2018 -- H 8056

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LC005387

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

____________

A N   A C T

RELATING TO EDUCATION - TEACHERS RETIREMENT [SEE TITLE 16 CHAPTER 97 -

THE RHODE ISLAND BOARD OF EDUCATION ACT]

     

     Introduced By: Representatives Messier, Donovan, Amore, O'Brien, and Serpa

     Date Introduced: April 05, 2018

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

1

     SECTION 1. Section 16-16-40 of the General Laws in Chapter 16-16 entitled "Teachers'

2

Retirement [See Title 16 Chapter 97 - The Rhode Island Board of Education Act]" is hereby

3

amended to read as follows:

4

     16-16-40. Additional benefits payable to retired teachers.

5

     (a) All teachers and all beneficiaries of teachers receiving any service retirement or

6

ordinary or accidental disability retirement allowance pursuant to the provisions of this chapter

7

and chapter 17 of this title, on or before December 31, 1967, shall receive a cost of living

8

retirement adjustment equal to one and one-half percent (1.5%) per year of the original retirement

9

allowance, not compounded, for each year the retirement allowance has been in effect. For

10

purposes of computation credit shall be given for a full calendar year regardless of the effective

11

date of the retirement allowance. This cost of living retirement adjustment shall be added to the

12

amount of the service retirement allowance as of January 1, 1970, and payment shall begin as of

13

July 1, 1970. An additional cost of living retirement adjustment shall be added to the original

14

retirement allowance equal to three percent (3%) of the original retirement allowance on the first

15

day of January, 1971, and each year thereafter through December 31, 1980.

16

     (b) All teachers and beneficiaries of teachers receiving any service retirement or ordinary

17

disability retirement allowance pursuant to the provisions of this title who retired on or after

18

January 1, 1968, shall, on the first day of January, next following the third (3rd) year on

 

1

retirement, receive a cost of living adjustment, in addition to his or her retirement allowance, an

2

amount equal to three percent (3%) of the original retirement allowance. In each succeeding year

3

thereafter, on the first day of January, the retirement allowance shall be increased an additional

4

three percent (3%) of the original retirement allowance, not compounded, to be continued through

5

December 31, 1980.

6

     (c) (1) Beginning on January 1, 1981, for all teachers and beneficiaries of teachers

7

receiving any service retirement and all teachers and all beneficiaries of teachers who have

8

completed at least ten (10) years of contributory service on or before July 1, 2005, pursuant to the

9

provisions of this chapter, and for all teachers and beneficiaries of teachers who receive a

10

disability retirement allowance pursuant to §§ 16-16-14 -- 16-16-17, the cost of living adjustment

11

shall be computed and paid at the rate of three percent (3%) of the original retirement allowance

12

or the retirement allowance as computed in accordance with § 16-16-40.1, compounded annually

13

from the year for which the cost of living adjustment was determined to be payable by the

14

retirement board pursuant to the provisions of subsection (a) or (b) of this section. Such cost of

15

living adjustments are available to teachers who retire before October 1, 2009, or are eligible to

16

retire as of September 30, 2009.

17

     (2) The provisions of this subsection shall be deemed to apply prospectively only and no

18

retroactive payment shall be made.

19

     (3) The retirement allowance of all teachers and all beneficiaries of teachers who have

20

not completed at least ten (10) years of contributory service on or before July 1, 2005, or were not

21

eligible to retire as of September 30, 2009, shall, on the month following the third anniversary

22

date of the retirement, and on the month following the anniversary date of each succeeding year

23

be adjusted and computed by multiplying the retirement allowance by three percent (3%) or the

24

percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

25

published by the United States Department of Labor Statistics, determined as of September 30 of

26

the prior calendar year, whichever is less; the cost of living adjustment shall be compounded

27

annually from the year for which the cost of living adjustment was determined payable by the

28

retirement board; provided, that no adjustment shall cause any retirement allowance to be

29

decreased from the retirement allowance provided immediately before such adjustment.

