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art.012/3/012/2

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     ARTICLE 12 AS AMENDED

RELATING TO PENSIONS

     SECTION 1. Section 16-16-40 of the General Laws in Chapter 16-16 entitled "Teachers’

Retirement [See Title 16 Chapter 97 — The Rhode Island Board of Education Act]" is hereby

amended to read as follows:

     16-16-40. Additional benefits payable to retired teachers.

     (a) All teachers and all beneficiaries of teachers receiving any service retirement or

ordinary or accidental disability retirement allowance pursuant to the provisions of this chapter and

chapter 17 of this title, on or before December 31, 1967, shall receive a cost of living retirement

adjustment equal to one and one-half percent (1.5%) per year of the original retirement allowance,

not compounded, for each year the retirement allowance has been in effect. For purposes of

computation credit shall be given for a full calendar year regardless of the effective date of the

retirement allowance. This cost of living retirement adjustment shall be added to the amount of the

service retirement allowance as of January 1, 1970, and payment shall begin as of July 1, 1970. An

additional cost of living retirement adjustment shall be added to the original retirement allowance

equal to three percent (3%) of the original retirement allowance on the first day of January, 1971,

and each year thereafter through December 31, 1980.

     (b) All teachers and beneficiaries of teachers receiving any service retirement or ordinary

disability retirement allowance pursuant to the provisions of this title who retired on or after January

1, 1968, shall, on the first day of January, next following the third (3rd) year on retirement, receive

a cost of living adjustment, in addition to his or her retirement allowance, an amount equal to three

percent (3%) of the original retirement allowance. In each succeeding year thereafter, on the first

day of January, the retirement allowance shall be increased an additional three percent (3%) of the

original retirement allowance, not compounded, to be continued through December 31, 1980.

     (c)(1) Beginning on January 1, 1981, for all teachers and beneficiaries of teachers receiving

any service retirement and all teachers and all beneficiaries of teachers who have completed at least

ten (10) years of contributory service on or before July 1, 2005, pursuant to the provisions of this

chapter, and for all teachers and beneficiaries of teachers who receive a disability retirement

allowance pursuant to §§ 16-16-14 — 16-16-17, the cost of living adjustment shall be computed

and paid at the rate of three percent (3%) of the original retirement allowance or the retirement

allowance as computed in accordance with § 16-16-40.1, compounded annually from the year for

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

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

to teachers who retire before October 1, 2009, or are eligible to retire as of September 30, 2009.

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

retroactive payment shall be made.

     (3) The retirement allowance of all teachers and all beneficiaries of teachers who have not

completed at least ten (10) years of contributory service on or before July 1, 2005, or were not

eligible to retire as of September 30, 2009, shall, on the month following the third anniversary date

of the retirement, and on the month following the anniversary date of each succeeding year be

adjusted and computed by multiplying the retirement allowance by three percent (3%) or the

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

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

calendar year, whichever is less; the cost of living adjustment shall be compounded annually from

the year for which the cost of living adjustment was determined payable by the retirement board;

provided, that no adjustment shall cause any retirement allowance to be decreased from the

retirement allowance provided immediately before such adjustment.

     (d) For teachers not eligible to retire in accordance with this chapter as of September 30,

2009, and not eligible upon passage of this article, and for their beneficiaries, the cost of living

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

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

(3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five (65), whichever

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

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

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

three percent (3%), whichever is less. The first thirty-five thousand dollars ($35,000), as indexed,

of retirement allowance shall be multiplied by the percentage of increase in the Consumer Price

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

Statistics determined as of September 30 of the prior calendar year or three percent (3%), whichever

is less, on the month following the anniversary date of each succeeding year. For teachers eligible

to retire as of September 30, 2009, or eligible upon passage of this article, and for their

beneficiaries, the provisions of this subsection (d) shall not apply.

     (e) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section.

     (f) This subsection (f) shall be effective for the period July 1, 2012, through June 30, 2015.

