62) and the completion of at least thirty-three (33) years of total service; or

     (II) The member's retirement eligibility date under subsections (ii)(A) or (ii)(B) above.

     (2) Except as specifically provided in §§ 45-21-19 -- 45-21-22, no member is eligible for

pension benefits under this chapter unless:

     (I) On or prior to June 30, 2012 the member has been a contributing member of the

employees' retirement system for at least ten (10) years; or

     (II) For members in active contributory service on or after July 1, 2012, the member shall

have been a contributing member of the employees' retirement system for at least five (5) years.

     (i) Provided, however, a person who has ten (10) years service credit on or before June

16, 1991 is vested.

     (ii) Furthermore, any past service credits purchased in accordance with § 45-21-62 are

counted towards vesting.

     (iii) Any person who becomes a member of the employees' retirement system pursuant to

§ 45-21-4 §§45-21-4, 45-21-4.1, 45-21-4.2, 45-21.2-3.1, or 45-21.2-3.2 shall be considered a

contributing member for the purpose of this chapter.

     (iv) Notwithstanding any other provision of law, no more than five (5) years of service

credit may be purchased by a member of the System. The five (5)-year limit does not apply to any

purchases made prior to the effective date of this provision. A member who has purchased more

than five (5) years of service credit maximum, before January 1, 1995, shall be permitted to apply

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the purchases towards the member's service retirement. However, no further purchase will be

permitted. Repayment, in accordance with applicable law and regulation, of any contribution

previously withdrawn from the System is not deemed a purchase of service credit.

     (v) Notwithstanding any other provision of law, effective July 1, 2012, except for

purchases under §§ 16-16-7.1, 36-5-3, 36-9-31, 36-10-10.4, and 45-21-53: (I) For service

purchases for time periods prior to a member's initial date of hire; the purchase must be made

within three (3) years of the member's initial date of hire; and

     (II) For service purchases for time periods for official periods of leave as authorized by

law, the purchase must be made within three (3) years of the time the official leave was

concluded by the member. Notwithstanding (I) and (II) above, service purchases from time

periods prior to June 30, 2012 may be made on or prior to June 30, 2015.

     (3) No member of the municipal employees' retirement system is permitted to purchase

service credits for casual, temporary, emergency or seasonal employment, for employment as a

page in the general assembly, or for employment at any state college or university while the

employee is a student or graduate assistant of the college or university.

     (4) A member does not receive service credit in this retirement system for any year or

portion of a year, which counts as service credit in any other retirement system in which the

member is vested or from which the member is receiving a pension and/or any annual payment

for life. This subsection does not apply to any payments received pursuant to the Federal Social

Security Act or to payments from a military pension earned prior to participation in state or

municipal employment, or to military service credits earned prior to participation in state or

municipal employment.

     (5) A member who seeks to purchase or receive service credit in this retirement system

has the affirmative duty to disclose to the retirement board whether or not he or she is a vested

member in any other retirement system and/or is receiving a pension retirement allowance or any

annual payment for life. The retirement board has the right to investigate whether or not the

member has utilized the same time of service for credit in any other retirement system. The

member has an affirmative duty to cooperate with the retirement board including, by way of

illustration and not by way of limitation, the duty to furnish or have furnished to the retirement

board any relevant information which is protected by any privacy act.

     (6) A member who fails to cooperate with the retirement board shall not have the time of

service counted toward total service credit until a time that the member cooperates with the

retirement board and until a time that the retirement board determines the validity of the service

credit.

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     (7) A member who knowingly makes a false statement to the retirement board regarding

service time or credit is not entitled to a retirement allowance and is entitled only to the return of

his or her contributions without interest.

     45-21-16.2. Electronic funds transfer.

     All members of the municipal employees retirement system retiring under the provisions

of this title on or after July 1, 1998, or joining the system pursuant to, or joining the system

pursuant to §§45-21-4, 45-21-4.1, 45-21-4.2, 45-21.2-3.1 or 45-21.2-3.2, are required to

participate in electronic funds transfer and to supply the municipal employees retirement system

with a bank routing number to effectuate a monthly transfer of benefits.

