2023 -- H 5240
========
LC000735
========
S TATE OF RHODE IS LAND
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:
SECTION 1. Section 16-16-40 of the General Laws in Chapter 16-16 entitled "Teachers’ 1
Retirement [See Title 16 Chapter 97 — The Rhode Island Board of Education Act]" is hereby 2
amended to read as follows: 3
16-16-40. Additional benefits payable to retired teachers. 4
(a) All teachers and all beneficiaries of teachers receiving any service retirement or 5
ordinary or accidental disability retirement allowance pursuant to the provisions of this chapter and 6
chapter 17 of this title, on or before December 31, 1967, shall receive a cost of living retirement 7
adjustment equal to one and one-half percent (1.5%) per year of the original retirement allowance, 8
not compounded, for each year the retirement allowance has been in effect. For purposes of 9
computation credit shall be given for a full calendar year regardless of the effective date of the 10
retirement allowance. This cost of living retirement adjustment shall be added to the amount of the 11
service retirement allowance as of January 1, 1970, and payment shall begin as of July 1, 1970. An 12
additional cost of living retirement adjustment shall be added to the original retirement allowance 13
equal to three percent (3%) of the original retirement allowance on the first day of January, 1971, 14
and each year thereafter through December 31, 1980. 15
(b) All teachers and beneficiaries of teachers receiving any service retirement or ordinary 16
disability retirement allowance pursuant to the provisions of this title who retired on or after January 17
1, 1968, shall, on the first day of January, next following the third (3rd) year on retirement, receive 18
a cost of living adjustment, in addition to his or her retirement allowance, an amount equal to three 19
LC000735 - Page 2 of 16
percent (3%) of the original retirement allowance. In each succeeding year thereafter, on the first 1
day of January, the retirement allowance shall be increased an additional three percent (3%) of the 2
original retirement allowance, not compounded, to be continued through December 31, 1980. 3
(c)(1) Beginning on January 1, 1981, for all teachers and beneficiaries of teachers receiving 4
any service retirement and all teachers and all beneficiaries of teachers who have completed at least 5
ten (10) years of contributory service on or before July 1, 2005, pursuant to the provisions of this 6
chapter, and for all teachers and beneficiaries of teachers who receive a disability retirement 7
allowance pursuant to §§ 16-16-14 — 16-16-17, the cost of living adjustment shall be computed 8
and paid at the rate of three percent (3%) of the original retirement allowance or the retirement 9
allowance as computed in accordance with § 16-16-40.1, compounded annually from the year for 10
which the cost of living adjustment was determined to be payable by the retirement board pursuant 11
to the provisions of subsection (a) or (b) of this section. Such cost of living adjustments are available 12
to teachers who retire before October 1, 2009, or are eligible to retire as of September 30, 2009. 13
(2) The provisions of this subsection shall be deemed to apply prospectively only and no 14
retroactive payment shall be made. 15
(3) The retirement allowance of all teachers and all beneficiaries of teachers who have not 16
completed at least ten (10) years of contributory service on or before July 1, 2005, or were not 17
eligible to retire as of September 30, 2009, shall, on the month following the third anniversary date 18
of the retirement, and on the month following the anniversary date of each succeeding year be 19
adjusted and computed by multiplying the retirement allowance by three percent (3%) or the 20
percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published 21
by the United States Department of Labor Statistics, determined as of September 30 of the prior 22
calendar year, whichever is less; the cost of living adjustment shall be compounded annually from 23
the year for which the cost of living adjustment was determined payable by the retirement board; 24
provided, that no adjustment shall cause any retirement allowance to be decreased from the 25
retirement allowance provided immediately before such adjustment. 26
(d) For teachers not eligible to retire in accordance with this chapter as of September 30, 27
2009, and not eligible upon passage of this article, and for their beneficiaries, the cost of living 28
adjustment described in subsection (3) above shall only apply to the first thirty-five thousand 29
dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon the third 30
(3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five (65), whichever 31
is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by the percentage 32
increase in the Consumer Price Index for all Urban Consumer (CPI-U) as published by the United 33
States Department of Labor Statistics determined as of September 30 of the prior calendar year or 34
LC000735 - Page 3 of 16
three percent (3%), whichever is less. The first thirty-five thousand dollars ($35,000), as indexed, 1