     (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (f)(2)

below, for all present and former teachers, active and retired teachers, and beneficiaries receiving

any retirement, disability or death allowance or benefit of any kind, the annual benefit adjustment

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

is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the

“subtrahend”) from the Five-Year Average Investment Return of the retirement system determined

as of the last day of the plan year preceding the calendar year in which the adjustment is granted,

said percentage not to exceed four percent (4%) and not to be less than zero percent (0%), and (B)

is equal to the lesser of the teacher’s retirement allowance or the first twenty-five thousand dollars

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

indexed annually in the same percentage as determined under paragraph (f)(1)(A) above. The

“Five-Year Average Investment Return” shall mean the average of the investment returns of the

most recent five (5) plan years as determined by the retirement board. Subject to paragraph (f)(2)

below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd)

anniversary of the date of retirement or the date on which the retiree reaches his or her Social

Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially

assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted

either upward or downward in the same amount.

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

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

Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police

Retirement Benefits Trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty

percent (80%) in which event the benefit adjustment will be reinstated for all teachers for such plan

year.

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

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

current or future benefit adjustment provided under this section.

     (3) Notwithstanding paragraph (f)(2), in each fifth plan year commencing after June 30,

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

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

above until the Funded Ratio of the Employees’ Retirement System of Rhode Island, the Judicial

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

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

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

(f) of § 16-16-40 shall become effective July 1, 2012, and shall apply to any benefit adjustments

not granted on or prior to June 30, 2012.

     (g) This subsection (g) shall become effective July 1, 2015.

     (1)(A) As soon as administratively reasonable following the enactment into law of this

subsection (g)(1)(A), a one-time benefit adjustment shall be provided to teachers and/or

beneficiaries of teachers who retired on or before June 30, 2012, in the amount of two percent (2%)

of the lesser of either the teacher’s retirement allowance or the first twenty-five thousand dollars

($25,000) of the teacher’s retirement allowance. This one-time benefit adjustment shall be provided

without regard to the retiree’s age or number of years since retirement.

     (B) Notwithstanding the prior subsections of this section, for all present and former

teachers, active and retired teachers, and beneficiaries receiving any retirement, disability or death

allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year under

this section for adjustments on and after January 1, 2016, and subject to subsection (g)(2) below,

shall be equal to (I) multiplied by (II):

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the “subtrahend”) from the five-year average investment return of the retirement system

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

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

(0%). The “five-year average investment return” shall mean the average of the investment returns

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

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

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

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

Statistics determined as of September 30 of the prior calendar year.

     In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be less

than (0%) percent.

     (II) is equal to the lesser of either the teacher’s retirement allowance or the first twenty-

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

to be indexed annually in the same percentage as determined under subsection (g)(1)(B)(I) above.

     The benefit adjustments provided by this subsection (g)(1)(B) shall be provided to all

retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

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

whichever is later.

     (2) Except as provided in subsection (g)(3), the The benefit adjustments under subsection

(g)(1)(B) for any plan year shall be suspended in their entirety reduced to twenty-five percent (25%)

of the benefit adjustment unless the funded ratio of the employees’ retirement system of Rhode

Island, the judicial retirement benefits trust and the state police retirement benefits trust, calculated

by the system’s actuary on an aggregate basis, exceeds eighty percent (80%) in which event the

benefit adjustment will be reinstated for all teachers for such plan year.

     In determining whether a funding level under this subsection (g)(2) has been achieved, the

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

current or future benefit adjustment provided under this section.

     (3) Notwithstanding subsection (g)(2), in each fourth plan year commencing after June 30,

2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four

plan years: (i) A benefit adjustment shall be calculated and made in accordance with subsection

(g)(1)(B) above; and (ii) Effective for teachers and/or beneficiaries of teachers who retired on or

before June 30, 2015, the dollar amount in subsection (g)(1)(B)(II) of twenty-five thousand eight

hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six

dollars ($31,026)until the funded ratio of the employees’ retirement system of Rhode Island, the

judicial retirement benefits trust and the state police retirement benefits trust, calculated by the

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

     (4) Effective for teachers and or beneficiaries of teachers who have retired on or before

July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)

days following the enactment of the legislation implementing this provision, and a second one-time

stipend of five hundred dollars ($500) in the same month of the following year. These stipends

shall be payable to all retired teachers or beneficiaries receiving a benefit as of the applicable

payment date and shall not be considered cost of living adjustments under the prior provisions of

this § 16-16-40.