     SECTION 2. Section 45-21.2-3 of the General Laws in Chapter 45-21.2 entitled

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

as follows:

     45-21.2-3. Optional retirement for police and fire fighters.

     In addition to the retirement system established under the provisions of chapter 21 of this

title, any municipality may accept this chapter in the manner stated in § 45-21-4. Withdrawal

from the system is in the same manner as stated in § 45-21-5, subject to the provisions of §45-

21.2-3.2.

     SECTION 3. Chapter 45-21 of the General Laws entitled "Retirement of Municipal

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

     45-21-4.1. Alternative acceptance by municipalities.

     (a) The provisions of this section shall apply only to locally administered plans within the

city of Central Falls.

     (b) On or after the effective date of this section, a municipality may accept the provisions

of this chapter, or the provisions of the optional retirement plan established in chapter 21.2 of title

45, by an ordinance of its governing body stating the group or groups of employees to be included

as provided in §45-21-7; provided that, any and all labor organizations representing active

employees of the municipality to be included have assented to such participation of their

respective memberships, through a collective bargaining agreement and ratification of the

agreement by a majority vote of those members of any such labor organization present and

voting. All elections authorized pursuant to subsections (f) through (i) of this section shall be

made in accordance with the provisions of subsection (b) of this section.

     (c) In the event a municipality enters the system pursuant to this section, the municipality

shall, on or before the effective date of participation, transfer to the system the accumulated

contributions of each member entering the system. The municipality may thereafter elect what

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portion of the remaining plan assets to transfer to the system, subject to the approval of the

retirement board, which shall retain the authority to deny the plan entrance into the system if the

proposed asset transfer is found to pose unacceptable risk to the liquidity or sustainability of the

new unit.

      (d) In the event a municipality joining pursuant to this section divides a locally

administered plan into one or more plans for purposes of entering the system pursuant to this

section, and has insufficient total plan assets to transfer to the system the accumulated

contributions of each member entering the system as set forth in subsection (c) of this section, the

municipality shall, on or before the effective date of participation, transfer assets to the system in

proportion to the total accrued liability of that portion of the original undivided plan being

transferred to the system, subject to the approval of the retirement board, which shall retain the

authority to deny the plan entrance into the system if the proposed asset transfer is found to pose

unacceptable risk to the liquidity or sustainability of the new unit.

     (e) Notwithstanding anything to the contrary in §45-21-8, any employee or elected

official of a municipality joining pursuant to this section, in service prior to the effective date of

participation, who is not a member of any other pension or retirement system supported wholly or

in part by a participating municipality, shall automatically become a member.

     (f) Notwithstanding any provisions of §45-21-16 to the contrary, if prior to the effective

date of participation a municipality joining pursuant to this section had a higher retirement age

than otherwise provided for therein, the municipality shall have a one-time election to retain a

higher retirement age for employees entering the system, not to exceed the plan's retirement age

prior to the effective date of participation, for any employees in active service as of the effective

date of participation, provided that the higher retirement age shall not apply to new employees

hired on or after the effective date of participation, which shall be subject to the retirement ages

set forth in §45-21-16. Should the municipality not make the election authorized by this section,

members entering the system shall be subject to the retirement ages and restrictions otherwise

provided for in §45-21-16.

     (g) Notwithstanding anything in §45-21-17 to the contrary, if prior to the effective date of

participation, a municipality joining pursuant to this section offered a different accrued benefit

than would otherwise be available pursuant to §45-21-17, the municipality shall have a one-time

election to allow members joining the system to receive upon retirement, their accrued benefit

based on their prior service, as of the effective date of participation. In the event the municipality

makes this election, the member shall not otherwise be entitled to a retirement allowance from the

system for prior service calculated pursuant to §45-21-17, and on and after the effective date of

LC002956 - Page 12 of 22

participation of the municipality, any member entering the system shall accrue benefits on service

at the rates set forth in §45-21-17. Should the municipality not make the election provided for in

this section, any members joining the system shall accrue benefits on total service at the rates set

forth in §45-21-17; provided that, notwithstanding anything to the contrary in §45-21-17, any

such member's retirement allowance shall in any case be equal to two percent (2%) of the

member's average compensation multiplied by the member's years of prior service between July

1, 2012 and the effective date of participation. Any member entering the system shall have their

total service, as of June 30, 2012, utilized for purposes of determining eligibility for participation

in the defined contribution retirement plan established in chapter 10.3 of title 36, pursuant to §45-

21-17.

