2019 -- H 6128

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LC002645

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

____________

A N   A C T

RELATING TO PUBLIC FINANCE -- RETIREMENT OF MUNICIPAL EMPLOYEES AND

CLOSED MUNICIPAL RETIREMENT PLANS

     Introduced By: Representative Shelby Maldonado

     Date Introduced: May 20, 2019

     Referred To: House Finance

     (General Treasurer)

It is enacted by the General Assembly as follows:

     SECTION 1. Title 35 of the General Laws entitled "PUBLIC FINANCE" is hereby

amended by adding thereto the following chapter:

CHAPTER 10.4

RHODE ISLAND CLOSED MUNICIPAL RETIREMENT PLANS TRUST FUND ACT

     35-10.4-1. Short title.

     This chapter shall be known and may be cited as the "Rhode Island Closed Municipal

Retirement Plans Trust Fund Act".

     35-10.4-2. Purpose.

     The purpose of this chapter is to enable eligible municipal governmental entities to allow

the state investment commission, in conjunction with the office of the general treasurer, to invest

the assets held in eligible municipal employee retirement plans which have been closed to new

participants in order to maximize the efficient and cost effective investment of its assets, and

improve the safety and liquidity of such assets through one or more pooled investment trust

funds.

     35-10.4-3. Definitions.

     As used in this chapter, the following terms, unless the context requires a different

interpretation, have the following meanings:

     (1) "Closed municipal retirement plan" means any employee defined benefit plan

sponsored by a municipality that has been closed to any new participants in accordance with state

and federal laws.

     (2) "Commission" means the state investment commission as established in chapter 10 of

title 35.

     (3) "Municipality" means any town or city in the state of Rhode Island, any city or town

housing authority, fire, water, sewer district, regional school district, public building authority as

established by chapter 14 of title 37, or any other municipal financed agency which has one or

more closed municipal retirement plans.

     35-10.4-4. Establishing trust funds.

     (a) Notwithstanding any general or special law or regulation to the contrary, the general

treasurer may establish, subject to the approval of the commission, one or more trust funds in

which a municipality may request all of the assets in one or more of its closed municipal

retirement plans, together with future contributions to any of those closed municipal retirement

plans, be included for investment on a pooled basis together with certain other monies in

accordance with § 35-10.4-5. The trust fund or trust funds established under this section shall be

maintained pursuant to written documents as directed by the general treasurer with the approval

of the commission. The trust fund documents shall expressly provide that none of the assets of a

closed municipal retirement plan that is part of the trust fund shall be used or diverted for

purposes other than the payment of benefits to the participants of the closed municipal retirement

plan and their beneficiaries or the payment of the administrative and investment management

expenses of the closed municipal retirement plan in accordance with its terms.

     (b) The general treasurer, with the approval of the commission, shall have the discretion

to determine if the assets of a closed municipal retirement plan may, upon the request of the

municipality sponsoring the closed municipal retirement plan, be included in or, at any time after

its inclusion, be removed from the trust fund.

     (c) A municipality in its sole and absolute discretion may have the assets of any closed

municipal retirement plan sponsored by the municipality removed from participation in any such

trust fund at any time upon at least ninety (90) days prior written notice to the general treasurer

and the commission.

     (d) Upon any removal of a closed municipal retirement plan from any trust fund, the

investment management, and all related duties and responsibilities associated therewith or

otherwise provided by the general treasurer or the commission under this chapter, shall revert in

all respects back to the municipality that sponsored the closed municipal retirement plan.

     35-10.4-5. Other monies available for investment with any trust funds.

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     The monies or other assets of any closed municipal retirement plan that are included in a

trust fund under this chapter may be invested, as determined by the general treasurer, with the

approval of the commission, together with any, or a combination of any, of the following:

     (1) Monies of any of the several funds of the state in accordance with the provisions of §

35-10-2, including, without limitation, the employees' retirement fund; and

     (2) The monies and other assets of any closed municipal retirement plan that are included

in a trust fund under this chapter.

     35-10.4-6. Trustee of the funds.