     SECTION 2. Section 36-10-35 of the General Laws in Chapter 36-10 entitled "Retirement

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

     36-10-35. Additional benefits payable to retired employees.

     (a) All state employees and all beneficiaries of state employees receiving any service

retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of

this title on or before December 31, 1967, shall receive a cost of living retirement adjustment equal

to one and one-half percent (1.5%) per year of the original retirement allowance, not compounded,

for each calendar year the retirement allowance has been in effect. For the purposes of computation,

credit shall be given for a full calendar year regardless of the effective date of the retirement

allowance. This cost of living adjustment shall be added to the amount of the retirement allowance

as of January 1, 1968, and an additional one and one-half percent (1.5%) shall be added to the

original retirement allowance in each succeeding year during the month of January, and provided

further, that this additional cost of living increase shall be three percent (3%) for the year beginning

January 1, 1971, and each year thereafter, through December 31, 1980. Notwithstanding any of the

above provisions, no employee receiving any service retirement allowance pursuant to the

provisions of this title on or before December 31, 1967, or the employee’s beneficiary, shall receive

any additional benefit hereunder in an amount less than two hundred dollars ($200) per year over

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

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

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

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

the third anniversary date of the retirement, receive a cost of living retirement adjustment, in

addition to his or her retirement allowance, in an amount equal to three percent (3%) of the original

retirement allowance. In each succeeding year thereafter through December 31, 1980, during the

month of January, the retirement allowance shall be increased an additional three percent (3%) of

the original retirement allowance, not compounded, to be continued during the lifetime of the

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

year regardless of the effective date of the service retirement allowance.

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

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

employees, who have completed at least ten (10) years of contributory service on or before July 1,

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

of state employees who receive a disability retirement allowance pursuant to §§ 36-10-12 — 36-

10-15, the cost of living adjustment shall be computed and paid at the rate of three percent (3%) of

the original retirement allowance or the retirement allowance as computed in accordance with § 

36-10-35.1, compounded annually from the year for which the cost of living adjustment was

determined to be payable by the retirement board pursuant to the provisions of subsection (a) or (b)

of this section. Such cost of living adjustments are available to members who retire before October

1, 2009, or are eligible to retire as of September 30, 2009.

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

retroactive payment shall be made.

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

who have not completed at least ten (10) years of contributory service on or before July 1, 2005, or

were not eligible to retire as of September 30, 2009, shall, on the month following the third

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

year be adjusted and computed by multiplying the retirement allowance by three percent (3%) or

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

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

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

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

retirement board; provided, that no adjustment shall cause any retirement allowance to be decreased

from the retirement allowance provided immediately before such adjustment.

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

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

cost of living adjustment described in subsection (c)(3) of this section shall only apply to the first

thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall

commence upon the third (3rd) anniversary of the date of retirement or when the retiree reaches

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

annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-

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

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

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

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

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

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

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

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

apply.

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

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

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

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

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

increased an additional three percent (3%) of the original retirement allowance, compounded

annually, to be continued during the lifetime of the legislator or beneficiary. For the purposes of

computation, credit shall be given for a full calendar year regardless of the effective date of the

service retirement allowance.

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

     (g) This subsection (g) shall be effective for the period July 1, 2012, through June 30, 2015.

     (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (g)(2)

below, for all present and former employees, active and retired members, and beneficiaries

receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit

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

where (A) is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the “subtrahend”) from the Five-Year Average Investment Return of the retirement system

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

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

(0%), and (B) is equal to the lesser of the member’s retirement allowance or the first twenty-five

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

amount to be indexed annually in the same percentage as determined under (g)(1)(A) above. The

“Five-Year Average Investment Return” shall mean the average of the investment returns of the

most recent five (5) plan years as determined by the retirement board. Subject to paragraph (g)(2)

below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd)

anniversary of the date of retirement or the date on which the retiree reaches his or her Social

Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially

assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted

either upward or downward in the same amount.