     (h) Notwithstanding anything in §45-21-17 to the contrary, if prior to the effective date of

participation, a municipality joining pursuant to this section provided for a lower maximum

retirement allowance than would otherwise be permissible pursuant to §45-21-17, the

municipality shall have a one-time election to retain a lower maximum retirement allowance for

employees entering the system, which may be no lower than the municipality's maximum

retirement allowance as of the effective date of participation, and which may not exceed the

maximum retirement allowance otherwise permissible pursuant to §45-21-17, for any employees

in active service as of the effective date of participation; provided that, the plan's election to retain

a different maximum retirement allowance than would otherwise be permissible pursuant to §45-

21-17 shall not apply to new employees hired on or after the effective date of participation, which

shall be subject to the maximum retirement allowance set forth in §45-21-17. Should the

municipality not make the election authorized by this section, members entering the system shall

be subject to the maximum retirement allowance set forth in §45-21-17.

     (i) Notwithstanding anything in §45-21-41 to the contrary, if prior to the effective date of

participation, a municipality joining pursuant to this section had an employee contribution rate

greater than set forth in §45-21-41, the municipality shall have a one-time election to retain the

higher employee contribution rate, not to exceed the rate in effect as of the effective date of

participation, for any employees in active service as of the effective date of participation;

provided that, the higher rate shall not apply to new employees hired on or after the effective date

of participation, which shall contribute as set forth in §45-21-41. Should the municipality elect to

retain the higher employee contribution rate, it may elect to do so on either a temporary or a

permanent basis. Should the municipality not make the election authorized by this section,

members entering the system shall contribute as set forth in §45-21-41.

     (j) Notwithstanding anything in §45-21-42.2 to the contrary, the cost to evaluate a

LC002956 - Page 13 of 22

municipality's prospective membership in the retirement system pursuant to this section shall be

borne by the retirement board.

     (k) Notwithstanding anything in §45-21-43.1 to the contrary, determination of the

employer contribution rate of a municipality joining pursuant to this section, shall be computed as

of the effective date of participation using an amortization period for the unfunded actuarial

accrued liability not to exceed thirty (30) years as determined by the board, based upon the

recommendation of the plan's actuary. Future actuarial gains and losses accruing within a plan

year will be amortized over individual new twenty (20) year closed periods.

     (l) Notwithstanding anything in §45-21-56 to the contrary, if a municipality joining

pursuant to this section is in critical status as defined in §45-65-4, and an employee of the

municipality leaves employment and is hired by another participating municipality that is not in

critical status as defined in §45-65-4, then the retirement system shall transfer the amount of the

member's total accrued liability with the municipality, multiplied by the funded status of the

municipality, to the account of the current employing municipality.

     45-21-4.2. Retiree membership in system.

     (a) The provisions of this section shall apply only to locally administered plans within the

city of Central Falls.

      (b) Notwithstanding any provision of this chapter to the contrary, a municipality may

accept the provisions of this chapter by an ordinance of its governing body stating the group or

groups of retired former employees to be included as provided in §45-21-7; provided that:

     (1) Any affected retired former employee has consented in writing to joining the system;

or

     (2) Any duly constituted retiree organization that represents said retired former

employees has assented to joining the system.

     For purposes of this section, "retired former employees" means any individual who has

retired prior to the effective date of participation, pursuant to the provisions of any locally

administered municipal retirement plan.