     The general treasurer shall serve as trustee for each established trust fund in accordance

with this chapter.

     35-10.4-7. Investment and distribution of funds.

     (a) The general treasurer shall invest each trust fund in the manner determined, and in the

amounts approved by the commission in accordance with the provisions of §§ 35-10-2 and 35-10-

6, including the investment of the funds in accordance with the prudent person standard as

defined in § 35-10-6.

     (b) While the assets of a closed municipal retirement plan are included in a trust fund

established under this chapter, disbursements from the assets of any closed municipal retirement

plan shall be made in accordance with rules and regulations adopted by the general treasurer,

subject to the approval of the commission, under § 35-10.4-10.

     35-10.4-8. Immunity from liability.

     The general treasurer, members of the commission and their representatives and agents

shall have no liability or responsibility, and shall be immune from suit in any civil action, for any

damages or economic loss incurred by any municipality, participants or beneficiaries under any

closed municipal retirement plan, or any other party as a result of the administration of, or

disbursement of funds under any closed municipal retirement plan, or as a result of any actions or

omissions by the general treasurer, the commission or their representatives or agents in

connection with the management and investment of funds relating to any trust fund under this

chapter; provided, that such actions or omissions were in accordance with the prudent person

standard set forth in § 35-10-6.

     35-10.4-9. Reporting.

     (a) The general treasurer shall keep a separate account for each municipality having funds

in a trust fund under this chapter with respect to a closed municipal retirement plan. Each account

shall record the individual amounts deposited from time to time in the trust fund, the interest in

the trust fund held, the date of the withdrawals and the earnings credited or paid.

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     (b) Within ninety (90) days after the end of each fiscal year during which the commission

is investing trust funds under this chapter, the commission shall prepare and submit to the

governor, the speaker of the house of representatives, the president of the senate, and the

secretary of state its annual report in accordance with § 35-10-1(e) with information included on

the balance of funds held in trust under this chapter, the earnings of each trust fund, the

administrative expenses of each trust fund, and any other information on each trust fund as the

commission deems relevant.

     35-10.4-10. Rules and regulations.

     The general treasurer, subject to the approval of the commission, shall by rule or

regulation, prescribe the procedure and documents required for the administration of the

investment of the funds for the closed municipal retirement plans included in any trust fund under

this chapter. The general treasurer, subject to the approval of the commission, shall promulgate

any other rules or regulations as are deemed necessary for the efficient operation of any trust fund

under this chapter.

     35-10.4-11. Severability.

     If any provision of this chapter, any rule, or regulation made thereunder, or the

application thereof to any person or circumstance is held invalid by a court of competent

jurisdiction, the remainder of this chapter, rules, or regulations and the application of those

provisions to other persons or circumstances shall not be affected thereby.

     SECTION 2. Sections 36-10.2-5, 36-10.2-7 and 36-10.2-8 of the General Laws in

Chapter 36-10.2 entitled "Pension Protection Act" are hereby amended to read as follows:

     36-10.2-5. Determination of endangered status.

     (a) A plan is in endangered status for a plan year if the retirement board determines, in

consultation with the plan actuary, that the plan:

     (i)(1) Has a funded percentage of fifty percent (50%) or less; and

     (ii)(2) The plan's funded percentage has decreased for five (5) consecutive plan years.

     (b) Notwithstanding the provisions of subsection (a) of this section, for a plan entering

the system in critical status as defined in § 45-65-4 as of the effective date of participation, the

plan shall only be determined to be in endangered status for a plan year if the retirement board

determines, in consultation with the plan actuary, that:

     (1) The plan's funded percentage has decreased for five (5) consecutive plan years

following the effective date of participation; and

     (2) The plan's funded percentage has decreased by one-half (1/2) or more between the

first and last year of any five (5) year period commencing on or after the effective date of

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participation.

     (c) Once a plan entering the system in critical status as defined in § 45-65-4, has achieved

a funding status of fifty percent (50%) or greater after the expiration of five (5) years from the

effective date of participation, endangered status shall thereafter be determined for that

municipality pursuant to the provisions of subsection (a) of this section.

