2013 -- H 6217

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LC02739

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES IN

CENTRAL FALLS

     Introduced By: Representatives Silva, and McLaughlin

     Date Introduced: June 11, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 45-21 of the General Laws entitled "Retirement of Municipal

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Employees" is hereby amended by adding thereto the following sections:

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     45-21-67. Definitions – Central Falls retirement plan. -- As used in this chapter:

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     (1) "Base retirement allowance" is such amount as is set forth in Appendix A, Appendix

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D-A and Appendix E-A under the column labeled "annualized final base pension" attached to the

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settlement agreement, as defined herein, including as the same may be amended.

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     (2) "City" means: the city of Central Falls, Rhode Island.

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     (3) "Existing retirees" means:

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     (i) All retirees of the city who participated in a locally administered city pension plan and

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who were receiving pension benefits from the city by virtue of said plan as of July 31, 2011 and,

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where the context requires, shall also mean and include the beneficiaries of such retirees where

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such beneficiaries were receiving such benefits as of such date or where they become entitled to

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benefits thereafter; and

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     (ii) All employees of the city who were participating in a locally administered city

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pension plan and who had submitted their notice of intent to retire under the provisions of said

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plan by July 31, 2011.

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     (iii) Excluded from this definition are those retirees of the city who receive city pension

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benefits guaranteed by John Hancock Life Insurance Company, which as of July 31, 2011,

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constituted a class consisting of fewer than eleven (11) individuals. Further excluded from this

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definition are those retirees and employees of the city who, as of July 31, 2011, were participating

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in or receiving pension benefits from the city's pension plan governed by the provisions of

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sections 45-21-67 through 45-21-75.

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     (4) "Member" for purposes of this chapter, shall include existing retirees of the city of

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Central Falls, except as may otherwise be provided in this section.

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     (5) "Settlement agreement" in this chapter shall mean that certain settlement and release

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agreement approved by ninety-one percent (91%) of the existing retirees of the city of Central

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Falls and approved by the United States Bankruptcy Court for the District of Rhode Island by

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order dated January 9, 2012 which, upon satisfaction of the conditions in section 15(i)-(iv) of the

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settlement agreement, shall be placed on file with the retirement board and the secretary of state

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and available for reference in applying the provisions of this chapter.

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     45-21-68. Transfer of pension assets - Central Falls retirement plan. -- The city of

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Central Falls shall take all necessary measures to facilitate the transfer of all of the existing

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retirees' available pension assets to the city of Central Falls retirement system established

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pursuant to this chapter as soon as practicable after the date of enactment hereof. For the

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purposes of this section, "available pension assets" shall mean and consist of all city pension

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assets currently held by John Hancock Life Insurance Company, or any of its affiliates, in excess

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of those assets which are required to be reserved for those city pensions previously guaranteed by

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John Hancock Life Insurance Company, which as of July 31, 2011 consisted of fewer than eleven

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(11) individual pensions. Upon the death of the last remaining beneficiary of said guaranteed

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pensions, the city shall take all necessary measures to facilitate the transfer of the remaining

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reserved assets, if any, to the city of Central Falls retirement system established pursuant to this

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chapter as soon as practicable after the date that notice of said death is provided by the city. For

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the purposes of this section, "available pension assets" shall not include those assets currently

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held by John Hancock Life Insurance Company for the benefit of active employees of the city of

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Central Falls.

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     45-21-69. Mode of administration - Central Falls retirement plan. -- The city of

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Central Falls retirement system established by sections 45-21-67 through 45-21-75 shall be

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administered in the same manner provided for in sections 45-21-1 through 45-21-66 provided,

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however, that where the provisions of 45-21-1 through 45-21-66 conflict with the provisions of

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sections 45-21-67 through 45-21-75 then the provisions of sections 45-21-67 through 45-21-75

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shall control. Where the provisions of this chapter conflict with the settlement agreement, the

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settlement agreement shall control. The city of Central Falls shall provide a complete list of

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existing retirees who are current participants and beneficiaries of the city's retirement system as

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of the date of enactment hereof, as well as all data necessary to administer the retirement system

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pursuant to sections 45-21-67 through 45-21-75 of this chapter, including, but not limited to,

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names, addresses, titles, compensation, duties, dates of birth, length of service, and beneficiary

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designations of each member, and any other information that the retirement board shall require.

