Rhode Island 2023 Regular Session

Rhode Island House Bill H5404 Compare Versions

Only one version of the bill is available at this time.

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5	5	2023 -- H 5404
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7	7	LC000924
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9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO RETIREMENT SYSTEM -- CONTRIBUTIONS AND BE NEFITS
16	16	Introduced By: Representatives Shanley, Vella-Wilkinson, Craven, Bennett, Edwards,
17	17	Spears, Cotter, and O'Brien
18	18	Date Introduced: February 03, 2023
19	19	Referred To: House Finance
20	20
21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Section 36-10-35 of the General Laws in Chapter 36-10 entitled "Retirement 1
24	24	System — Contributions and Benefits" is hereby amended to read as follows: 2
25	25	36-10-35. Additional benefits payable to retired employees. 3
26	26	(a) All state employees and all beneficiaries of state employees receiving any service 4
27	27	retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of 5
28	28	this title on or before December 31, 1967, shall receive a cost of living retirement adjustment equal 6
29	29	to one and one-half percent (1.5%) per year of the original retirement allowance, not compounded, 7
30	30	for each calendar year the retirement allowance has been in effect. For the purposes of computation, 8
31	31	credit shall be given for a full calendar year regardless of the effective date of the retirement 9
32	32	allowance. This cost of living adjustment shall be added to the amount of the retirement allowance 10
33	33	as of January 1, 1968, and an additional one and one-half percent (1.5%) shall be added to the 11
34	34	original retirement allowance in each succeeding year during the month of January, and provided 12
35	35	further, that this additional cost of living increase shall be three percent (3%) for the year beginning 13
36	36	January 1, 1971, and each year thereafter, through December 31, 1980. Notwithstanding any of the 14
37	37	above provisions, no employee receiving any service retirement allowance pursuant to the 15
38	38	provisions of this title on or before December 31, 1967, or the employee’s beneficiary, shall receive 16
39	39	any additional benefit hereunder in an amount less than two hundred dollars ($200) per year over 17
40	40	the service retirement allowance where the employee retired prior to January 1, 1958. 18
41	41	(b) All state employees and all beneficiaries of state employees retired on or after January 19
42	42
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45	45	1, 1968, who are receiving any service retirement or ordinary or accidental disability retirement 1
46	46	allowance pursuant to the provisions of this title shall, on the first day of January next following 2
47	47	the third anniversary date of the retirement, receive a cost of living retirement adjustment, in 3
48	48	addition to his or her retirement allowance, in an amount equal to three percent (3%) of the original 4
49	49	retirement allowance. In each succeeding year thereafter through December 31, 1980, during the 5
50	50	month of January, the retirement allowance shall be increased an additional three percent (3%) of 6
51	51	the original retirement allowance, not compounded, to be continued during the lifetime of the 7
52	52	employee or beneficiary. For the purposes of computation, credit shall be given for a full calendar 8
53	53	year regardless of the effective date of the service retirement allowance. 9
54	54	(c)(1) Beginning on January 1, 1981, for all state employees and beneficiaries of the state 10
55	55	employees receiving any service retirement and all state employees, and all beneficiaries of state 11
56	56	employees, who have completed at least ten (10) years of contributory service on or before July 1, 12
57	57	2005, pursuant to the provisions of this chapter, and for all state employees, and all beneficiaries 13
58	58	of state employees who receive a disability retirement allowance pursuant to §§ 36-10-12 — 36-14
59	59	10-15, the cost of living adjustment shall be computed and paid at the rate of three percent (3%) of 15
60	60	the original retirement allowance or the retirement allowance as computed in accordance with § 16
61	61	36-10-35.1, compounded annually from the year for which the cost of living adjustment was 17
62	62	determined to be payable by the retirement board pursuant to the provisions of subsection (a) or (b) 18
63	63	of this section. Such cost of living adjustments are available to members who retire before October 19
64	64	1, 2009, or are eligible to retire as of September 30, 2009. 20
65	65	(2) The provisions of this subsection shall be deemed to apply prospectively only and no 21
66	66	retroactive payment shall be made. 22
67	67	(3) The retirement allowance of all state employees and all beneficiaries of state employees 23
68	68	who have not completed at least ten (10) years of contributory service on or before July 1, 2005, or 24
69	69	were not eligible to retire as of September 30, 2009, shall, on the month following the third 25
70	70	anniversary date of retirement, and on the month following the anniversary date of each succeeding 26
71	71	year be adjusted and computed by multiplying the retirement allowance by three percent (3%) or 27
72	72	the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as 28
73	73	published by the United States Department of Labor Statistics determined as of September 30 of 29
74	74	the prior calendar year, whichever is less; the cost of living adjustment shall be compounded 30
75	75	annually from the year for which the cost of living adjustment was determined payable by the 31
76	76	retirement board; provided, that no adjustment shall cause any retirement allowance to be decreased 32
77	77	from the retirement allowance provided immediately before such adjustment. 33
78	78	(d) For state employees not eligible to retire in accordance with this chapter as of 34
79	79
80	80