      (c) Any group or groups of retired former employees that become members pursuant to

this provision shall receive benefits calculated in accordance with, and shall be subject to, all of

the provisions, limitations and restrictions contained in this chapter as of the effective date of

participation, and shall waive any benefits accrued pursuant to the locally administered plan.

     (d) In the event a municipality enters the system pursuant to this section, the municipality

shall, on or before the effective date of participation, transfer to the system the accumulated

contributions of each member entering the system. The municipality may thereafter elect what

LC002956 - Page 14 of 22

portion of the remaining plan assets to transfer to the system, subject to the approval of the

retirement board, which shall retain the authority to deny the plan entrance into the system if the

proposed asset transfer is found to pose unacceptable risk to the liquidity or sustainability of the

new unit.

      (e) In the event a municipality joining pursuant to this section divides a locally

administered plan into one or more plans for purposes of entering the system pursuant to this

section, and has insufficient total plan assets to transfer to the system the accumulated

contributions of each member entering the system as set forth in subsection (d) of this section, the

municipality shall, on or before the effective date of participation, transfer assets to the system in

proportion to the total accrued liability of that portion of the original undivided plan being

transferred to the system, subject to the approval of the retirement board, which shall retain the

authority to deny the plan entrance into the system if the proposed asset transfer is found to pose

unacceptable risk to the liquidity or sustainability of the new unit.

     (f) Withdrawal of a municipal plan consisting solely of retired former employees, that

had joined the retirement system pursuant to this section, shall be as provided in §45-21-5;

provided that, the withdrawal is conditioned upon the written approval of each individual retired

former employee, or the assent of any duly constituted retiree organization that represents said

retired former employees; and further provided that, the municipality must agree upon

withdrawal, by ordinance of its governing body, to assume thereafter full responsibility for

management and administration of the retirement and disability allowances in force for each

retired former employee or any beneficiaries thereof. In the event the municipality withdraws its

retired former employees, it shall not be subject to the provisions of §45-21-6.

     (g) Notwithstanding the provisions of subsection (c) of this section, if a municipality

elects to have a group or groups of retired former employees join the system pursuant to this

section, it shall have the opportunity as of the effective date of participation, to make one-time

elections as follows:

      (1) To retain any provisions contained in the municipality's locally administered plan

related to retirement eligibility notwithstanding anything to the contrary in §45-21-16;

      (2) To allow any retired former employee to retain their accrued benefit pursuant to the

provisions of the locally administered plan, in which case the member shall not be entitled to any

retirement allowance or benefit from the system otherwise available or calculated pursuant to the

provisions of §§45-21-17, 45-21-17.1, 45-21-17.2, 45-21-27, 45-21-30, 45-21-51 or 45-21-51.1;

      (3) To retain any maximum retirement allowance provided for by the locally

administered retirement plan, notwithstanding anything to the contrary in §45-21-17; or

LC002956 - Page 15 of 22

      (4) To retain any automatic adjustment increases in the service retirement allowances

provided for by the locally administered plan, notwithstanding anything to the contrary in §45-21-

52.

     (h) Any retired former employee receiving a disability pension pursuant to the provisions

contained in the locally administered plan, shall be subject to the provisions of §§45-21-23 and

45-21-24.

     (i) Subject to the provisions of subsection (j) of this section, any retired former employee

entering the system pursuant to this section shall be subject to the provisions of §§45-21-31 and

45-21-54.

     (j) Notwithstanding anything in subsection (i) of this section, any retired former

employee becoming a member pursuant to this section, who as of the effective date of

participation is also an employee of an already participating municipality, shall not be subject to

the provisions of §§45-21-31 or 45-21-54, for so long as they remain employed by the already

participating municipality. Should the member terminate employment with the already

participating municipality for any reason, they shall thereafter be subject to the provisions of

§§45-21-31 and 45-21-54.

     (k) The cost to evaluate a municipality's prospective membership in the retirement system

pursuant to this section shall be borne by the retirement board.