30

     (d) For teachers not eligible to retire in accordance with this chapter as of September 30,

31

2009, and not eligible upon passage of this article, and for their beneficiaries, the cost of living

32

adjustment described in subsection (3) above shall only apply to the first thirty-five thousand

33

dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon the third

34

(3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five (65),

 

LC005387 - Page 2 of 17

1

whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by the

2

percentage increase in the Consumer Price Index for all Urban Consumer (CPI-U) as published

3

by the United States Department of Labor Statistics determined as of September 30 of the prior

4

calendar year or three percent (3%), whichever is less. The first thirty-five thousand dollars

5

($35,000), as indexed, of retirement allowance shall be multiplied by the percentage of increase

6

in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States

7

Department of Labor Statistics determined as of September 30 of the prior calendar year or three

8

percent (3%), whichever is less, on the month following the anniversary date of each succeeding

9

year. For teachers eligible to retire as of September 30, 2009, or eligible upon passage of this

10

article, and for their beneficiaries, the provisions of this subsection (d) shall not apply.

11

     (e) The provisions of §§ 45-13-7 -- 45-13-10 shall not apply to this section.

12

     (f) This subsection (f) shall be effective for the period July 1, 2012, through June 30,

13

2015.

14

     (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (f)(2)

15

below, for all present and former teachers, active and retired teachers, and beneficiaries receiving

16

any retirement, disability or death allowance or benefit of any kind, the annual benefit adjustment

17

provided in any calendar year under this section shall be equal to (A) multiplied by (B) where (A)

18

is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the

19

"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%), and (B) is equal to the lesser of the teacher's retirement allowance or the first twenty-five

23

thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000)

24

amount to be indexed annually in the same percentage as determined under paragraph (f)(1)(A)

25

above. The "Five-Year Average Investment Return" shall mean the average of the investment

26

returns of the most recent five (5) plan years as determined by the retirement board. Subject to

27

paragraph (f)(2) below, the benefit adjustment provided by this paragraph shall commence upon

28

the third (3rd) anniversary of the date of retirement or the date on which the retiree reaches his or

29

her Social Security retirement age, whichever is later. In the event the retirement board adjusts

30

the actuarially assumed rate of return for the system, either upward or downward, the subtrahend

31

shall be adjusted either upward or downward in the same amount.

32

     (2) Except as provided in paragraph (f)(3), the benefit adjustments under this section for

33

any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees'

34

Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police

 

LC005387 - Page 3 of 17

1

Retirement Benefits Trust, calculated by the system's actuary on an aggregate basis, exceeds

2

eighty percent (80%) in which event the benefit adjustment will be reinstated for all teachers for

3

such plan year.

4

     In determining whether a funding level under this paragraph (f)(2) has been achieved, the

5

actuary shall calculate the funding percentage after taking into account the reinstatement of any

6

current or future benefit adjustment provided under this section.

7

     (3) Notwithstanding paragraph (f)(2), in each fifth plan year commencing after June 30,

8

2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five

9

plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (f)(l)

10

above until the Funded Ratio of the Employees' Retirement System of Rhode Island, the Judicial

11

Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the

12

system's actuary on an aggregate basis, exceeds eighty percent (80%).

13

     (4) Notwithstanding any other provisions of this chapter, the provisions of this paragraph

14

(f) of § 16-16-40 shall become effective July 1, 2012, and shall apply to any benefit adjustments

15

not granted on or prior to June 30, 2012.

16

     (g) This subsection (g) shall become effective July 1, 2015.

17

     (1) (A) As soon as administratively reasonable following the enactment into law of this

18

subsection (g)(1)(A), a one-time benefit adjustment shall be provided to teachers and/or

19

beneficiaries of teachers who retired on or before June 30, 2012, in the amount of two percent

20

(2%) of the lesser of either the teacher's retirement allowance or the first twenty-five thousand

21

dollars ($25,000) of the teacher's retirement allowance. This one-time benefit adjustment shall be

22

provided without regard to the retiree's age or number of years since retirement.

23

     (B) Notwithstanding the prior subsections of this section, for all present and former

24

teachers, active and retired teachers, and beneficiaries receiving any retirement, disability or

25

death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar

26

year under this section for adjustments on and after January 1, 2016, and subject to subsection

27

(g)(2) below, shall be equal to (I) multiplied by (II):

28

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

29

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

30

(the "subtrahend") from the five-year average investment return of the retirement system

31

determined as of the last day of the plan year preceding the calendar year in which the adjustment

32

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

33

(0%). The "five-year average investment return" shall mean the average of the investment returns

34

of the most recent five (5) plan years as determined by the retirement board. In the event the

 

LC005387 - Page 4 of 17

1

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

2

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

3

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

4

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

5

Statistics determined as of September 30 of the prior calendar year.

6

     In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be

7

less than (0%) percent.