of retirement allowance shall be multiplied by the percentage of increase in the Consumer Price 2
Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor 3
Statistics determined as of September 30 of the prior calendar year or three percent (3%), whichever 4
is less, on the month following the anniversary date of each succeeding year. For teachers eligible 5
to retire as of September 30, 2009, or eligible upon passage of this article, and for their 6
beneficiaries, the provisions of this subsection (d) shall not apply. 7
(e) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section. 8
(f) This subsection (f) shall be effective for the period July 1, 2012, through June 30, 2015. 9
(1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (f)(2) 10
below, for all present and former teachers, active and retired teachers, and beneficiaries receiving 11
any retirement, disability or death allowance or benefit of any kind, the annual benefit adjustment 12
provided in any calendar year under this section shall be equal to (A) multiplied by (B) where (A) 13
is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the 14
“subtrahend”) from the Five-Year Average Investment Return of the retirement system determined 15
as of the last day of the plan year preceding the calendar year in which the adjustment is granted, 16
said percentage not to exceed four percent (4%) and not to be less than zero percent (0%), and (B) 17
is equal to the lesser of the teacher’s retirement allowance or the first twenty-five thousand dollars 18
($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000) amount to be 19
indexed annually in the same percentage as determined under paragraph (f)(1)(A) above. The 20
“Five-Year Average Investment Return” shall mean the average of the investment returns of the 21
most recent five (5) plan years as determined by the retirement board. Subject to paragraph (f)(2) 22
below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd) 23
anniversary of the date of retirement or the date on which the retiree reaches his or her Social 24
Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially 25
assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted 26
either upward or downward in the same amount. 27
(2) Except as provided in paragraph (f)(3), the benefit adjustments under this section for 28
any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees’ 29
Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police 30
Retirement Benefits Trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty 31
percent (80%) in which event the benefit adjustment will be reinstated for all teachers for such plan 32
year. 33
In determining whether a funding level under this paragraph (f)(2) has been achieved, the 34
LC000735 - Page 4 of 16
actuary shall calculate the funding percentage after taking into account the reinstatement of any 1
current or future benefit adjustment provided under this section. 2
(3) Notwithstanding paragraph (f)(2), in each fifth plan year commencing after June 30, 3
2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five 4
plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (f)(1) 5
above until the Funded Ratio of the Employees’ Retirement System of Rhode Island, the Judicial 6
Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the 7
system’s actuary on an aggregate basis, exceeds eighty percent (80%). 8
(4) Notwithstanding any other provisions of this chapter, the provisions of this paragraph 9
(f) of § 16-16-40 shall become effective July 1, 2012, and shall apply to any benefit adjustments 10
not granted on or prior to June 30, 2012. 11
(g) This subsection (g) shall become effective July 1, 2015. 12
(1)(A) As soon as administratively reasonable following the enactment into law of this 13
subsection (g)(1)(A), a one-time benefit adjustment shall be provided to teachers and/or 14
beneficiaries of teachers who retired on or before June 30, 2012, in the amount of two percent (2%) 15
of the lesser of either the teacher’s retirement allowance or the first twenty-five thousand dollars 16
($25,000) of the teacher’s retirement allowance. This one-time benefit adjustment shall be provided 17
without regard to the retiree’s age or number of years since retirement. 18
(B) Notwithstanding the prior subsections of this section, for all present and former 19
teachers, active and retired teachers, and beneficiaries receiving any retirement, disability or death 20
allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year under 21
this section for adjustments on and after January 1, 2016, and subject to subsection (g)(2) below, 22
shall be equal to (I) multiplied by (II): 23
(I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where: 24
(i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%) 25
(the “subtrahend”) from the five-year average investment return of the retirement system 26
determined as of the last day of the plan year preceding the calendar year in which the adjustment 27
is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 28
(0%). The “five-year average investment return” shall mean the average of the investment returns 29
of the most recent five (5) plan years as determined by the retirement board. In the event the 30