     SECTION 4. Chapter 45-21.2 of the General Laws entitled "Optional Retirement for

Members of Police Force and Fire Fighters" is hereby amended by adding thereto the following

sections:

     45-21.2-3.1. Alternative acceptance by municipalities of optional retirement for

police and fire fighters.

     (a) The provisions of this section shall apply only to locally administered plans within the

city of Central Falls.

     (b) On or after the effective date of this section, a municipality may accept the provisions

of this chapter, by an ordinance of its governing body stating the group or groups of employees to

be included as provided in §45-21-7; provided that, any and all labor organizations representing

active employees of the municipality to be included have assented to such participation of their

respective memberships, through a collective bargaining agreement and ratification of the

decision by a majority vote of those members of any such labor organization present and voting.

All elections authorized pursuant to subsections (f) through (j) of this section, or pursuant to

§§45-21.2-5, 45-21.2-6 or 45-21.2-14, shall be made in accordance with the provisions of

subsection (b) of this section.

LC002956 - Page 16 of 22

     (c) In the event a municipality enters the system pursuant to this section, the municipality

shall, on or before the effective date of participation, transfer to the system the accumulated

contributions of each member entering the system. The municipality may thereafter elect what

portion of the remaining plan assets to transfer to the system, subject to the approval of the

retirement board, which shall retain the authority to deny the plan entrance into the system if the

proposed asset transfer is found to pose unacceptable risk to the liquidity or sustainability of the

new unit.

      (d) In the event a municipality joining pursuant to this section divides a locally

administered plan into one or more plans for purposes of entering the system pursuant to this

section, and has insufficient total plan assets to transfer to the system the accumulated

contributions of each member entering the system as set forth in subsection (c) of this section, the

municipality shall, on or before the effective date of participation, transfer assets to the system in

proportion to the total accrued liability of that portion of the original undivided plan being

transferred to the system, subject to the approval of the retirement board, which shall retain the

authority to deny the plan entrance into the system if the proposed asset transfer is found to pose

unacceptable risk to the liquidity or sustainability of the new unit.

     (e) Any employee of a municipality joining pursuant to this section, in service prior to the

effective date of participation, who is not a member of any other pension or retirement system

supported wholly or in part by a participating municipality, shall automatically become a

member.

     (f) Notwithstanding anything in §45-21.2-5 to the contrary, if a municipality joining

pursuant to this section, prior to the effective date of participation, had a higher retirement age

than otherwise provided for herein, the municipality shall have a one-time election to retain a

higher retirement age for employees entering the system, not to exceed the plan's retirement age

prior to the effective date of participation, for any employees in active service as of the effective

date of participation; provided that, the higher retirement age shall not apply to new employees

hired on or after the effective date of participation, which shall otherwise be subject to the

applicable provisions of §45-21.2-5. Should a municipality joining pursuant to this section not

make the election authorized herein, members entering the system shall be subject to the

otherwise applicable retirement ages and restrictions set forth in §45-21.2-5.

     (g) Notwithstanding anything in §45-21.2-6 to the contrary, a municipality joining

pursuant to this section shall have a one-time election to allow members joining the system who

thereafter retire upon the attainment of the age of fifty-seven (57) years, and who have completed

at least thirty (30) years of total service, to have the enhanced rate of pension benefit accrual as

LC002956 - Page 17 of 22

set forth in §45-21.2-6(a), apply:

     (1) Only to years of service rendered on or after the effective date of participation; or

     (2) To total service, but only after the member has completed such number of years of

service on or after the effective date of participation, as is established by the municipality upon

the effective date of participation.

     (h) Notwithstanding anything in this section to the contrary, if a municipality joining

pursuant to this section offered a different accrued benefit than would otherwise be available

pursuant to §45-21.2-6, the municipality shall have a one-time election to allow members joining

the system to receive upon retirement, their accrued benefit based on their prior service, as of the

effective date of participation. In the event the municipality makes this election, the member shall

not otherwise be entitled to a retirement allowance from the system for prior service calculated

pursuant to §45-21.2-6, and on and after the effective date of participation of the municipality,

any member entering the system shall accrue benefits on service at the rates set forth in §45-21.2-

6. Should a municipality not make the elections provided for in this subdivision, any member

entering the system shall accrue benefits on total service at the rates set forth in §45-21.2-6.