8

     (II) is equal to the lesser of either the teacher's retirement allowance or the first twenty-

9

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

10

to be indexed annually in the same percentage as determined under subsection (g)(1)(B)(I) above.

11

     The benefit adjustments provided by this subsection (g)(1)(B) shall be provided to all

12

retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,

13

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

14

date of retirement or the date on which the retiree reaches his or her Social Security retirement

15

age, whichever is later.

16

     (2) Except as provided in subsection (g)(3), the benefit adjustments under subsection

17

(g)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio of the

18

employees' retirement system of Rhode Island, the judicial retirement benefits trust and the state

19

police retirement benefits trust, calculated by the system's actuary on an aggregate basis, exceeds

20

eighty percent (80%) in which event the benefit adjustment will be reinstated for all teachers for

21

such plan year.

22

     In determining whether a funding level under this subsection (g)(2) has been achieved,

23

the actuary shall calculate the funding percentage after taking into account the reinstatement of

24

any current or future benefit adjustment provided under this section.

25

     (3) Notwithstanding subsection (g)(2), in each fourth plan year commencing after June

26

30, 2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of

27

four plan years: (i) A benefit adjustment shall be calculated and made in accordance with

28

subsection (g)(1)(B) above; and (ii) Effective for teachers and/or beneficiaries of teachers who

29

retired on or before June 30, 2015, the dollar amount in subsection (g)(1)(B)(II) of twenty-five

30

thousand eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand

31

and twenty-six dollars ($31,026)until the funded ratio of the employees' retirement system of

32

Rhode Island, the judicial retirement benefits trust and the state police retirement benefits trust,

33

calculated by the system's actuary on an aggregate basis, exceeds eighty percent (80%).

34

     (4) Effective for teachers and or beneficiaries of teachers who have retired on or before

 

LC005387 - Page 5 of 17

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-

3

time stipend of five hundred dollars ($500) in the same month of the following year. These

4

stipends shall be payable to all retired teachers or beneficiaries receiving a benefit as of the

5

applicable payment date and shall not be considered cost of living adjustments under the prior

6

provisions of this § 16-16-40.

7

     (5) Effective January 1, 2019, for each year in which a cost of living adjustment (COLA)

8

is not scheduled pursuant to subsection (g)(3) of this section, a stipend in the amount of three

9

percent (3%) applied to the first fifteen thousand dollars ($15,000) of pension benefits, to a

10

maximum of four hundred and fifty dollars ($450) shall be added to the January pension payment.

11

These stipends shall be payable to all retired teachers or beneficiaries receiving a benefit as of the

12

applicable payment date and shall not be considered cost of living adjustments under the prior

13

provisions of § 16-16-40.

14

     SECTION 2. Section 36-10-35 of the General Laws in Chapter 36-10 entitled

15

"Retirement System - Contributions and Benefits" is hereby amended to read as follows:

16

     36-10-35. Additional benefits payable to retired employees.

17

     (a) All state employees and all beneficiaries of state employees receiving any service

18

retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of

19

this title on or before December 31, 1967, shall receive a cost of living retirement adjustment

20

equal to one and one-half percent (1.5%) per year of the original retirement allowance, not

21

compounded, for each calendar year the retirement allowance has been in effect. For the purposes

22

of computation, credit shall be given for a full calendar year regardless of the effective date of the

23

retirement allowance. This cost of living adjustment shall be added to the amount of the

24

retirement allowance as of January 1, 1968, and an additional one and one-half percent (1.5%)

25

shall be added to the original retirement allowance in each succeeding year during the month of

26

January, and provided further, that this additional cost of living increase shall be three percent

27

(3%) for the year beginning January 1, 1971, and each year thereafter, through December 31,

28

1980. Notwithstanding any of the above provisions, no employee receiving any service retirement

29

allowance pursuant to the provisions of this title on or before December 31, 1967, or the

30

employee's beneficiary, shall receive any additional benefit hereunder in an amount less than two

31

hundred dollars ($200) per year over the service retirement allowance where the employee retired

32

prior to January 1, 1958.

