Rhode Island 2023 Regular Session

Rhode Island House Bill H5404 Compare Versions

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55 2023 -- H 5404
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99 S TATE OF RHODE IS LAND
1010 IN GENERAL ASSEMBLY
1111 JANUARY SESSION, A.D. 2023
1212 ____________
1313
1414 A N A C T
1515 RELATING TO RETIREMENT SYSTEM -- CONTRIBUTIONS AND BE NEFITS
1616 Introduced By: Representatives Shanley, Vella-Wilkinson, Craven, Bennett, Edwards,
1717 Spears, Cotter, and O'Brien
1818 Date Introduced: February 03, 2023
1919 Referred To: House Finance
2020
2121
2222 It is enacted by the General Assembly as follows:
2323 SECTION 1. Section 36-10-35 of the General Laws in Chapter 36-10 entitled "Retirement 1
2424 System — Contributions and Benefits" is hereby amended to read as follows: 2
2525 36-10-35. Additional benefits payable to retired employees. 3
2626 (a) All state employees and all beneficiaries of state employees receiving any service 4
2727 retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of 5
2828 this title on or before December 31, 1967, shall receive a cost of living retirement adjustment equal 6
2929 to one and one-half percent (1.5%) per year of the original retirement allowance, not compounded, 7
3030 for each calendar year the retirement allowance has been in effect. For the purposes of computation, 8
3131 credit shall be given for a full calendar year regardless of the effective date of the retirement 9
3232 allowance. This cost of living adjustment shall be added to the amount of the retirement allowance 10
3333 as of January 1, 1968, and an additional one and one-half percent (1.5%) shall be added to the 11
3434 original retirement allowance in each succeeding year during the month of January, and provided 12
3535 further, that this additional cost of living increase shall be three percent (3%) for the year beginning 13
3636 January 1, 1971, and each year thereafter, through December 31, 1980. Notwithstanding any of the 14
3737 above provisions, no employee receiving any service retirement allowance pursuant to the 15
3838 provisions of this title on or before December 31, 1967, or the employee’s beneficiary, shall receive 16
3939 any additional benefit hereunder in an amount less than two hundred dollars ($200) per year over 17
4040 the service retirement allowance where the employee retired prior to January 1, 1958. 18
4141 (b) All state employees and all beneficiaries of state employees retired on or after January 19
4242
4343
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4545 1, 1968, who are receiving any service retirement or ordinary or accidental disability retirement 1
4646 allowance pursuant to the provisions of this title shall, on the first day of January next following 2
4747 the third anniversary date of the retirement, receive a cost of living retirement adjustment, in 3
4848 addition to his or her retirement allowance, in an amount equal to three percent (3%) of the original 4
4949 retirement allowance. In each succeeding year thereafter through December 31, 1980, during the 5
5050 month of January, the retirement allowance shall be increased an additional three percent (3%) of 6
5151 the original retirement allowance, not compounded, to be continued during the lifetime of the 7
5252 employee or beneficiary. For the purposes of computation, credit shall be given for a full calendar 8
5353 year regardless of the effective date of the service retirement allowance. 9
5454 (c)(1) Beginning on January 1, 1981, for all state employees and beneficiaries of the state 10
5555 employees receiving any service retirement and all state employees, and all beneficiaries of state 11
5656 employees, who have completed at least ten (10) years of contributory service on or before July 1, 12
5757 2005, pursuant to the provisions of this chapter, and for all state employees, and all beneficiaries 13
5858 of state employees who receive a disability retirement allowance pursuant to §§ 36-10-12 — 36-14
5959 10-15, the cost of living adjustment shall be computed and paid at the rate of three percent (3%) of 15
6060 the original retirement allowance or the retirement allowance as computed in accordance with § 16
6161 36-10-35.1, compounded annually from the year for which the cost of living adjustment was 17
6262 determined to be payable by the retirement board pursuant to the provisions of subsection (a) or (b) 18
6363 of this section. Such cost of living adjustments are available to members who retire before October 19
6464 1, 2009, or are eligible to retire as of September 30, 2009. 20
6565 (2) The provisions of this subsection shall be deemed to apply prospectively only and no 21
6666 retroactive payment shall be made. 22
6767 (3) The retirement allowance of all state employees and all beneficiaries of state employees 23
6868 who have not completed at least ten (10) years of contributory service on or before July 1, 2005, or 24
6969 were not eligible to retire as of September 30, 2009, shall, on the month following the third 25
7070 anniversary date of retirement, and on the month following the anniversary date of each succeeding 26
7171 year be adjusted and computed by multiplying the retirement allowance by three percent (3%) or 27
7272 the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as 28
7373 published by the United States Department of Labor Statistics determined as of September 30 of 29
7474 the prior calendar year, whichever is less; the cost of living adjustment shall be compounded 30
7575 annually from the year for which the cost of living adjustment was determined payable by the 31
7676 retirement board; provided, that no adjustment shall cause any retirement allowance to be decreased 32
7777 from the retirement allowance provided immediately before such adjustment. 33
7878 (d) For state employees not eligible to retire in accordance with this chapter as of 34
7979
8080