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The city shall give prompt notice of all appointments, removals, deaths, resignations, leaves of

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absence, and changes in pay of members.

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     45-21-70. Retirement allowances for existing retirees - Central Falls retirement plan.

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– (a) All existing retirees shall receive a retirement allowance subject to the provisions of sections

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45-21-67 through 45-21-75 of this chapter, and as set forth in Appendix A, Appendix D-A and

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Appendix E-A (including as the same may be amended) to the settlement agreement as follows:

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Notwithstanding Appendix A, Appendix D-A, and Appendix E-A, or any provision to the

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contrary in this chapter, it is expressly provided that no retiree shall receive less than the

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following percentage of the pension allowance received by each retiree on July 31, 2011:

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     2016 (75.60%) 2017 (76.95%) 2018 (78.30%)

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     2019 (79.65%) 2020 (81.1%) 2021 (82.36%)

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     2022 (83.71 %) 2023 (85.06 %) 2024 (86.41 %)

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     2025 (87.76 %) 2026 (89.11 %) 2027 (90.46 %)

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     2028 (91.81%) 2029 (93.16%) 2030 (94.52%)

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     2031 (95.87 %) 2032 (97.22 %) 2033 (98.57 %)

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     2034 (99.92%) 2035 (101.27%)

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     (b) Beginning on the first day of the July, 2036, fiscal year, and continuing on the first

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day of each successive fiscal year, the total pension allowance for each retiree shall increase at no

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less than two percent (2%), not compounded, based on the pension allowance received in 2035.

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     (c) Maximum reduction of pension payments pursuant to this section. – No pension

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benefit being paid to an existing retiree prior to the enactment of this chapter was reduced by

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more than fifty-five percent (55%) as described in the settlement agreement, nor was any such

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benefit reduced if the existing amount was already less than ten thousand dollars ($10,000)

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annually. In no event did a reduction as described in the settlement agreement result in a

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retirement allowance of less than ten thousand dollars ($10,000) annually.

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     (d) Spousal or dependent children benefits shall be provided pursuant to section 45-21.3-

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1, as such statute provided on July 31, 2011, with spousal benefits being payable to the surviving

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spouse of a deceased existing retiree until said spouse shall remarry, at the rate of sixty seven and

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one-half percent (67.5%) of the amount of the existing retiree's retirement allowance at the time

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of his or her death, and if there is no surviving spouse or if the surviving spouse shall remarry,

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then said benefit shall be paid to the dependent children of the deceased existing retiree until said

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children shall attain the age of eighteen (18) years of age.

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     (e) Existing retirees shall be exempt from the provisions of section 45-21-54 and are

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expressly permitted to obtain employment with the state or any municipality, whether or not said

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municipality participates in this system, without the interruption of pension benefits.

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     (f) Existing retirees shall be exempt from the provisions of section 45-21-23.

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Notwithstanding any other provision herein to the contrary, an existing retiree's disability

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retirement allowance may be revoked by the retirement board in the event that, following

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adherence to all procedural steps and processes provided under law, a court of competent

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jurisdiction (or appropriate governing agency or body) enters a final order, decree or

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determination, in accordance with applicable law, that is not then stayed, appealed or subject to

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an appeal:

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     (1) Determining that the disability retirement allowance of such existing retiree was

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awarded as a result of fraud or misrepresentation, the standard as provided in the settlement

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agreement; and

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     (2) Determining the amount to be forfeited. If any amounts are ordered to be recovered as

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a result of this provision, said funds (net of reasonable attorney's fees, costs and expenses

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incurred by the city as a result thereof) shall be deposited into the "Participating Retirees'

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Restricted Five (5) Year Account" as defined in the Settlement Agreement, and shall not be

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forfeited in the manner specified in section 45-21-46.