33

     (b) All state employees and all beneficiaries of state employees retired on or after January

34

1, 1968, who are receiving any service retirement or ordinary or accidental disability retirement

 

LC005387 - Page 6 of 17

1

allowance pursuant to the provisions of this title shall, on the first day of January next following

2

the third anniversary date of the retirement, receive a cost of living retirement adjustment, in

3

addition to his or her retirement allowance, in an amount equal to three percent (3%) of the

4

original retirement allowance. In each succeeding year thereafter through December 31, 1980,

5

during the month of January, the retirement allowance shall be increased an additional three

6

percent (3%) of the original retirement allowance, not compounded, to be continued during the

7

lifetime of the employee or beneficiary. For the purposes of computation, credit shall be given for

8

a full calendar year regardless of the effective date of the service retirement allowance.

9

     (c) (1) Beginning on January 1, 1981, for all state employees and beneficiaries of the

10

state employees receiving any service retirement and all state employees, and all beneficiaries of

11

state employees, who have completed at least ten (10) years of contributory service on or before

12

July 1, 2005 pursuant to the provisions of this chapter, and for all state employees, and all

13

beneficiaries of state employees who receive a disability retirement allowance pursuant to §§ 36-

14

10-12 -- 36-10-15, the cost of living adjustment shall be computed and paid at the rate of three

15

percent (3%) of the original retirement allowance or the retirement allowance as computed in

16

accordance with § 36-10-35.1, compounded annually from the year for which the cost of living

17

adjustment was determined to be payable by the retirement board pursuant to the provisions of

18

subsection (a) or (b) of this section. Such cost of living adjustments are available to members who

19

retire before October 1, 2009 or are eligible to retire as of September 30, 2009.

20

     (2) The provisions of this subsection shall be deemed to apply prospectively only and no

21

retroactive payment shall be made.

22

     (3) The retirement allowance of all state employees and all beneficiaries of state

23

employees who have not completed at least ten (10) years of contributory service on or before

24

July 1, 2005 or were not eligible to retire as of September 30, 2009, shall, on the month following

25

the third anniversary date of retirement, and on the month following the anniversary date of each

26

succeeding year be adjusted and computed by multiplying the retirement allowance by three

27

percent (3%) or the percentage of increase in the Consumer Price Index for all Urban Consumers

28

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

29

September 30 of the prior calendar year, whichever is less; the cost of living adjustment shall be

30

compounded annually from the year for which the cost of living adjustment was determined

31

payable by the retirement board; provided, that no adjustment shall cause any retirement

32

allowance to be decreased from the retirement allowance provided immediately before such

33

adjustment.

34

     (d) For state employees not eligible to retire in accordance with this chapter as of

 

LC005387 - Page 7 of 17

1

September 30, 2009 and not eligible upon passage of this article, and for their beneficiaries, the

2

cost of living adjustment described in subsection (3) above shall only apply to the first thirty-five

3

thousand dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon

4

the third (3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five

5

(65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by

6

the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

7

published by the United States Department of Labor Statistics determined as of September 30 of

8

the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand

9

dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of

10

increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the

11

United States Department of Labor Statistics determined as of September 30 of the prior calendar

12

year or three percent (3%), whichever is less, on the month following the anniversary date of each

13

succeeding year. For state employees eligible to retire as of September 30, 2009 or eligible upon

14

passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not

15

apply.

16

     (e) All legislators and all beneficiaries of legislators who are receiving a retirement

17

allowance pursuant to the provisions of § 36-10-9.1 for a period of three (3) or more years, shall,

18

commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to a

19

retirement allowance, in an amount equal to three percent (3%) of the original retirement

20

allowance. In each succeeding year thereafter during the month of January, the retirement

21

allowance shall be increased an additional three percent (3%) of the original retirement

22

allowance, compounded annually, to be continued during the lifetime of the legislator or

23

beneficiary. For the purposes of computation, credit shall be given for a full calendar year

24

regardless of the effective date of the service retirement allowance.

25

     (f) The provisions of §§ 45-13-7 -- 45-13-10 shall not apply to this section.

26

     (g) This subsection (g) shall be effective for the period July 1, 2012 through June 30,

27

2015.

28

     (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (g)(2)

29

below, for all present and former employees, active and retired members, and beneficiaries

30

receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit

31

adjustment provided in any calendar year under this section shall be equal to (A) multiplied by

32

(B) where (A) is equal to the percentage determined by subtracting five and one-half percent

33

(5.5%) (the "subtrahend") from the Five-Year Average Investment Return of the retirement

34

system determined as of the last day of the plan year preceding the calendar year in which the

 

LC005387 - Page 8 of 17

1

adjustment is granted, said percentage not to exceed four percent (4%) and not to be less than

2

zero percent (0%), and (B) is equal to the lesser of the member's retirement allowance or the first

3

twenty-five thousand dollars ($25,000) of retirement allowance, such twenty-five thousand

4

dollars ($25,000) amount to be indexed annually in the same percentage as determined under

5

(g)(1)(A) above. The "Five-Year Average Investment Return" shall mean the average of the

6

investment returns of the most recent five (5) plan years as determined by the retirement board.