retirement board adjusts the actuarially assumed rate of return for the system, either upward or 31
downward, the subtrahend shall be adjusted either upward or downward in the same amount. 32
(ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer 33
Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor 34
LC000735 - Page 5 of 16
Statistics determined as of September 30 of the prior calendar year. 1
In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be less 2
than (0%) percent. 3
(II) is equal to the lesser of either the teacher’s retirement allowance or the first twenty-4
five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount 5
to be indexed annually in the same percentage as determined under subsection (g)(1)(B)(I) above. 6
The benefit adjustments provided by this subsection (g)(1)(B) shall be provided to all 7
retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect, 8
and for all other retirees the benefit adjustments shall commence upon the third anniversary of the 9
date of retirement or the date on which the retiree reaches his or her Social Security retirement age, 10
whichever is later. 11
(2) Except as provided in subsection (g)(3), the The benefit adjustments under subsection 12
(g)(1)(B) for any plan year shall be suspended in their entirety reduced to twenty-five percent (25%) 13
of the benefit adjustment unless the funded ratio of the employees’ retirement system of Rhode 14
Island, the judicial retirement benefits trust and the state police retirement benefits trust, calculated 15
by the system’s actuary on an aggregate basis, exceeds eighty percent (80%) in which event the 16
benefit adjustment will be reinstated for all teachers for such plan year. 17
In determining whether a funding level under this subsection (g)(2) has been achieved, the 18
actuary shall calculate the funding percentage after taking into account the reinstatement of any 19
current or future benefit adjustment provided under this section. 20
(3) Notwithstanding subsection (g)(2), in each fourth plan year commencing after June 30, 21
2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four 22
plan years: (i) A benefit adjustment shall be calculated and made in accordance with subsection 23
(g)(1)(B) above; and (ii) Effective for teachers and/or beneficiaries of teachers who retired on or 24
before June 30, 2015, the dollar amount in subsection (g)(1)(B)(II) of twenty-five thousand eight 25
hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six 26
dollars ($31,026)until the funded ratio of the employees’ retirement system of Rhode Island, the 27
judicial retirement benefits trust and the state police retirement benefits trust, calculated by the 28
system’s actuary on an aggregate basis, exceeds eighty percent (80%). 29
(4) Effective for teachers and or beneficiaries of teachers who have retired on or before 30
July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60) 31
days following the enactment of the legislation implementing this provision, and a second one-time 32
stipend of five hundred dollars ($500) in the same month of the following year. These stipends 33
shall be payable to all retired teachers or beneficiaries receiving a benefit as of the applicable 34
LC000735 - Page 6 of 16
payment date and shall not be considered cost of living adjustments under the prior provisions of 1
this § 16-16-40. 2
SECTION 2. Section 36-10-35 of the General Laws in Chapter 36-10 entitled "Retirement 3
System — Contributions and Benefits" is hereby amended to read as follows: 4
36-10-35. Additional benefits payable to retired employees. 5
(a) All state employees and all beneficiaries of state employees receiving any service 6
retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of 7
this title on or before December 31, 1967, shall receive a cost of living retirement adjustment equal 8
to one and one-half percent (1.5%) per year of the original retirement allowance, not compounded, 9
for each calendar year the retirement allowance has been in effect. For the purposes of computation, 10
credit shall be given for a full calendar year regardless of the effective date of the retirement 11
allowance. This cost of living adjustment shall be added to the amount of the retirement allowance 12
as of January 1, 1968, and an additional one and one-half percent (1.5%) shall be added to the 13
original retirement allowance in each succeeding year during the month of January, and provided 14
further, that this additional cost of living increase shall be three percent (3%) for the year beginning 15
January 1, 1971, and each year thereafter, through December 31, 1980. Notwithstanding any of the 16
above provisions, no employee receiving any service retirement allowance pursuant to the 17
provisions of this title on or before December 31, 1967, or the employee’s beneficiary, shall receive 18
any additional benefit hereunder in an amount less than two hundred dollars ($200) per year over 19
the service retirement allowance where the employee retired prior to January 1, 1958. 20
(b) All state employees and all beneficiaries of state employees retired on or after January 21
1, 1968, who are receiving any service retirement or ordinary or accidental disability retirement 22