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     (g) Existing retirees shall be exempt from the provisions of section 45-21-24. No income

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offset shall reduce the benefits payable to an existing retiree who engages in gainful employment,

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or has received, or in the future shall receive, income from another source.

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     (h) Existing retirees shall be exempt from the provisions of section 45-21-31 and shall not

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be subject to any offset of benefits hereunder for workers' compensation or personal injury

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recovery for injuries sustained while in the performance of their duties.

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     45-21-71. Automatic increase in retirement allowances - Central Falls retirement

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plan. -- Existing retirees subject to the provisions of section 45-21-66 through 45-21-75 of this

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chapter, shall receive an increase equal to up to two percent (2%) per year of the member's base

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retirement allowance, not compounded, in each calendar year the retirement allowance has been

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in effect pursuant to this chapter. This increase shall be added to the base retirement allowance on

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the first day of July 2012 and in each succeeding calendar year starting on the first day of

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January, 2013, not compounded, but added to the preceding year's retirement allowance. The

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amount of the increase shall equal the percentage of increase in the Consumer Price Index for all

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Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics

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determined as of March 31 of the same calendar year, or two percent (2%), whichever is less,

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applied to the base retirement allowance.

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     45-21-72. Accidental disability retirements - Central Falls retirement plan. --

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Existing retirees who have been receiving accidental disability benefits on account of becoming

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physically or mentally incapacitated from the performance of their job duties as a result of an

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illness or injury sustained while, or resulting from, the performance of their job duties, and not as

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a result of age or length of service, are listed on Appendix A and Appendix D-A (including as the

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same may be amended) of the settlement agreement and were placed on accidental disability

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retirement after medical examinations and certification that the retiree is physically or mentally

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incapacitated as a result of injuries or illness sustained while, or resulting from the performance

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of their job duties, which prevented them from performing their duties as police officers or

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firefighters.

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     45-21-73. Tax exemption – Fraudulent claims - Central Falls retirement plan. -- The

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provisions of section 45-21-45 (but subject to exclusions from income for disability pensions, 45-

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21-46 (but subject to subsection 45-21-70(d)), and 45-21-47 are expressly made applicable to and

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controlling over this chapter.

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     45-21-74. Settlement agreement controls - Central Falls retirement plan. – Except as

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otherwise provided herein, the provisions of the settlement agreement shall control as to existing

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retirees. Further, nothing herein shall be deemed to derogate from the full effect of the inclusion

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in the settlement agreement of various general law provisions (as in effect on July 31, 2011) that

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are incorporated or referenced therein, which provisions shall control over any provisions of

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chapter 45-21 and over any general law provisions that may be incorporated or referenced herein.

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     45-21-75. Liability of the city of Central Falls - Enforcement. -- (a) The city is liable

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to the retirement system for the cost of funding a retirement system for its existing retirees who

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are members of the system under this section and chapter.

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     (b) The liability of the city under this section and chapter is enforceable by the retirement

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board against the city through appropriate action in the superior court.

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     (c) The state is further empowered to withhold from the city that amount of the city's

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portion of any shared taxes or state aid which is sufficient to satisfy its liability hereunder.

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     SECTION 2. This act shall take effect upon satisfaction of the conditions in section 15(i)

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– (iv) of the settlement agreement, which shall be evidenced by the joint filing by the state-

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appointed receiver and counsel to the existing retirees of an attested copy of the settlement

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agreement with the retirement board and the secretary of state's office.

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LC02739

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES IN

CENTRAL FALLS

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     This act would provide a process for the city of Central Falls locally-administered

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municipal employee retirement plans to transition existing retirees, and at their option active

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employees, to a state-administered municipal employees retirement system in order to secure the

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fiscal stability and proper administration of said pension plan.

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     This act would take effect upon satisfaction of the conditions in section 15(i) – (iv) of the

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settlement agreement which would be evidenced by the joint filing by the state-appointed receiver

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and counsel to the existing retirees of an attested copy of the settlement agreement with the

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retirement board and the secretary of state's office.

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LC02739

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