7

Subject to paragraph (g)(2) below, the benefit adjustment provided by this paragraph shall

8

commence upon the third (3rd) anniversary of the date of retirement or the date on which the

9

retiree reaches his or her Social Security retirement age, whichever is later. In the event the

10

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

11

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

12

     (2) Except as provided in paragraph (g)(3), the benefit adjustments under this section for

13

any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees'

14

Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police

15

Retirement Benefits Trust, calculated by the system's actuary on an aggregate basis, exceeds

16

eighty percent (80%) in which event the benefit adjustment will be reinstated for all members for

17

such plan year.

18

     In determining whether a funding level under this paragraph (g)(2) has been achieved, the

19

actuary shall calculate the funding percentage after taking into account the reinstatement of any

20

current or future benefit adjustment provided under this section.

21

     (3) Notwithstanding paragraph (g)(2), in each fifth plan year commencing after June 30,

22

2012 commencing with the plan year ending June 30, 2017, and subsequently at intervals of five

23

plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (g)(1)

24

above until the Funded Ratio of the Employees' Retirement System of Rhode Island, the Judicial

25

Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the

26

system's actuary on an aggregate basis, exceeds eighty percent (80%).

27

     (4) Notwithstanding any other provision of this chapter, the provisions of this paragraph

28

(g) of § 36-10-35 shall become effective July 1, 2012 and shall apply to any benefit adjustment

29

not granted on or prior to June 30, 2012.

30

     (h) This subsection (h) shall become effective July 1, 2015.

31

     (1) (A) As soon as administratively reasonable following the enactment into law of this

32

subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or

33

beneficiaries of members who retired on or before June 30, 2012, in the amount of 2% of the

34

lesser of either the member's retirement allowance or the first twenty-five thousand dollars

 

LC005387 - Page 9 of 17

1

($25,000) of the member's retirement allowance. This one-time benefit adjustment shall be

2

provided without regard to the retiree's age or number of years since retirement.

3

     (B) Notwithstanding the prior subsections of this section, for all present and former

4

employees, active and retired members, and beneficiaries receiving any retirement, disability or

5

death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar

6

year under this section for adjustments on and after January 1, 2016, and subject to subsection

7

(h)(2) below, shall be equal to (I) multiplied by (II):

8

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

9

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

10

(the "subtrahend") from the five-year average investment return of the retirement system

11

determined as of the last day of the plan year preceding the calendar year in which the adjustment

12

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

13

(0%). The "five-year average investment return" shall mean the average of the investment returns

14

of the most recent five (5) plan years as determined by the retirement board. In the event the

15

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

16

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

17

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

18

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

19

Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of

20

(i) plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%).

21

     (II) Is equal to the lesser of either the member's retirement allowance or the first twenty-

22

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

23

to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above.

24

     The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all

25

retirees entitled to receive a benefit adjustment as of June 30, 2012 under the law then in effect,

26

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

27

date of retirement or the date on which the retiree reaches his or her Social Security retirement

28

age, whichever is later.

29

     (2) Except as provided in subsection (h)(3) of this section, the benefit adjustments under

30

subsection (h)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio

31

of the employees' retirement system of Rhode Island, the judicial retirement benefits trust and the

32

state police retirement benefits trust, calculated by the system's actuary on an aggregate basis,

33

exceeds eighty percent (80%) in which event the benefit adjustment will be reinstated for all

34

members for such plan year.

 

LC005387 - Page 10 of 17

1

     In determining whether a funding level under this subsection (h)(2) has been achieved,

2

the actuary shall calculate the funding percentage after taking into account the reinstatement of

3

any current or future benefit adjustment provided under this section.