allowance pursuant to the provisions of this title shall, on the first day of January next following 23
the third anniversary date of the retirement, receive a cost of living retirement adjustment, in 24
addition to his or her retirement allowance, in an amount equal to three percent (3%) of the original 25
retirement allowance. In each succeeding year thereafter through December 31, 1980, during the 26
month of January, the retirement allowance shall be increased an additional three percent (3%) of 27
the original retirement allowance, not compounded, to be continued during the lifetime of the 28
employee or beneficiary. For the purposes of computation, credit shall be given for a full calendar 29
year regardless of the effective date of the service retirement allowance. 30
(c)(1) Beginning on January 1, 1981, for all state employees and beneficiaries of the state 31
employees receiving any service retirement and all state employees, and all beneficiaries of state 32
employees, who have completed at least ten (10) years of contributory service on or before July 1, 33
2005, pursuant to the provisions of this chapter, and for all state employees, and all beneficiaries 34
LC000735 - Page 7 of 16
of state employees who receive a disability retirement allowance pursuant to §§ 36-10-12 — 36-1
10-15, the cost of living adjustment shall be computed and paid at the rate of three percent (3%) of 2
the original retirement allowance or the retirement allowance as computed in accordance with § 3
36-10-35.1, compounded annually from the year for which the cost of living adjustment was 4
determined to be payable by the retirement board pursuant to the provisions of subsection (a) or (b) 5
of this section. Such cost of living adjustments are available to members who retire before October 6
1, 2009, or are eligible to retire as of September 30, 2009. 7
(2) The provisions of this subsection shall be deemed to apply prospectively only and no 8
retroactive payment shall be made. 9
(3) The retirement allowance of all state employees and all beneficiaries of state employees 10
who have not completed at least ten (10) years of contributory service on or before July 1, 2005, or 11
were not eligible to retire as of September 30, 2009, shall, on the month following the third 12
anniversary date of retirement, and on the month following the anniversary date of each succeeding 13
year be adjusted and computed by multiplying the retirement allowance by three percent (3%) or 14
the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as 15
published by the United States Department of Labor Statistics determined as of September 30 of 16
the prior calendar year, whichever is less; the cost of living adjustment shall be compounded 17
annually from the year for which the cost of living adjustment was determined payable by the 18
retirement board; provided, that no adjustment shall cause any retirement allowance to be decreased 19
from the retirement allowance provided immediately before such adjustment. 20
(d) For state employees not eligible to retire in accordance with this chapter as of 21
September 30, 2009, and not eligible upon passage of this article, and for their beneficiaries, the 22
cost of living adjustment described in subsection (c)(3) of this section shall only apply to the first 23
thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall 24
commence upon the third (3rd) anniversary of the date of retirement or when the retiree reaches 25
age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase 26
annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-27
U) as published by the United States Department of Labor Statistics determined as of September 28
30 of the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand 29
dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of 30
increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United 31
States Department of Labor Statistics determined as of September 30 of the prior calendar year or 32
three percent (3%), whichever is less, on the month following the anniversary date of each 33
succeeding year. For state employees eligible to retire as of September 30, 2009, or eligible upon 34
LC000735 - Page 8 of 16
passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not 1
apply. 2
(e) All legislators and all beneficiaries of legislators who are receiving a retirement 3
allowance pursuant to the provisions of § 36-10-9.1 for a period of three (3) or more years, shall, 4
commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to a 5
retirement allowance, in an amount equal to three percent (3%) of the original retirement allowance. 6
In each succeeding year thereafter during the month of January, the retirement allowance shall be 7
increased an additional three percent (3%) of the original retirement allowance, compounded 8
annually, to be continued during the lifetime of the legislator or beneficiary. For the purposes of 9
computation, credit shall be given for a full calendar year regardless of the effective date of the 10
service retirement allowance. 11
(f) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section. 12
(g) This subsection (g) shall be effective for the period July 1, 2012, through June 30, 2015. 13