     (i) Notwithstanding anything in §45-21.2-6 to the contrary, if a municipality joining

pursuant to this section, prior to the effective date of participation, provided for a lower maximum

retirement allowance than would otherwise be permissible pursuant to §45-21.2-6, the

municipality shall have a one-time election to retain a lower maximum retirement allowance for

employees entering the system, which may be no lower than the plan's maximum retirement

allowance as of the effective date of participation, and which may not exceed the maximum

retirement allowance otherwise permissible pursuant to §45-21.2-6, for any employees in active

service as of the effective date of participation; provided that, the plan's election to retain a

different maximum retirement allowance than would otherwise be permissible pursuant to §45-

21.2-6 shall not apply to new employees hired on or after the effective date of participation,

which shall be subject to the maximum retirement allowance set forth in §45-21.2-6.

     (j) Notwithstanding anything in §45-21.2-14 to the contrary, if a municipality joining

pursuant to this section, prior to the effective date of participation, had an employee contribution

rate greater than set forth in §45-21.2-14(a), the municipality shall have a one-time election to

retain the higher employee contribution rate, not to exceed the rate in effect as of the effective

date of participation, for any employees in active service as of the effective date of participation;

provided that, the higher rate shall not apply to new employees hired on or after the effective date

of participation, which shall contribute as set forth in §45-21.2-14(a). Should the municipality

elect to retain the higher employee contribution rate, it may elect to do so on either a temporary or

LC002956 - Page 18 of 22

a permanent basis. Should the municipality not make the election authorized by this subsection,

members entering the system shall contribute as set forth in §45-21.2-14(a).

     (k) Notwithstanding anything in §45-21-42.2 to the contrary, the cost to evaluate a

municipality's prospective membership in the retirement system pursuant to this section or §45-

21.2-3.2, shall be borne by the retirement board.

     (l) Notwithstanding anything in §45-21-43.1 to the contrary, determination of the

employer contribution rate of a municipality joining pursuant to this section, shall be computed as

of the effective date of participation using an amortization period for the unfunded actuarial

accrued liability not to exceed thirty (30) years as determined by the board, based upon the

recommendation of the plan's actuary. Future actuarial gains and losses accruing within a plan

year will be amortized over individual new twenty (20) year closed periods.

     (m) Notwithstanding anything in §45-21-56 to the contrary, if a municipality joining

pursuant to this section is in critical status as defined in §45-65-4, and an employee of the

municipality leaves employment and is hired by another participating municipality that is not in

critical status as defined in §45-65-4, then the retirement system shall transfer the amount of the

member's total accrued liability with the municipality, multiplied by the funded status of the

municipality, to the account of the current employing municipality.

     45-21.2-3.2. Retiree participation in optional retirement plan.

     (a) The provisions of this section shall apply only to locally administered plans within the

city of Central Falls.

     (b) Notwithstanding any provision of this chapter to the contrary, a municipality may

accept the provisions of this chapter by an ordinance of its governing body stating the group or

groups of retired former employees to be included as provided in §45-21-7; provided that:

     (1) Any affected retired former employee has consented in writing to joining the system;

or

     (2) Any duly constituted retiree organization that represents said retired former

employees has assented to joining the system.

     For purposes of this section, "retired former employees" means any individual who has

retired prior to the effective date of participation, pursuant to the provisions of any locally

administered municipal retirement plan.

     (c) Any group or groups of retired former employees that become members pursuant to

this provision shall receive benefits calculated in accordance with, and shall be subject to, all of

the provisions, limitations and restrictions contained in this chapter as of the effective date of

participation, and shall waive any benefits accrued pursuant to the locally administered municipal

LC002956 - Page 19 of 22

plan.