4

     (3) Notwithstanding subsection (h)(2), in each fourth plan year commencing after June

5

30, 2012 commencing with the plan year ending June 30, 2016, and subsequently at intervals of

6

four plan years:

7

     (i) A benefit adjustment shall be calculated and made in accordance with subsection

8

(h)(1)(B) above; and

9

     (ii) Effective for members and/or beneficiaries of members who retired on or before June

10

30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand eight hundred and

11

fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars

12

($31,026) until the funded ratio of the employees' retirement system of Rhode Island, the judicial

13

retirement benefits trust and the state police retirement benefits trust, calculated by the system's

14

actuary on an aggregate basis, exceeds eighty percent (80%).

15

     (i) Effective for members and or beneficiaries of members who have retired on or before

16

July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)

17

days following the enactment of the legislation implementing this provision, and a second one-

18

time stipend of five hundred dollars ($500) in the same month of the following year. These

19

stipends shall be payable to all retired members or beneficiaries receiving a benefit as of the

20

applicable payment date and shall not be considered cost of living adjustments under the prior

21

provisions of this § 36-10-3.

22

     (iv) Effective January 1, 2019, for each year in which a cost of living adjustment (COLA)

23

is not scheduled pursuant to subsection (h)(3) of this section, a stipend in the amount of three

24

percent (3%) applied to the first fifteen thousand dollars ($15,000) of pension benefits, to a

25

maximum of four hundred and fifty dollars ($450) shall be added to the January pension payment.

26

These stipends shall be payable to all retired teachers or beneficiaries receiving a benefit as of the

27

applicable payment date and shall not be considered cost of living adjustments under the prior

28

provisions of § 36-10-3.

29

     SECTION 3. Section 45-21-52 of the General Laws in Chapter 45-21 entitled

30

"Retirement of Municipal Employees" is hereby amended to read as follows:

31

     45-21-52. Automatic increase in service retirement allowance.

32

     (a) The local legislative bodies of the cities and towns may extend to their respective

33

employees automatic adjustment increases in their service retirement allowances, by a resolution

34

accepting any of the plans described in this section:

 

LC005387 - Page 11 of 17

1

     (1) Plan A. All employees and beneficiaries of those employees receiving a service

2

retirement or disability retirement allowance under the provisions of this chapter on December 31

3

of the year their city or town accepts this section, receive a cost of living adjustment equal to one

4

and one-half percent (1 1/2%) per year of the original retirement allowance, not compounded, for

5

each calendar year the retirement allowance has been in effect. This cost of living adjustment is

6

added to the amount of the retirement allowance as of January 1 following acceptance of this

7

provision, and an additional one and one-half percent (1 1/2%) is added to the original retirement

8

allowance in each succeeding year during the month of January, and provided, further, that this

9

additional cost of living increase is three percent (3%) for the year beginning January 1 of the

10

year the plan is accepted and each succeeding year.

11

     (2) Plan B. All employees and beneficiaries of those employees receiving a retirement

12

allowance under the provisions of this chapter on December 31 of the year their municipality

13

accepts this section, receive a cost of living adjustment equal to three percent (3%) of their

14

original retirement allowance. This adjustment is added to the amount of the retirement allowance

15

as of January 1 following acceptance of this provision, and an additional three percent (3%) of the

16

original retirement allowance, not compounded, is payable in each succeeding year in the month

17

of January.

18

     (3) Plan C. All employees and beneficiaries of those employees who retire on or after

19

January 1 of the year following acceptance of this section, on the first day of January next

20

following the date of the retirement, receive a cost of living adjustment in an amount equal to

21

three percent (3%) of the original retirement allowance.

22

     (b) In each succeeding year in the month of January, the retirement allowance is

23

increased an additional three percent (3%) of the original retirement allowance, not compounded.

24

     (c) This subsection (c) shall be effective for the period July 1, 2012 through June 30,

25

2015.

26

     (1) Notwithstanding any other paragraphs of this section, and subject to paragraph (c)(2)

27

below, for all present and former employees, active and retired members, and beneficiaries

28

receiving any retirement, disability or death allowance or benefit of any kind by reason of

29

adoption of this section by their employer, the annual benefit adjustment provided in any calendar

30

year under this section shall be equal to (A) multiplied by (B) where (A) is equal to the

31

percentage determined by subtracting five and one-half percent (5.5%) (the "subtrahend") from

32

the Five-Year Average Investment Return of the retirement system determined as of the last day

33

of the plan year preceding the calendar year in which the adjustment is granted, said percentage

34

not to exceed four percent (4%) and not to be less than zero percent (0%), and (B) is equal to the

 

LC005387 - Page 12 of 17

1

lesser of the member's retirement allowance or the first twenty-five thousand dollars ($25,000) of

