2023 -- H 5240

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LC000735

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

____________

A N   A C T

RELATING TO EDUCATION -- TEACHERS' RETIREMENT

     

     Introduced By: Representatives McEntee, Caldwell, Fogarty, Serpa, Phillips, Casimiro,
O'Brien, Bennett, Edwards, and Morales

     Date Introduced: January 25, 2023

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

1

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

2

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

3

amended to read as follows:

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

and each year thereafter through December 31, 1980.

16

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

17

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

18

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

19

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

 

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

retroactive payment shall be made.

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

retirement allowance provided immediately before such adjustment.

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 2 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

either upward or downward in the same amount.

28

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

29

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

30

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

31

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

32

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

33

year.

34

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

 

LC000735 - Page 3 of 16

1

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

2

current or future benefit adjustment provided under this section.

3

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

4

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 (f)(1)

6

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

7

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

8

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

9

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

10

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

11

not granted on or prior to June 30, 2012.

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 4 of 16

1

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

2

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

3

than (0%) percent.

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

whichever is later.

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

current or future benefit adjustment provided under this section.

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 5 of 16

1

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

2

this § 16-16-40.

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 6 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

retroactive payment shall be made.

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

from the retirement allowance provided immediately before such adjustment.

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 7 of 16

1

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

2

apply.

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

service retirement allowance.

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

either upward or downward in the same amount.

32

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

33

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

34

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

 

LC000735 - Page 8 of 16

1

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

2

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

3

plan year.

4

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

5

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

6

current or future benefit adjustment provided under this section.

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

prior to June 30, 2012.

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 9 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

whichever is later.

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

current or future benefit adjustment provided under this section.

24

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

25

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

26

plan years:

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC000735 - Page 10 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

this section.

8

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

9

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

10

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

11

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

12

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

13

accepting any of the plans described in this section:

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

the plan is accepted and each succeeding year.

24

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

25

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

26

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

27

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

28

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

29

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

30

of January.

31

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

32

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

33

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

34

(3%) of the original retirement allowance.

 

LC000735 - Page 11 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

current or future benefit adjustment provided under this section.

 

LC000735 - Page 12 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

than zero percent (0%).

32

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

33

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

34

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

 

LC000735 - Page 13 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

current or future benefit adjustment provided under this section.

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

contributions otherwise being made to the retirement system.

32

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

33

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

34

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

 

LC000735 - Page 14 of 16

1

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

2

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

3

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

4

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

5

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

6

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

7

on or after January 1, 2003.

8

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

9

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

10

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

11

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

12

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

13

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

14

section.

15

     SECTION 4. This act shall take effect upon passage.

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LC000735 - Page 15 of 16

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION -- TEACHERS' RETIREMENT

***

1

     This act would provide that the current COLA suspension schedule would be replaced with

2

a fractional annual COLA of twenty-five percent (25%) of the COLA declared for that plan year,

3

as it pertains to retired teachers, state and municipal employees.

4

     This act would take effect upon passage.

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LC000735 - Page 16 of 16