(1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (g)(2) 14
below, for all present and former employees, active and retired members, and beneficiaries 15
receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit 16
adjustment provided in any calendar year under this section shall be equal to (A) multiplied by (B) 17
where (A) is equal to the percentage determined by subtracting five and one-half percent (5.5%) 18
(the “subtrahend”) from the Five-Year Average Investment Return of the retirement system 19
determined as of the last day of the plan year preceding the calendar year in which the adjustment 20
is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 21
(0%), and (B) is equal to the lesser of the member’s retirement allowance or the first twenty-five 22
thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000) 23
amount to be indexed annually in the same percentage as determined under (g)(1)(A) above. The 24
“Five-Year Average Investment Return” shall mean the average of the investment returns of the 25
most recent five (5) plan years as determined by the retirement board. Subject to paragraph (g)(2) 26
below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd) 27
anniversary of the date of retirement or the date on which the retiree reaches his or her Social 28
Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially 29
assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted 30
either upward or downward in the same amount. 31
(2) Except as provided in paragraph (g)(3), the benefit adjustments under this section for 32
any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees’ 33
Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police 34
LC000735 - Page 9 of 16
Retirement Benefits Trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty 1
percent (80%) in which event the benefit adjustment will be reinstated for all members for such 2
plan year. 3
In determining whether a funding level under this paragraph (g)(2) has been achieved, the 4
actuary shall calculate the funding percentage after taking into account the reinstatement of any 5
current or future benefit adjustment provided under this section. 6
(3) Notwithstanding paragraph (g)(2), in each fifth plan year commencing after June 30, 7
2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five 8
plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (g)(1) 9
above until the Funded Ratio of the Employees’ Retirement System of Rhode Island, the Judicial 10
Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the 11
system’s actuary on an aggregate basis, exceeds eighty percent (80%). 12
(4) Notwithstanding any other provision of this chapter, the provisions of this paragraph 13
(g) shall become effective July 1, 2012, and shall apply to any benefit adjustment not granted on or 14
prior to June 30, 2012. 15
(h) This subsection (h) shall become effective July 1, 2015. 16
(1)(A) As soon as administratively reasonable following the enactment into law of this 17
subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or 18
beneficiaries of members who retired on or before June 30, 2012, in the amount of 2% of the lesser 19
of either the member’s retirement allowance or the first twenty-five thousand dollars ($25,000) of 20
the member’s retirement allowance. This one-time benefit adjustment shall be provided without 21
regard to the retiree’s age or number of years since retirement. 22
(B) Notwithstanding the prior subsections of this section, for all present and former 23
employees, active and retired members, and beneficiaries receiving any retirement, disability or 24
death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year 25
under this section for adjustments on and after January 1, 2016, and subject to subsection (h)(2) 26
below, shall be equal to (I) multiplied by (II): 27
(I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where: 28
(i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%) 29
(the “subtrahend”) from the five-year average investment return of the retirement system 30
determined as of the last day of the plan year preceding the calendar year in which the adjustment 31
is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 32
(0%). The “five-year average investment return” shall mean the average of the investment returns 33
of the most recent five (5) plan years as determined by the retirement board. In the event the 34
LC000735 - Page 10 of 16
retirement board adjusts the actuarially assumed rate of return for the system, either upward or 1
downward, the subtrahend shall be adjusted either upward or downward in the same amount. 2
(ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer 3
Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor 4
Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of (i) 5
plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%). 6
(II) Is equal to the lesser of either the member’s retirement allowance or the first twenty-7
five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount 8
to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above. 9
The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all 10
retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect, 11
