Far-Reaching Pension Overhaul Set to Become Law in Rhode Island
The legislation, passed by both chambers on Thursday (November 17), is intended to reduce Rhode Island's enormous unfunded pension liability - estimated at $7.3 billion for the nation's smallest state - by cutting benefits for current and future employees and retirees. According to The Associated Press , the measure "would suspend pension increases for retirees for five years and then only if pension investments perform well. The bill also raises retirement ages for many workers and creates a benefit plan that mixes pensions with 401(k)-style accounts."
Many states have curtailed benefits for public workers, but Rhode Island's plan is considered the most sweeping in the country, partly because it is aimed at current workers and retirees as well as new hires. The Pew Center on the States, Stateline 's parent organization, has called it "unprecedented, both in terms of the employees it would affect and the scope and scale of changes to their benefits." As Stateline noted earlier this year , political leaders in several other states vowed to overhaul their pension systems to make them more like 401(k) packages, but none of them followed through.
For most of Thursday, public employee unions and other protesters jammed the Rhode Island Capitol to voice their displeasure with the bill. One firefighter told The Associated Press that lawmakers were "trying to solve a 40-year-old problem in one day," and unions vowed to sue to stop the proposal from becoming law.
Despite the contentious debate, the final vote tallies were decisive. The House passed the legislation 57-to-15, and the Senate passed it 34-to-2.