     36-10.2-7. Funding improvement strategy procedure.

     (1) In any case in which a plan is in endangered status for a plan year, except for a plan

year where a plan is already in a funding improvement period and meeting its scheduled funding

targets for the three (3) consecutive prior plan years, a funding improvement strategy shall be

implemented not later than June 30th following the date the plan was certified as being in

endangered status under § 36-10.2-6. The plan actuary shall submit preliminary funding

improvement strategies including a default strategy as described in subparagraphs (3) and (4) to

the board for review not later than January 1st following the date the plan was certified as being

in endangered status under § 36-10.2-6.

     (2) The funding improvement strategy shall be formulated to achieve, based on

reasonably anticipated experience and reasonable actuarial assumptions, the following

requirements:

     (a) The plan's funded percentage shall improve in accordance with paragraph (i) or

paragraph (ii), applying the paragraph that produces the greater funded percentage increase for

the plan in a ten (10) year period.

     (i) As of the close of a ten (10) year funding improvement period, the plan's funded

percentage shall equal or exceed the sum of:

     (I) The plan's funded percentage as of the beginning of the plan year that the actuary

initially certified the plan as endangered; plus

     (II) Fifty percent (50%) of the difference between eighty percent (80%) and the plan's

funded percentage under paragraph (I); or

     (ii) The plan's funded percentage shall improve at the rate of at least one percent (1%)

annually until the plan's funded percentage equals or exceeds eighty percent (80%).

     (b) Notwithstanding any provision of this section to the contrary, for a plan entering the

system in critical status as defined in § 45-65-4, determined to be in endangered status in

accordance with § 36-10.2-5(b), the funding improvement period established in subsection (2)(a)

of this section, may be set by the retirement board at a time period not to exceed fifteen (15)

years, based upon the recommendation of the plan's actuary; provided, that if a plan entering the

system in critical status as defined in § 45-65-4 has achieved a funding status of fifty percent

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(50%) or greater after the expiration of five (5) years from the effective date of participation, the

plan shall be subject to the provisions of subsection (2)(a) of this section.

     (b)(c) In the event that the state or a local municipality, as the employer of a plan,

determines that, based on reasonable actuarial assumptions and upon exhaustion of all reasonable

measures, the plan cannot reasonably be expected to meet the guidelines requirements of

subdivisions (i) and (ii) subsection (2) of this section, then the employer's legislative governing

body shall provide a report to the retirement board, no later than March 1st following the date the

plan was certified as being in endangered status under § 36-10.2-6, explaining why the plan is not

reasonably expected to meet the guidelines requirements of subdivisions (i) and (ii) subsection (2)

of this section and provide providing a reasonable proposed funding improvement strategy to

emerge from endangered status.

     (3) Not later than January 1st following the date the plan was certified as being in

endangered status under § 36-10.2-6, the actuary shall provide to the board, and in the case of

MERS plan shall also provide to the impacted local municipality's legislative governing body, at

least five (5) funding improvement strategies but no more than ten (10) funding improvement

strategies showing revised benefit structures, revised contribution structures, or both, which, if

adopted, may reasonably be expected to enable the plan to meet the applicable requirements

found in subparagraph (2).

     (4) In addition to any funding improvement strategies provided by the board in

subparagraph (3), the board shall include a default funding improvement strategy ("Default A")

that shall show increases in employer and employee contributions under the plan necessary to

achieve the applicable requirements found in subsection (2), assuming no amendments to reduce

future benefit accruals under the plan.

     (5) Not later than April 1st following the date the plan was certified as being in

endangered status under § 36-10.2-6, the board shall submit the "Default A" strategy as described

in subparagraph (4) and one additional funding improvement strategy, as selected by the board, to

the general assembly.