and for all other retirees the benefit adjustments shall commence upon the third anniversary of the 12
date of retirement or the date on which the retiree reaches his or her Social Security retirement age, 13
whichever is later. 14
(2) Except as provided in subsection (h)(3) of this section, the The benefit adjustments 15
under subsection (h)(1)(B) for any plan year shall be suspended in their entirety reduced to twenty-16
five percent (25%) of the benefit adjustment unless the funded ratio of the employees’ retirement 17
system of Rhode Island, the judicial retirement benefits trust and the state police retirement benefits 18
trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty percent (80%) in 19
which event the benefit adjustment will be reinstated for all members for such plan year. 20
In determining whether a funding level under this subsection (h)(2) has been achieved, the 21
actuary shall calculate the funding percentage after taking into account the reinstatement of any 22
current or future benefit adjustment provided under this section. 23
(3) Notwithstanding subsection (h)(2), in each fourth plan year commencing after June 30, 24
2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four 25
plan years: 26
(i) A benefit adjustment shall be calculated and made in accordance with subsection 27
(h)(1)(B) above; and 28
(ii) Effective for members and/or beneficiaries of members who retired on or before June 29
30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand eight hundred and 30
fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars 31
($31,026) until the funded ratio of the employees’ retirement system of Rhode Island, the judicial 32
retirement benefits trust and the state police retirement benefits trust, calculated by the system’s 33
actuary on an aggregate basis, exceeds eighty percent (80%). 34
LC000735 - Page 11 of 16
(i) Effective for members and/or beneficiaries of members who have retired on or before 1
July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60) 2
days following the enactment of the legislation implementing this provision, and a second one-time 3
stipend of five hundred dollars ($500) in the same month of the following year. These stipends 4
shall be payable to all retired members or beneficiaries receiving a benefit as of the applicable 5
payment date and shall not be considered cost of living adjustments under the prior provisions of 6
this section. 7
SECTION 3. Section 45-21-52 of the General Laws in Chapter 45-21 entitled "Retirement 8
of Municipal Employees" is hereby amended to read as follows: 9
45-21-52. Automatic increase in service retirement allowance. 10
(a) The local legislative bodies of the cities and towns may extend to their respective 11
employees automatic adjustment increases in their service retirement allowances, by a resolution 12
accepting any of the plans described in this section: 13
(1) Plan A. All employees and beneficiaries of those employees receiving a service 14
retirement or disability retirement allowance under the provisions of this chapter on December 31 15
of the year their city or town accepts this section, receive a cost of living adjustment equal to one 16
and one-half percent (1
1
/2%) per year of the original retirement allowance, not compounded, for 17
each calendar year the retirement allowance has been in effect. This cost of living adjustment is 18
added to the amount of the retirement allowance as of January 1 following acceptance of this 19
provision, and an additional one and one-half percent (1
1
/2%) is added to the original retirement 20
allowance in each succeeding year during the month of January, and provided, further, that this 21
additional cost of living increase is three percent (3%) for the year beginning January 1 of the year 22
the plan is accepted and each succeeding year. 23
(2) Plan B. All employees and beneficiaries of those employees receiving a retirement 24
allowance under the provisions of this chapter on December 31 of the year their municipality 25
accepts this section, receive a cost of living adjustment equal to three percent (3%) of their original 26
retirement allowance. This adjustment is added to the amount of the retirement allowance as of 27
January 1 following acceptance of this provision, and an additional three percent (3%) of the 28
original retirement allowance, not compounded, is payable in each succeeding year in the month 29
of January. 30
(3) Plan C. All employees and beneficiaries of those employees who retire on or after 31
January 1 of the year following acceptance of this section, on the first day of January next following 32
the date of the retirement, receive a cost of living adjustment in an amount equal to three percent 33
(3%) of the original retirement allowance. 34
LC000735 - Page 12 of 16
(b) In each succeeding year in the month of January, the retirement allowance is increased 1
an additional three percent (3%) of the original retirement allowance, not compounded. 2
(c) This subsection (c) shall be effective for the period July 1, 2012, through June 30, 2015. 3
(1) Notwithstanding any other paragraphs of this section, and subject to paragraph (c)(2) 4