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82	82	September 30, 2009, and not eligible upon passage of this article, and for their beneficiaries, the 1
83	83	cost of living adjustment described in subsection (c)(3) of this section shall only apply to the first 2
84	84	thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall 3
85	85	commence upon the third (3rd) anniversary of the date of retirement or when the retiree reaches 4
86	86	age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase 5
87	87	annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-6
88	88	U) as published by the United States Department of Labor Statistics determined as of September 7
89	89	30 of the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand 8
90	90	dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of 9
91	91	increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United 10
92	92	States Department of Labor Statistics determined as of September 30 of the prior calendar year or 11
93	93	three percent (3%), whichever is less, on the month following the anniversary date of each 12
94	94	succeeding year. For state employees eligible to retire as of September 30, 2009, or eligible upon 13
95	95	passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not 14
96	96	apply. 15
97	97	(e) All legislators and all beneficiaries of legislators who are receiving a retirement 16
98	98	allowance pursuant to the provisions of § 36-10-9.1 for a period of three (3) or more years, shall, 17
99	99	commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to a 18
100	100	retirement allowance, in an amount equal to three percent (3%) of the original retirement allowance. 19
101	101	In each succeeding year thereafter during the month of January, the retirement allowance shall be 20
102	102	increased an additional three percent (3%) of the original retirement allowance, compounded 21
103	103	annually, to be continued during the lifetime of the legislator or beneficiary. For the purposes of 22
104	104	computation, credit shall be given for a full calendar year regardless of the effective date of the 23
105	105	service retirement allowance. 24
106	106	(f) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section. 25
107	107	(g) This subsection (g) shall be effective for the period July 1, 2012, through June 30, 2015. 26
108	108	(1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (g)(2) 27
109	109	below, for all present and former employees, active and retired members, and beneficiaries 28
110	110	receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit 29
111	111	adjustment provided in any calendar year under this section shall be equal to (A) multiplied by (B) 30
112	112	where (A) is equal to the percentage determined by subtracting five and one-half percent (5.5%) 31
113	113	(the “subtrahend”) from the Five-Year Average Investment Return of the retirement system 32
114	114	determined as of the last day of the plan year preceding the calendar year in which the adjustment 33
115	115	is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 34
116	116
117	117
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119	119	(0%), and (B) is equal to the lesser of the member’s retirement allowance or the first twenty-five 1
120	120	thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000) 2
121	121	amount to be indexed annually in the same percentage as determined under (g)(1)(A) above. The 3
122	122	“Five-Year Average Investment Return” shall mean the average of the investment returns of the 4
123	123	most recent five (5) plan years as determined by the retirement board. Subject to paragraph (g)(2) 5
124	124	below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd) 6
125	125	anniversary of the date of retirement or the date on which the retiree reaches his or her Social 7
126	126	Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially 8
127	127	assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted 9
128	128	either upward or downward in the same amount. 10
129	129	(2) Except as provided in paragraph (g)(3), the benefit adjustments under this section for 11
130	130	any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees’ 12
131	131	Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police 13
132	132	Retirement Benefits Trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty 14
133	133	percent (80%) in which event the benefit adjustment will be reinstated for all members for such 15
134	134	plan year. 16
135	135	In determining whether a funding level under this paragraph (g)(2) has been achieved, the 17
136	136	actuary shall calculate the funding percentage after taking into account the reinstatement of any 18
137	137	current or future benefit adjustment provided under this section. 19
138	138	(3) Notwithstanding paragraph (g)(2), in each fifth plan year commencing after June 30, 20
139	139	2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five 21
140	140	plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (g)(1) 22
141	141	above until the Funded Ratio of the Employees’ Retirement System of Rhode Island, the Judicial 23
142	142	Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the 24
143	143	system’s actuary on an aggregate basis, exceeds eighty percent (80%). 25
144	144	(4) Notwithstanding any other provision of this chapter, the provisions of this paragraph 26
145	145	(g) shall become effective July 1, 2012, and shall apply to any benefit adjustment not granted on or 27
146	146	prior to June 30, 2012. 28
147	147	(h) This subsection (h) shall become effective July 1, 2015. 29
148	148	(1)(A) As soon as administratively reasonable following the enactment into law of this 30
149	149	subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or 31
150	150	beneficiaries of members who retired on or before June 30, 2012, in the amount of 2% of the lesser 32
151	151	of either the member’s retirement allowance or the first twenty-five thousand dollars ($25,000) of 33
152	152	the member’s retirement allowance. This one-time benefit adjustment shall be provided without 34
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156	156	regard to the retiree’s age or number of years since retirement. 1