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

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

Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police

Retirement Benefits Trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty

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

plan year.

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

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

current or future benefit adjustment provided under this section.

     (3) Notwithstanding paragraph (g)(2), in each fifth plan year commencing after June 30,

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

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

above until the Funded Ratio of the Employees’ Retirement System of Rhode Island, the Judicial

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

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

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

(g) shall become effective July 1, 2012, and shall apply to any benefit adjustment not granted on or

prior to June 30, 2012.

     (h) This subsection (h) shall become effective July 1, 2015.

     (1)(A) As soon as administratively reasonable following the enactment into law of this

subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or

beneficiaries of members who retired on or before June 30, 2012, in the amount of 2% of the lesser

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

the member’s retirement allowance. This one-time benefit adjustment shall be provided without

regard to the retiree’s age or number of years since retirement.

     (B) Notwithstanding the prior subsections of this section, for all present and former

employees, active and retired members, and beneficiaries receiving any retirement, disability or

death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year

under this section for adjustments on and after January 1, 2016, and subject to subsection (h)(2)

below, shall be equal to (I) multiplied by (II):

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the “subtrahend”) from the five-year average investment return of the retirement system

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

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

(0%). The “five-year average investment return” shall mean the average of the investment returns

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

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

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

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of (i)

plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%).

     (II) Is equal to the lesser of either the member’s retirement allowance or the first twenty-

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above.

     The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all

retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

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

whichever is later.

     (2) Except as provided in subsection (h)(3) of this section, the The benefit adjustments

under subsection (h)(1)(B) for any plan year shall be suspended in their entirety reduced to twenty-

twenty-five percent (25%) of the benefit adjustment unless the funded ratio of the employees’

retirement system of Rhode Island, the judicial retirement benefits trust and the state police

retirement benefits trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty

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

plan year.

     In determining whether a funding level under this subsection (h)(2) has been achieved, the

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

current or future benefit adjustment provided under this section.

     (3) Notwithstanding subsection (h)(2), in each fourth plan year commencing after June 30,

2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four

plan years:

     (i) A benefit adjustment shall be calculated and made in accordance with subsection

(h)(1)(B) above; and

     (ii) Effective for members and/or beneficiaries of members who retired on or before June

30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand eight hundred and

fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars

($31,026) until the funded ratio of the employees’ retirement system of Rhode Island, the judicial

retirement benefits trust and the state police retirement benefits trust, calculated by the system’s

actuary on an aggregate basis, exceeds eighty percent (80%).

     (i) Effective for members and/or beneficiaries of members who have retired on or before

July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)

days following the enactment of the legislation implementing this provision, and a second one-time

stipend of five hundred dollars ($500) in the same month of the following year. These stipends

shall be payable to all retired members or beneficiaries receiving a benefit as of the applicable

payment date and shall not be considered cost of living adjustments under the prior provisions of

this section.

     SECTION 3. Section 45-21-52 of the General Laws in Chapter 45-21 entitled "Retirement

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

     45-21-52. Automatic increase in service retirement allowance.

     (a) The local legislative bodies of the cities and towns may extend to their respective

employees automatic adjustment increases in their service retirement allowances, by a resolution

accepting any of the plans described in this section:

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

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

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

and one-half percent (11/2%) per year of the original retirement allowance, not compounded, for

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

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

provision, and an additional one and one-half percent (11/2%) is added to the original retirement

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

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

the plan is accepted and each succeeding year.

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

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

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

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

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

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

of January.

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

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

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

(3%) of the original retirement allowance.

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

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

     (c) This subsection (c) shall be effective for the period July 1, 2012, through June 30, 2015.