     (6) Not later than June 30th following the date the plan was certified as being in

endangered status under § 36-10.2-6, the general assembly shall select and enact into law one of

the two (2) submitted funding improvement strategies. If no funding improvement strategy is

approved by the general assembly by June 30th, the "Default A" strategy as described in

subparagraph (4) shall be enacted into law effective July 1st following the date the plan was

certified as being in endangered status under § 36-10.2-6. "Default A" shall remain in effect until

either the actuary certifies under § 36-10.2-6 for a plan year that the plan is no longer in

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endangered status or the general assembly selects a funding improvement strategy consistent with

the provisions of this chapter.

     (7) Notwithstanding any other law to the contrary, any reports and funding strategies

submitted to the board pursuant to this section shall be public records.

     36-10.2-8. Funding improvement period.

     (1) The funding improvement period for any funding improvement strategy adopted

pursuant to this chapter shall begin on the first day of July immediately after the adoption date of

the funding improvement strategy.

     (2) The funding improvement period shall be a ten (10) year period unless the actuary

certifies under § 36-10.2-6 for a plan year that the plan is no longer in endangered status. In such

a case, the funding improvement period shall end as of the close of the preceding plan year.

     (3) A plan may not be amended during the funding improvement period so as to be

inconsistent with the funding improvement strategy.

     (4) Notwithstanding any provision of this section to the contrary, for a plan entering the

system in critical status as defined in § 45-65-4 on the effective date of participation, determined

to be in endangered status as determined in accordance with § 36-10.2-5(b), the funding

improvement period may be set by the retirement board at a time period not to exceed fifteen (15)

years, based upon the recommendation of the plan's actuary; provided, that if a plan entering the

system in critical status as defined in § 45-65-4 has achieved a funding status of fifty percent

(50%) or greater after the expiration of five (5) years from the effective date of participation, the

plan shall be subject to the provisions of subsection (2) of this section.

     SECTION 3. Sections 45-21-2, 45-21-4, 45-21-6, 45-21-8, 45-21-16, 45-21-16.2, 45-21-

17, 45-21-41, 45-21-42.2, 45-21-43.1 and 45-21-56 of the General Laws in Chapter 45-21 entitled

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

     45-21-2. Definitions.

     The following words and phrases as used in this chapter have the following meanings

unless a different meaning is plainly required by the context:

     (1) "Accumulated contributions" means the sum of all amounts deducted from the

compensation of a member and credited to his or her individual account in the members'

contribution reserve account.

     (2) "Active member" means any employee of a participating municipality as defined in

this section for whom the retirement system is currently receiving regular contributions pursuant

to §§ 45-21-41, 45-21-41.1 or 45-21.2-14.

     (3) "Actuarial reserve" means the present value of all payments to be made on account of

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any annuity, retirement allowance, or benefit, computed upon the basis of mortality tables

adopted by the retirement board with regular interest.

     (4) "Beneficiary" means any person in receipt of a retirement allowance, annuity, or other

benefit as provided by this chapter.

     (5) For purposes of this chapter, "domestic partner" shall be defined as a person who,

prior to the decedent's death, was in an exclusive, intimate and committed relationship with the

decedent, and who certifies by affidavit that their relationship met the following qualifications:

     (i) Both partners were at least eighteen (18) years of age and were mentally competent to

contract;

     (ii) Neither partner was married to anyone else;

     (iii) Partners were not related by blood to a degree which would prohibit marriage in the

state of Rhode Island;

     (iv) Partners resided together and had resided together for at least one year at the time of

death; and

     (v) Partners were financially interdependent as evidenced by at least two (2) of the

following:

     (A) Domestic partnership agreement or relationship contract;

     (B) Joint mortgage or joint ownership of primary residence;

     (C) Two (2) of: (I) Joint ownership of motor vehicle; (II) Joint checking account; (III)

Joint credit account; (IV) Joint lease; and/or

     (D) The domestic partner had been designated as a beneficiary for the decedent's will,

retirement contract or life insurance.

     (6) "Effective date of participation" means the date on which the provisions of this

chapter have become applicable to a municipality accepting the provisions of the chapter in the

manner stated in § 45-21-4.