2

retirement allowance, such twenty-five thousand dollars ($25,000) amount to be indexed annually

3

in the same percentage as determined under (c)(1)(A) above. The "Five-Year Average Investment

4

Return" shall mean the average of the investment returns of the most recent five (5) plan years as

5

determined by the retirement board. Subject to paragraph (c)(2) below, the benefit adjustment

6

provided by this paragraph shall commence upon the third (3rd) anniversary of the date of

7

retirement or the date on which the retiree reaches his or her Social Security retirement age,

8

whichever is later; or for municipal police and fire retiring under the provisions of chapter 45-

9

21.2, the benefit adjustment provided by this paragraph shall commence on the later of the third

10

(3rd) anniversary of the date of retirement or the date on which the retiree reaches age fifty-five

11

(55). In the event the retirement board adjusts the actuarially assumed rate of return for the

12

system, either upward or downward, the subtrahend shall be adjusted either upward or downward

13

in the same amount.

14

     (2) Except as provided in paragraph (c)(3) the benefit adjustments provided under this

15

section for any plan year shall be suspended in their entirety for each municipal plan within the

16

municipal employees retirement system unless the municipal plan is determined to be funded at a

17

Funded Ratio equal to or greater than eighty percent (80%) as of the end of the immediately

18

preceding plan year in accordance with the retirement system's actuarial valuation report as

19

prepared by the system's actuary, in which event the benefit adjustment will be reinstated for all

20

members for such plan year.

21

     In determining whether a funding level under this paragraph (c)(2) has been achieved, the

22

actuary shall calculate the funding percentage after taking into account the reinstatement of any

23

current or future benefit adjustment provided under this section.

24

     (3) Notwithstanding paragraph (c)(2), for each municipal plan that has a Funded Ratio of

25

less than eighty percent (80%) as of June 30, 2012, in each fifth plan year commencing after June

26

30, 2012 commencing with the plan year ending June 30, 2017, and subsequently at intervals of

27

five (5) plan years, a benefit adjustment shall be calculated and made in accordance with

28

paragraph (c)(1) above until the municipal plan's Funded Ratio exceeds eighty percent (80%).

29

     (d) This subsection (d) shall become effective July 1, 2015.

30

     (1) (A) As soon as administratively reasonable following the enactment into law of this

31

subsection (d)(1)(A), a one-time benefit adjustment shall be provided to members and/or

32

beneficiaries of members who retired on or before June 30, 2012, in the amount of two percent

33

(2%) of the lesser of either the employee's retirement allowance or the first twenty-five thousand

34

dollars ($25,000) of the member's retirement allowance. This one-time benefit adjustment shall

 

LC005387 - Page 13 of 17

1

be provided without regard to the retiree's age or number of years since retirement.

2

     (B) Notwithstanding the prior subsections of this section, for all present and former

3

employees, active and retired employees, and beneficiaries receiving any retirement, disability or

4

death allowance or benefit of any kind by reason of adoption of this section by their employer, the

5

annual benefit adjustment provided in any calendar year under this section for adjustments on and

6

after January 1, 2016, and subject to paragraph (d)(2) below, shall be equal to (I) multiplied by

7

(II):

8

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

9

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

10

(the "subtrahend") from the five-year average investment return of the retirement system

11

determined as of the last day of the plan year preceding the calendar year in which the adjustment

12

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

13

(0%). The "five-year average investment return" shall mean the average of the investment returns

14

of the most recent five (5) plan years as determined by the retirement board. In the event the

15

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

16

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

17

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

18

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

19

Statistics determined as of September 30 of the prior calendar year.

20

     In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be

21

less than zero percent (0%).

22

     (II) Is equal to the lesser of either the member's retirement allowance or the first twenty-

23

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

24

to be indexed annually in the same percentage as determined under subsection (d)(1)(B)(I) above.

25

     The benefit adjustments provided by this subsection (d)(1)(B) shall be provided to all

26

retirees entitled to receive a benefit adjustment as of June 30, 2012 under the law then in effect,

27

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

28

date of retirement or the date on which the retiree reaches his or her Social Security retirement

29

age, whichever is later; or for municipal police and fire retiring under the provisions of § 45-21.2-

30

5(b)(1)(A), the benefit adjustment provided by this paragraph shall commence on the later of the

31

third anniversary of the date of retirement or the date on which the retiree reaches age fifty-five

32

(55); or for municipal police and fire retiring under the provisions of § 45-21.2-5(b)(1)(B), the

33

benefit adjustment provided by this paragraph shall commence on the later of the third

34

anniversary of the date of retirement or the date on which the retiree reaches age fifty (50).

