2023 -- H 6207

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LC002624

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO PUBLIC OFFICERS AND EMPLOYEES - RETIREMENT SYSTEM -

CONTRIBUTIONS AND BENEFITS

     

     Introduced By: Representatives O'Brien, Dawson, Caldwell, Craven, McEntee, Shanley,
Batista, Vella-Wilkinson, Perez, and Noret

     Date Introduced: March 24, 2023

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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retroactive payment shall be made.

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

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

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

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

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

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

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

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

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

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

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from the retirement allowance provided immediately before such adjustment.

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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apply.

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

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

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

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

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

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

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

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

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service retirement allowance.

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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either upward or downward in the same amount.

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

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

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

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

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

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plan year.

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

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

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current or future benefit adjustment provided under this section.

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

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

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

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

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

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

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

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

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prior to June 30, 2012.

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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whichever is later.

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

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subsection (h)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio

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of the employees’ retirement system of Rhode Island, the judicial retirement benefits trust and the

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state police retirement benefits trust, calculated by the system’s actuary on an aggregate basis,

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

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members for such plan year.

 

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

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

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current or future benefit adjustment provided under this section.

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

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

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plan years:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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this section.

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     (j)(1) Notwithstanding the prior subsections of this section, for all present and former

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

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

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under this section for adjustments on and after January 1, 2024, shall be three percent (3%) and

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applied to the first fifty thousand dollars ($50,000) of the member's retirement allowance provided

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that the prior year investment return shall yield a gain of ten percent (10%) or more.

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     (2) In the event that the funding ratio of the employee's retirement system of Rhode Island,

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

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system's actuary on an aggregate basis exceeds eighty percent (80%), this subsection shall become

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null and void and the annual benefit adjustment shall be awarded pursuant to the provisions of

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subsection (h) of this section.

 

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC OFFICERS AND EMPLOYEES - RETIREMENT SYSTEM -

CONTRIBUTIONS AND BENEFITS

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     This act would award all members of the pension system a three percent (3%) annual

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benefit adjustment (COLA) applied to the first fifty thousand dollars ($50,000) of a member's

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retirement allowance on and after January 1, 2024, provided the prior year investment return yields

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a gain of ten percent (10%) or more until the pension system funding ratio exceeds eighty percent

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(80%).

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     This act would take effect upon passage.

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