     (1) Notwithstanding any other paragraphs of this section, and subject to paragraph (c)(2)

below, for all present and former employees, active and retired members, and beneficiaries

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

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

this section shall be equal to (A) multiplied by (B) where (A) is equal to the percentage determined

by subtracting five and one-half percent (5.5%) (the “subtrahend”) from the Five-Year Average

Investment Return of the retirement system determined as of the last day of the plan year preceding

the calendar year in which the adjustment is granted, said percentage not to exceed four percent

(4%) and not to be less than zero percent (0%), and (B) is equal to the lesser of the member’s

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

such twenty-five thousand dollars ($25,000) amount to be indexed annually in the same percentage

as determined under (c)(1)(A) above. The “Five-Year Average Investment Return” shall mean the

average of the investment returns of the most recent five (5) plan years as determined by the

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

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

which the retiree reaches his or her Social Security retirement age, whichever is later; or for

municipal police and fire retiring under the provisions of chapter 45-21.2, the benefit adjustment

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

retirement or the date on which the retiree reaches age fifty-five (55). In the event the retirement

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

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

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

section for any plan year shall be suspended in their entirety reduced to twenty-five percent (25%)

of the benefit adjustment for each municipal plan within the municipal employees retirement

system unless the municipal plan is determined to be funded at a Funded Ratio equal to or greater

than eighty percent (80%) as of the end of the immediately preceding plan year in accordance with

the retirement system’s actuarial valuation report as prepared by the system’s actuary, in which

event the benefit adjustment will be reinstated for all members for such plan year.

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

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

current or future benefit adjustment provided under this section.

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

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

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

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

(c)(1) above until the municipal plan’s Funded Ratio exceeds eighty percent (80%).

     (d) This subsection (d) shall become effective July 1, 2015.

     (1)(A) As soon as administratively reasonable following the enactment into law of this

subsection (d)(1)(A), a one-time benefit adjustment shall be provided to members and/or

beneficiaries of members who retired on or before June 30, 2012, in the amount of two percent

(2%) of the lesser of either the employee’s retirement allowance or the first twenty-five thousand

dollars ($25,000) of the member’s retirement allowance. This one-time benefit adjustment shall be

provided without regard to the retiree’s age or number of years since retirement.

     (B) Notwithstanding the prior subsections of this section, for all present and former

employees, active and retired employees, and beneficiaries receiving any retirement, disability or

death allowance or benefit of any kind by reason of adoption of this section by their employer, the

annual benefit adjustment provided in any calendar year under this section for adjustments on and

after January 1, 2016, and subject to paragraph (d)(2) below, shall be equal to (I) multiplied by (II):

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the “subtrahend”) from the five-year average investment return of the retirement system

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

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

(0%). The “five-year average investment return” shall mean the average of the investment returns

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

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

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

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

Statistics determined as of September 30 of the prior calendar year.

     In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be less

than zero percent (0%).

     (II) Is equal to the lesser of either the member’s retirement allowance or the first twenty-

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

to be indexed annually in the same percentage as determined under subsection (d)(1)(B)(I) above.

     The benefit adjustments provided by this subsection (d)(1)(B) shall be provided to all

retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

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

whichever is later; or for municipal police and fire retiring under the provisions of § 45-21.2-

5(b)(1)(A), the benefit adjustment provided by this paragraph shall commence on the later of the

third anniversary of the date of retirement or the date on which the retiree reaches age fifty-five

(55); or for municipal police and fire retiring under the provisions of § 45-21.2-5(b)(1)(B), the

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

of the date of retirement or the date on which the retiree reaches age fifty (50).

     (2) Except as provided in subsection (d)(3), the The benefit adjustments under subsection

(d)(1)(B) for any plan year shall be suspended in their entirety reduced to twenty-five percent (25%)

of the benefit adjustment for each municipal plan within the municipal employees retirement

system unless the municipal plan is determined to be funded at a funded ratio equal to or greater

than eighty percent (80%) as of the end of the immediately preceding plan year in accordance with

the retirement system’s actuarial valuation report as prepared by the system’s actuary, in which

event the benefit adjustment will be reinstated for all members for such plan year.

     In determining whether a funding level under this subsection (d)(2) has been achieved, the

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

current or future benefit adjustment provided under this section.