     (d) In the event a municipality enters the system pursuant to this section, the municipality

shall, on or before the effective date of participation, transfer to the system the accumulated

contributions of each member entering the system. The municipality may thereafter elect what

portion of the remaining plan assets to transfer to the system, subject to the approval of the

retirement board, which shall retain the authority to deny the plan entrance into the system if the

proposed asset transfer is found to pose unacceptable risk to the liquidity or sustainability of the

new unit.

      (e) In the event the municipality divides a locally administered plan into one or more

plans for purposes of entering the system pursuant to this section, and has insufficient total plan

assets to transfer to the system the accumulated contributions of each member entering the system

as set forth in subsection (d) of this section, the municipality shall, on or before the effective date

of participation, transfer assets to the system in proportion to the total accrued liability of that

portion of the original undivided plan being transferred to the system, subject to the approval of

the retirement board, which shall retain the authority to deny the plan entrance into the system if

the proposed asset transfer is found to pose unacceptable risk to the liquidity or sustainability of

the new unit.

     (f) Withdrawal of a plan consisting solely of retired former employees, that had joined

the retirement system pursuant to this section, shall be as provided in §45-21-5; provided that, the

withdrawal is conditioned upon the written approval of each individual retired former employee,

or the assent of any duly constituted retiree organization that represents said retired former

employees; and further provided that, the municipality must agree upon withdrawal, by ordinance

of its governing body, to assume thereafter full responsibility for management and administration

of the retirement and disability allowances in force for each retired former employee or any

beneficiaries thereof.

      (g) Notwithstanding the provisions of subsection (c) of this section, any locally

administered municipal plan that elects to have a group or groups of retired former employees

join the system pursuant to this section, shall have the opportunity as of the effective date of

participation, to make one-time elections as follows:

      (1) To retain any provisions contained in the locally administered plan related to

retirement eligibility notwithstanding anything to the contrary in §§45-21.2-5 or 45-21.2-22;

      (2) To allow any retired former employee to retain their accrued benefit pursuant to the

provisions of the locally administered plan, in which case the member shall not be entitled to any

retirement allowance or benefit from the system otherwise available or calculated pursuant to the

LC002956 - Page 20 of 22

provisions of §§45-21.2-6, 45-21.2-13, or 45-21.2-20, 45-21.2-21, or 45-21.2-22;

      (3) To retain any maximum retirement allowance provided for by the locally

administered retirement plan, notwithstanding anything to the contrary in §§45-21.2-6 or 45-21.2-

22; or

      (4) To retain any automatic adjustment increases in the service retirement allowances

provided for by the locally administered plan, notwithstanding anything to the contrary in §45-21-

52.

     (h) Any retired former employee receiving a disability pension pursuant to the provisions

contained in the locally administered plan, shall be subject to the provisions of §§45-21-23 and

45-21-24.

     (i) Subject to the provisions of subsection (j) of this section, any retired former employee

entering the system pursuant to this section shall be subject to the provisions of §§45-21-31, and

45-21-54.

     (j) Notwithstanding anything in subsection (i) of this section, any retired former

employee becoming a member pursuant to this section, who, as of the effective date of

participation, is also an employee of an already participating municipality, shall not be subject to

the provisions of §§45-21-31 or 45-21-54, for so long as they remain employed by the already

participating municipality. Should the member terminate employment with the already

participating municipality for any reason, they shall thereafter be subject to the provisions of

§§45-21-31 and 45-21-54.

     (k) The cost to evaluate a municipality's prospective membership in the retirement system

pursuant to this section shall be borne by the retirement board.

     SECTION 5. This act shall take effect upon passage.

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LC002956 - Page 21 of 22

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- RETIREMENT OF MUNICIPAL EMPLOYEES

AND CLOSED MUNICIPAL RETIREMENT PLANS

***

     This act would allow locally administered retirement plans in the city of Central Falls to

join the Municipal Employees Retirement System (MERS) by providing greater flexibility in

funding policies than would otherwise be required, depending upon the needs and circumstances

of the community.

     This act would take effect upon passage.

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LC002956 - Page 22 of 22