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8282 September 30, 2009, and not eligible upon passage of this article, and for their beneficiaries, the 1
8383 cost of living adjustment described in subsection (c)(3) of this section shall only apply to the first 2
8484 thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall 3
8585 commence upon the third (3rd) anniversary of the date of retirement or when the retiree reaches 4
8686 age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase 5
8787 annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-6
8888 U) as published by the United States Department of Labor Statistics determined as of September 7
8989 30 of the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand 8
9090 dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of 9
9191 increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United 10
9292 States Department of Labor Statistics determined as of September 30 of the prior calendar year or 11
9393 three percent (3%), whichever is less, on the month following the anniversary date of each 12
9494 succeeding year. For state employees eligible to retire as of September 30, 2009, or eligible upon 13
9595 passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not 14
9696 apply. 15
9797 (e) All legislators and all beneficiaries of legislators who are receiving a retirement 16
9898 allowance pursuant to the provisions of § 36-10-9.1 for a period of three (3) or more years, shall, 17
9999 commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to a 18
100100 retirement allowance, in an amount equal to three percent (3%) of the original retirement allowance. 19
101101 In each succeeding year thereafter during the month of January, the retirement allowance shall be 20
102102 increased an additional three percent (3%) of the original retirement allowance, compounded 21
103103 annually, to be continued during the lifetime of the legislator or beneficiary. For the purposes of 22
104104 computation, credit shall be given for a full calendar year regardless of the effective date of the 23
105105 service retirement allowance. 24
106106 (f) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section. 25
107107 (g) This subsection (g) shall be effective for the period July 1, 2012, through June 30, 2015. 26
108108 (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (g)(2) 27
109109 below, for all present and former employees, active and retired members, and beneficiaries 28
110110 receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit 29
111111 adjustment provided in any calendar year under this section shall be equal to (A) multiplied by (B) 30
112112 where (A) is equal to the percentage determined by subtracting five and one-half percent (5.5%) 31
113113 (the “subtrahend”) from the Five-Year Average Investment Return of the retirement system 32
114114 determined as of the last day of the plan year preceding the calendar year in which the adjustment 33
115115 is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 34
116116
117117
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119119 (0%), and (B) is equal to the lesser of the member’s retirement allowance or the first twenty-five 1
120120 thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000) 2
121121 amount to be indexed annually in the same percentage as determined under (g)(1)(A) above. The 3
122122 “Five-Year Average Investment Return” shall mean the average of the investment returns of the 4
123123 most recent five (5) plan years as determined by the retirement board. Subject to paragraph (g)(2) 5
124124 below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd) 6
125125 anniversary of the date of retirement or the date on which the retiree reaches his or her Social 7
126126 Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially 8
127127 assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted 9
128128 either upward or downward in the same amount. 10
129129 (2) Except as provided in paragraph (g)(3), the benefit adjustments under this section for 11
130130 any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees’ 12
131131 Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police 13
132132 Retirement Benefits Trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty 14
133133 percent (80%) in which event the benefit adjustment will be reinstated for all members for such 15
134134 plan year. 16
135135 In determining whether a funding level under this paragraph (g)(2) has been achieved, the 17
136136 actuary shall calculate the funding percentage after taking into account the reinstatement of any 18
137137 current or future benefit adjustment provided under this section. 19
138138 (3) Notwithstanding paragraph (g)(2), in each fifth plan year commencing after June 30, 20
139139 2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five 21
140140 plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (g)(1) 22
141141 above until the Funded Ratio of the Employees’ Retirement System of Rhode Island, the Judicial 23
142142 Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the 24
143143 system’s actuary on an aggregate basis, exceeds eighty percent (80%). 25
144144 (4) Notwithstanding any other provision of this chapter, the provisions of this paragraph 26
145145 (g) shall become effective July 1, 2012, and shall apply to any benefit adjustment not granted on or 27
146146 prior to June 30, 2012. 28
147147 (h) This subsection (h) shall become effective July 1, 2015. 29
148148 (1)(A) As soon as administratively reasonable following the enactment into law of this 30
149149 subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or 31
150150 beneficiaries of members who retired on or before June 30, 2012, in the amount of 2% of the lesser 32
151151 of either the member’s retirement allowance or the first twenty-five thousand dollars ($25,000) of 33
152152 the member’s retirement allowance. This one-time benefit adjustment shall be provided without 34
153153
154154
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156156 regard to the retiree’s age or number of years since retirement. 1