     (3) Notwithstanding subsection (d)(2), in each fourth plan year commencing after June 30,

2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four

plan years: (i) A benefit adjustment shall be calculated and made in accordance with subsection

(d)(1)(B) above; and (ii) Effective for members and/or beneficiaries of members who retired on or

before June 30, 2015, the dollar amount in subsection (d)(1)(B)(II) of twenty-five thousand eight

hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six

dollars ($31,026) until the municipal plan’s funded ratio exceeds eighty percent (80%).

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

next succeeding the acceptance, contribute by means of salary deductions, pursuant to § 45-21-41,

one percent (1%) of the employee’s compensation concurrently with and in addition to

contributions otherwise being made to the retirement system.

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

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

     (g) The East Greenwich town council shall be allowed to accept Plan C of subsection (a)(3)

of this section for all employees of the town of East Greenwich who either, pursuant to contract

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

and who shall all collectively be referred to as the “Municipal-COLA Group” and shall be separate

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

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

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

on or after January 1, 2003.

     (h) Effective for members and/or beneficiaries of members who have retired on or before

July 1, 2015, and without regard to whether the retired member or beneficiary is receiving a benefit

adjustment under this section, a one-time stipend of five hundred dollars ($500) shall be payable

within sixty (60) days following the enactment of the legislation implementing this provision, and

a second one-time stipend of five hundred dollars ($500) in the same month of the following year.

These stipends shall not be considered cost of living adjustments under the prior provisions of this

section.

     SECTION 4. The general assembly makes the following findings of fact:

     (1) The Rhode Island Retirement Security Act of 2011 was enacted to ensure sustainability

of the state's public retirement systems;

     (2) At the time of enactment, the pension system was critically underfunded and the state

was experiencing continuing financial instability following the Great Recession;

     (3) The state's contributions and projected future contributions to fund the pension system

combined with the state's fragile economy jeopardized public pensions and vital government

services;

     (4) Rapidly escalating pension costs posed a significant risk to state and municipal credit

ratings, further jeopardizing vital public services and the ability to address critical infrastructure

needs;

     (5) The Rhode Island Retirement Security Act of 2011 restructured public pensions

programs, including COLA benefits for retirees, with the stated goals to ensure: the ability of state

and municipalities to provide retirement benefits that will enable a dignified retirement for public

employees; an adequate source of retirement funds for public retiree benefits and an affordable

pension program that does not jeopardize vital public services;

     (6) More than a decade has passed since enactment of the Rhode Island Retirement Security

Act of 2011;

     (7) The reforms in the Rhode Island Retirement Security Act of 2011 have had various

effects over time, including changing the condition of the retirements systems throughout the state,

as well as impacting the retirement security of current and future public retirees; and

     (8) A thorough review of the restructured pension programs will assist in determining if

the stated goals of the Rhode Island Retirement Security Act of 2011 are being met, as well as

inform any changes that may be needed to improve the pension programs and address any

unintended consequences of the Act and any impacts on the ability of the state to attract and retain

a stable workforce.

     SECTION 5. Chapter 36-10.2 of the General Laws entitled "Pension Protection Act" is

hereby amended by adding thereto the following section:

     36-10.2-11. Advisory working group - Report.

     (a) The general treasurer shall establish and convene an advisory working group to assist

in the review and analysis of the impacts of the Rhode Island Retirement Security Act of 2011 on

the state's public retirement systems and their current and retired members. The working group

shall develop options for consideration by the general assembly that may be needed to improve the

pension programs or address any unintended consequences of the Act. Options, to the extent

possible, shall include a clear cost-benefit analysis.

     (b) The advisory working group may include, but not be limited to, designees from the

following: the office of the general treasurer, actuarial professionals, public sector unions, state

and/or national organizations interested in pension reform and sustainability, pension advocacy

groups and financial and investment professionals.

     (c) On or before March 1, 2024, the general treasurer shall forward a report containing the

findings, recommendations and proposed options for consideration to the governor, speaker of the

house and president of the senate.

     SECTION 6. Section 5 shall take effect upon passage. The remainder of the article shall

take effect on January 1, 2024.