below, for all present and former employees, active and retired members, and beneficiaries 5
receiving any retirement, disability or death allowance or benefit of any kind by reason of adoption 6
of this section by their employer, the annual benefit adjustment provided in any calendar year under 7
this section shall be equal to (A) multiplied by (B) where (A) is equal to the percentage determined 8
by subtracting five and one-half percent (5.5%) (the “subtrahend”) from the Five-Year Average 9
Investment Return of the retirement system determined as of the last day of the plan year preceding 10
the calendar year in which the adjustment is granted, said percentage not to exceed four percent 11
(4%) and not to be less than zero percent (0%), and (B) is equal to the lesser of the member’s 12
retirement allowance or the first twenty-five thousand dollars ($25,000) of retirement allowance, 13
such twenty-five thousand dollars ($25,000) amount to be indexed annually in the same percentage 14
as determined under (c)(1)(A) above. The “Five-Year Average Investment Return” shall mean the 15
average of the investment returns of the most recent five (5) plan years as determined by the 16
retirement board. Subject to paragraph (c)(2) below, the benefit adjustment provided by this 17
paragraph shall commence upon the third (3rd) anniversary of the date of retirement or the date on 18
which the retiree reaches his or her Social Security retirement age, whichever is later; or for 19
municipal police and fire retiring under the provisions of chapter 45-21.2, the benefit adjustment 20
provided by this paragraph shall commence on the later of the third (3rd) anniversary of the date of 21
retirement or the date on which the retiree reaches age fifty-five (55). In the event the retirement 22
board adjusts the actuarially assumed rate of return for the system, either upward or downward, the 23
subtrahend shall be adjusted either upward or downward in the same amount. 24
(2) Except as provided in paragraph (c)(3) the benefit adjustments provided under this 25
section for any plan year shall be suspended in their entirety reduced to twenty-five percent (25%) 26
of the benefit adjustment for each municipal plan within the municipal employees retirement 27
system unless the municipal plan is determined to be funded at a Funded Ratio equal to or greater 28
than eighty percent (80%) as of the end of the immediately preceding plan year in accordance with 29
the retirement system’s actuarial valuation report as prepared by the system’s actuary, in which 30
event the benefit adjustment will be reinstated for all members for such plan year. 31
In determining whether a funding level under this paragraph (c)(2) has been achieved, the 32
actuary shall calculate the funding percentage after taking into account the reinstatement of any 33
current or future benefit adjustment provided under this section. 34
LC000735 - Page 13 of 16
(3) Notwithstanding paragraph (c)(2), for each municipal plan that has a Funded Ratio of 1
less than eighty percent (80%) as of June 30, 2012, in each fifth plan year commencing after June 2
30, 2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of 3
five (5) plan years, a benefit adjustment shall be calculated and made in accordance with paragraph 4
(c)(1) above until the municipal plan’s Funded Ratio exceeds eighty percent (80%). 5
(d) This subsection (d) shall become effective July 1, 2015. 6
(1)(A) As soon as administratively reasonable following the enactment into law of this 7
subsection (d)(1)(A), a one-time benefit adjustment shall be provided to members and/or 8
beneficiaries of members who retired on or before June 30, 2012, in the amount of two percent 9
(2%) of the lesser of either the employee’s retirement allowance or the first twenty-five thousand 10
dollars ($25,000) of the member’s retirement allowance. This one-time benefit adjustment shall be 11
provided without regard to the retiree’s age or number of years since retirement. 12
(B) Notwithstanding the prior subsections of this section, for all present and former 13
employees, active and retired employees, and beneficiaries receiving any retirement, disability or 14
death allowance or benefit of any kind by reason of adoption of this section by their employer, the 15
annual benefit adjustment provided in any calendar year under this section for adjustments on and 16
after January 1, 2016, and subject to paragraph (d)(2) below, shall be equal to (I) multiplied by (II): 17
(I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where: 18
(i) 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%). The “five-year average investment return” shall mean the average of the investment returns 23
of the most recent five (5) plan years as determined by the retirement board. In the event the 24
retirement board adjusts the actuarially assumed rate of return for the system, either upward or 25
downward, the subtrahend shall be adjusted either upward or downward in the same amount. 26
(ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer 27
Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor 28
Statistics determined as of September 30 of the prior calendar year. 29
In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be less 30