157157 (B) Notwithstanding the prior subsections of this section, for all present and former 2
158158 employees, active and retired members, and beneficiaries receiving any retirement, disability or 3
159159 death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year 4
160160 under this section for adjustments on and after January 1, 2016, and subject to subsection (h)(2) 5
161161 below, shall be equal to (I) multiplied by (II): 6
162162 (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where: 7
163163 (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%) 8
164164 (the “subtrahend”) from the five-year average investment return of the retirement system 9
165165 determined as of the last day of the plan year preceding the calendar year in which the adjustment 10
166166 is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 11
167167 (0%). The “five-year average investment return” shall mean the average of the investment returns 12
168168 of the most recent five (5) plan years as determined by the retirement board. In the event the 13
169169 retirement board adjusts the actuarially assumed rate of return for the system, either upward or 14
170170 downward, the subtrahend shall be adjusted either upward or downward in the same amount. 15
171171 (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer 16
172172 Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor 17
173173 Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of (i) 18
174174 plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%). 19
175175 (II) Is equal to the lesser of either the member’s retirement allowance or the first twenty-20
176176 five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount 21
177177 to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above. 22
178178 The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all 23
179179 retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect, 24
180180 and for all other retirees the benefit adjustments shall commence upon the third anniversary of the 25
181181 date of retirement or the date on which the retiree reaches his or her Social Security retirement age, 26
182182 whichever is later. 27
183183 (2) Except as provided in subsection (h)(3) of this section, the benefit adjustments under 28
184184 subsection (h)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio 29
185185 of the employees’ retirement system of Rhode Island, the judicial retirement benefits trust and the 30
186186 state police retirement benefits trust, calculated by the system’s actuary on an aggregate basis, 31
187187 exceeds eighty percent (80%) in which event the benefit adjustment will be reinstated for all 32
188188 members for such plan year. 33
189189 In determining whether a funding level under this subsection (h)(2) has been achieved, the 34
190190
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193193 actuary shall calculate the funding percentage after taking into account the reinstatement of any 1
194194 current or future benefit adjustment provided under this section. 2
195195 (3) Notwithstanding subsection (h)(2), in each fourth plan year commencing after June 30, 3
196196 2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four 4
197197 plan years: 5
198198 (i) A benefit adjustment shall be calculated and made in accordance with subsection 6
199199 (h)(1)(B) above; and 7
200200 (ii) Effective for members and/or beneficiaries of members who retired on or before June 8
201201 30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand eight hundred and 9
202202 fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars 10
203203 ($31,026) until the funded ratio of the employees’ retirement system of Rhode Island, the judicial 11
204204 retirement benefits trust and the state police retirement benefits trust, calculated by the system’s 12
205205 actuary on an aggregate basis, exceeds eighty percent (80%). 13
206206 (i) Effective for members and/or beneficiaries of members who have retired on or before 14
207207 July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60) 15
208208 days following the enactment of the legislation implementing this provision, and a second one-time 16
209209 stipend of five hundred dollars ($500) in the same month of the following year. These stipends 17
210210 shall be payable to all retired members or beneficiaries receiving a benefit as of the applicable 18
211211 payment date and shall not be considered cost of living adjustments under the prior provisions of 19
212212 this section. 20
213213 (j) Notwithstanding the above, the provisions of subsections (g), (h) and (i) of this section 21
214214 shall not apply to members and/or beneficiaries of members who retired prior to January 1, 2011. 22
215215 (1) Members and/or beneficiaries of members who have retired before January 1, 2011, 23
216216 shall receive a one-time cost of living adjustment to compensate for the difference in benefits 24
217217 between 2011 and 2023; provided, however, that this amount shall not be compounded annually. 25
218218 (2) Members and/or beneficiaries of members who have retired before January 1, 2011, 26
219219 shall receive a cost of living adjustment for 2024 and every year thereafter. 27
220220 SECTION 2. This act shall take effect upon passage. 28
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227227 EXPLANATION
228228 BY THE LEGISLATIVE COUNCIL
229229 OF
230230 A N A C T
231231 RELATING TO RETIREMENT SYSTEM -- CONTRIBUTIONS AND BE NEFITS
232232 ***
233233 This act would compensate pre-2011 retirees, and their beneficiaries, for the difference in 1
234234 benefits from 2011 to 2023 with a non-compounded one-time cost of living adjustment. This act 2
235235 would also restore the cost of living adjustment (COLA) to pre-2011 retirees, and their 3
236236 beneficiaries, for 2024 and every year thereafter. 4
237237 This act would take effect upon passage. 5
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