 

LC005387 - Page 14 of 17

1

     (2) Except as provided in subsection (d)(3), the benefit adjustments under subsection

2

(d)(1)(B) for any plan year shall be suspended in their entirety for each municipal plan within the

3

municipal employees retirement system unless the municipal plan is determined to be funded at a

4

funded ratio equal to or greater than eighty percent (80%) as of the end of the immediately

5

preceding plan year in accordance with the retirement system's actuarial valuation report as

6

prepared by the system's actuary, in which event the benefit adjustment will be reinstated for all

7

members for such plan year.

8

     In determining whether a funding level under this subsection (d)(2) has been achieved,

9

the actuary shall calculate the funding percentage after taking into account the reinstatement of

10

any current or future benefit adjustment provided under this section.

11

     (3) Notwithstanding subsection (d)(2), in each fourth plan year commencing after June

12

30, 2012 commencing with the plan year ending June 30, 2016, and subsequently at intervals of

13

four plan years: (i) A benefit adjustment shall be calculated and made in accordance with

14

subsection (d)(1)(B) above; and (ii) Effective for members and/or beneficiaries of members who

15

retired on or before June 30, 2015, the dollar amount in subsection (d)(1)(B)(II) of twenty-five

16

thousand eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand

17

and twenty-six dollars ($31,026) until the municipal plan's funded ratio exceeds eighty percent

18

(80%).

19

     (e) Upon acceptance of any of the plans in this section, each employee shall on January 1

20

next succeeding the acceptance, contribute by means of salary deductions, pursuant to § 45-21-

21

41, one percent (1%) of the employee's compensation concurrently with and in addition to

22

contributions otherwise being made to the retirement system.

23

     (f) The city or town shall make any additional contributions to the system, pursuant to the

24

terms of § 45-21-42, for the payment of any benefits provided by this section.

25

     (g) The East Greenwich town council shall be allowed to accept Plan C of § 45-21-

26

52(a)(3) for all employees of the town of East Greenwich who either, pursuant to contract

27

negotiations, bargain for Plan C, or who are non-union employees who are provided with Plan C

28

and who shall all collectively be referred to as the "Municipal-COLA Group" and shall be

29

separate from all other employees of the town and school department, union or non-union, who

30

are in the same pension group but have not been granted Plan C benefits. Upon acceptance by the

31

town council, benefits in accordance with this section shall be available to all such employees

32

who retire on or after January 1, 2003.

33

     (h) Effective for members and/or beneficiaries of members who have retired on or before

34

July 1, 2015, and without regard to whether the retired member or beneficiary is receiving a

 

LC005387 - Page 15 of 17

1

benefit adjustment under this § 45-21-52, a one-time stipend of five hundred dollars ($500) shall

2

be payable within sixty (60) days following the enactment of the legislation implementing this

3

provision, and a second one-time stipend of five hundred dollars ($500) in the same month of the

4

following year. These stipends shall not be considered cost of living adjustments under the prior

5

provisions of this § 45-21-52.

6

     (i) Effective January 1, 2019, for each year in which a cost of living adjustment (COLA)

7

is not scheduled pursuant to subsection (d)(3) of this section, a stipend in the amount of three

8

percent (3%) applied to the first fifteen thousand dollars ($15,000) of pension benefits, to a

9

maximum of four hundred and fifty dollars ($450) shall be added to the January pension payment.

10

These stipends shall be payable to all retired teachers or beneficiaries receiving a benefit as of the

11

applicable payment date and shall not be considered cost of living adjustments under the prior

12

provisions of § 45-21-52.

13

     SECTION 4. This act shall take effect upon passage.

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LC005387

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LC005387 - Page 16 of 17

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION - TEACHERS RETIREMENT [SEE TITLE 16 CHAPTER 97 -

THE RHODE ISLAND BOARD OF EDUCATION ACT]

***

1

     This act would provide for a stipend to be paid to certain retired state employees,

2

municipal employees, and teachers or their beneficiaries during years when a cost of living

3

adjustment is not scheduled.

4

     This act would take effect upon passage.

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LC005387

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LC005387 - Page 17 of 17