157	157	(B) Notwithstanding the prior subsections of this section, for all present and former 2
158	158	employees, active and retired members, and beneficiaries receiving any retirement, disability or 3
159	159	death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year 4
160	160	under this section for adjustments on and after January 1, 2016, and subject to subsection (h)(2) 5
161	161	below, shall be equal to (I) multiplied by (II): 6
162	162	(I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where: 7
163	163	(i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%) 8
164	164	(the “subtrahend”) from the five-year average investment return of the retirement system 9
165	165	determined as of the last day of the plan year preceding the calendar year in which the adjustment 10
166	166	is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent 11
167	167	(0%). The “five-year average investment return” shall mean the average of the investment returns 12
168	168	of the most recent five (5) plan years as determined by the retirement board. In the event the 13
169	169	retirement board adjusts the actuarially assumed rate of return for the system, either upward or 14
170	170	downward, the subtrahend shall be adjusted either upward or downward in the same amount. 15
171	171	(ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer 16
172	172	Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor 17
173	173	Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of (i) 18
174	174	plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%). 19
175	175	(II) Is equal to the lesser of either the member’s retirement allowance or the first twenty-20
176	176	five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount 21
177	177	to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above. 22
178	178	The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all 23
179	179	retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect, 24
180	180	and for all other retirees the benefit adjustments shall commence upon the third anniversary of the 25
181	181	date of retirement or the date on which the retiree reaches his or her Social Security retirement age, 26
182	182	whichever is later. 27
183	183	(2) Except as provided in subsection (h)(3) of this section, the benefit adjustments under 28
184	184	subsection (h)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio 29
185	185	of the employees’ retirement system of Rhode Island, the judicial retirement benefits trust and the 30
186	186	state police retirement benefits trust, calculated by the system’s actuary on an aggregate basis, 31
187	187	exceeds eighty percent (80%) in which event the benefit adjustment will be reinstated for all 32
188	188	members for such plan year. 33
189	189	In determining whether a funding level under this subsection (h)(2) has been achieved, the 34
190	190
191	191
192	192	LC000924 - Page 6 of 7
193	193	actuary shall calculate the funding percentage after taking into account the reinstatement of any 1
194	194	current or future benefit adjustment provided under this section. 2
195	195	(3) Notwithstanding subsection (h)(2), in each fourth plan year commencing after June 30, 3
196	196	2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four 4
197	197	plan years: 5
198	198	(i) A benefit adjustment shall be calculated and made in accordance with subsection 6
199	199	(h)(1)(B) above; and 7
200	200	(ii) Effective for members and/or beneficiaries of members who retired on or before June 8
201	201	30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand eight hundred and 9
202	202	fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars 10
203	203	($31,026) until the funded ratio of the employees’ retirement system of Rhode Island, the judicial 11
204	204	retirement benefits trust and the state police retirement benefits trust, calculated by the system’s 12
205	205	actuary on an aggregate basis, exceeds eighty percent (80%). 13
206	206	(i) Effective for members and/or beneficiaries of members who have retired on or before 14
207	207	July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60) 15
208	208	days following the enactment of the legislation implementing this provision, and a second one-time 16
209	209	stipend of five hundred dollars ($500) in the same month of the following year. These stipends 17
210	210	shall be payable to all retired members or beneficiaries receiving a benefit as of the applicable 18
211	211	payment date and shall not be considered cost of living adjustments under the prior provisions of 19
212	212	this section. 20
213	213	(j) Notwithstanding the above, the provisions of subsections (g), (h) and (i) of this section 21
214	214	shall not apply to members and/or beneficiaries of members who retired prior to January 1, 2011. 22
215	215	(1) Members and/or beneficiaries of members who have retired before January 1, 2011, 23
216	216	shall receive a one-time cost of living adjustment to compensate for the difference in benefits 24
217	217	between 2011 and 2023; provided, however, that this amount shall not be compounded annually. 25
218	218	(2) Members and/or beneficiaries of members who have retired before January 1, 2011, 26
219	219	shall receive a cost of living adjustment for 2024 and every year thereafter. 27
220	220	SECTION 2. This act shall take effect upon passage. 28
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227	227	EXPLANATION
228	228	BY THE LEGISLATIVE COUNCIL
229	229	OF
230	230	A N A C T
231	231	RELATING TO RETIREMENT SYSTEM -- CONTRIBUTIONS AND BE NEFITS
232	232	***
233	233	This act would compensate pre-2011 retirees, and their beneficiaries, for the difference in 1
234	234	benefits from 2011 to 2023 with a non-compounded one-time cost of living adjustment. This act 2
235	235	would also restore the cost of living adjustment (COLA) to pre-2011 retirees, and their 3
236	236	beneficiaries, for 2024 and every year thereafter. 4
237	237	This act would take effect upon passage. 5
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