than zero percent (0%). 31
(II) Is equal to the lesser of either the member’s retirement allowance or the first twenty-32
five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount 33
to be indexed annually in the same percentage as determined under subsection (d)(1)(B)(I) above. 34
LC000735 - Page 14 of 16
The benefit adjustments provided by this subsection (d)(1)(B) shall be provided to all 1
retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect, 2
and for all other retirees the benefit adjustments shall commence upon the third anniversary of the 3
date of retirement or the date on which the retiree reaches his or her Social Security retirement age, 4
whichever is later; or for municipal police and fire retiring under the provisions of § 45-21.2-5
5(b)(1)(A), the benefit adjustment provided by this paragraph shall commence on the later of the 6
third anniversary of the date of retirement or the date on which the retiree reaches age fifty-five 7
(55); or for municipal police and fire retiring under the provisions of § 45-21.2-5(b)(1)(B), the 8
benefit adjustment provided by this paragraph shall commence on the later of the third anniversary 9
of the date of retirement or the date on which the retiree reaches age fifty (50). 10
(2) Except as provided in subsection (d)(3), the The benefit adjustments under subsection 11
(d)(1)(B) for any plan year shall be suspended in their entirety reduced to twenty-five percent (25%) 12
of the benefit adjustment for each municipal plan within the municipal employees retirement 13
system unless the municipal plan is determined to be funded at a funded ratio equal to or greater 14
than eighty percent (80%) as of the end of the immediately preceding plan year in accordance with 15
the retirement system’s actuarial valuation report as prepared by the system’s actuary, in which 16
event the benefit adjustment will be reinstated for all members for such plan year. 17
In determining whether a funding level under this subsection (d)(2) has been achieved, the 18
actuary shall calculate the funding percentage after taking into account the reinstatement of any 19
current or future benefit adjustment provided under this section. 20
(3) Notwithstanding subsection (d)(2), in each fourth plan year commencing after June 30, 21
2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four 22
plan years: (i) A benefit adjustment shall be calculated and made in accordance with subsection 23
(d)(1)(B) above; and (ii) Effective for members and/or beneficiaries of members who retired on or 24
before June 30, 2015, the dollar amount in subsection (d)(1)(B)(II) of twenty-five thousand eight 25
hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six 26
dollars ($31,026) until the municipal plan’s funded ratio exceeds eighty percent (80%). 27
(e) Upon acceptance of any of the plans in this section, each employee shall on January 1 28
next succeeding the acceptance, contribute by means of salary deductions, pursuant to § 45-21-41, 29
one percent (1%) of the employee’s compensation concurrently with and in addition to 30
contributions otherwise being made to the retirement system. 31
(f) The city or town shall make any additional contributions to the system, pursuant to the 32
terms of § 45-21-42, for the payment of any benefits provided by this section. 33
(g) The East Greenwich town council shall be allowed to accept Plan C of subsection (a)(3) 34
LC000735 - Page 15 of 16
of this section for all employees of the town of East Greenwich who either, pursuant to contract 1
negotiations, bargain for Plan C, or who are non-union employees who are provided with Plan C 2
and who shall all collectively be referred to as the “Municipal-COLA Group” and shall be separate 3
from all other employees of the town and school department, union or non-union, who are in the 4
same pension group but have not been granted Plan C benefits. Upon acceptance by the town 5
council, benefits in accordance with this section shall be available to all such employees who retire 6
on or after January 1, 2003. 7
(h) Effective for members and/or beneficiaries of members who have retired on or before 8
July 1, 2015, and without regard to whether the retired member or beneficiary is receiving a benefit 9
adjustment under this section, a one-time stipend of five hundred dollars ($500) shall be payable 10
within sixty (60) days following the enactment of the legislation implementing this provision, and 11
a second one-time stipend of five hundred dollars ($500) in the same month of the following year. 12
These stipends shall not be considered cost of living adjustments under the prior provisions of this 13
section. 14
SECTION 4. This act shall take effect upon passage. 15
========
LC000735
========
LC000735 - Page 16 of 16
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO EDUCATION -- TEACHERS' RETIREMENT
***
This act would provide that the current COLA suspension schedule would be replaced with 1
a fractional annual COLA of twenty-five percent (25%) of the COLA declared for that plan year, 2
as it pertains to retired teachers, state and municipal employees. 3
This act would take effect upon passage. 4
========
LC000735
========