     (7) "Employee" means any regular and permanent employee or officer of any

municipality, whose business time at a minimum of twenty (20) hours a week is devoted to the

service of the municipality, including elective officials and officials and employees of city and

town housing authorities. Notwithstanding the previous sentence, the term "employee", for the

purposes of this chapter, does not include any person whose duties are of a casual or seasonal

nature. The retirement board shall decide who are employees within the meaning of this chapter,

but in no case shall it deem as an employee any individual who annually devotes less than twenty

(20) business hours per week to the service of the municipality and who receives less than the

equivalent of minimum wage compensation on an hourly basis for his or her services, except as

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provided in § 45-21-14.1. Casual employees mean those persons hired for an occasional period or

a period of emergency to perform special jobs or functions not necessarily related to the work of

regular employees. Any commissioner of a municipal housing authority, or any member of a part-

time state board commission, committee or other authority is not deemed to be an employee

within the meaning of this chapter.

     (8)(a) "Final compensation" for members who are eligible to retire on or prior to June 30,

2012, means the average annual compensation, pay, or salary of a member for services rendered

during the period of three (3) consecutive years within the total service of the member when the

average was highest, and as the term average annual compensation is further defined in

subdivision 36-8-1(5)(a). For members eligible to retire on or after July 1, 2012, "final

compensation" means the average of the highest five (5) consecutive years of compensation

within the total service when the final compensation was the highest.

     (b) For members who become eligible to retire on or after July 1, 2012, if more than one

half (1/2) of the member's total years of service consist of years of service during which the

member devoted less than thirty (30) business hours per week to the service of the municipality,

but the member's average compensation consists of three (3) or more years during which the

member devoted more than thirty (30) business hours per week to the service of a municipality,

such member's average compensation shall mean the average of the highest ten (10) consecutive

years of compensation within the total service when the average compensation was the highest;

provided however, effective July 1, 2015, if such member's average compensation as defined in

subsection (a) above is equal to or less than thirty-five thousand dollars ($35,000), such amount

to be indexed annually in accordance with § 45-21-52(d)(1)(B), such member's average

compensation shall mean the greater of: (i) The average of the highest ten (10) consecutive years

of compensation within the total service when the average compensation was the highest; or (ii)

The member's average compensation as defined in subsection (a) above. To protect a member's

accrued benefit on June 30, 2012, under this § 45-21-2(8)(b), in no event shall a member's

average compensation be lower than his or her average compensation determined as of June 30,

2012.

     Notwithstanding the preceding provisions, in no event shall a member's final

compensation be lower than his or her final compensation determined as of June 30, 2012.

     (9) "Fiscal year" means the period beginning on July 1 in any year and ending on June 30

of the next succeeding year.

     (10) "Full actuarial costs" or "full actuarial value" mean the lump sum payable by a

member claiming service credit for certain employment for which payment is required, which is

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determined according to the age of the member and his or her annual rate of compensation at the

time he or she applies for service credit, and which is expressed as a rate percent of the annual

rate of compensation to be multiplied by the number of years for which he or she claims the

service credit, as prescribed in a schedule adopted by the retirement board, from time to time, on

the basis of computation by the actuary. Except as provided in §§ 16-16-7.1, 36-5-3, 36-9-31, 36-

10-10.4, and subdivision 45-21-53: (i) All service credit purchases requested after June 16, 2009,

and prior to July 1, 2012, shall be at full actuarial value; and (ii) All service credit purchases

requested after June 30, 2012, shall be at full actuarial value which shall be determined using the

system's assumed investment rate of return minus one percent (1%).

     (11) "Governing body" means any and all bodies empowered to appropriate monies for,

and administer the operation of, the units as defined in subdivision (1) of this section.

     (12) "Member" means any person included in the membership of the retirement system as

provided in § §§ 45-21-8, 45-21-68, or 45-21.2-3.1.

     (13) "Municipality" means any town or city in the state of Rhode Island, any city or town

housing authority, fire, water, sewer district, regional school district, public building authority as

established by chapter 14 of title 37, or any other municipal financed agency to which the

retirement board has approved admission in the retirement system.

     (14) "Participating municipality" means any municipality which has accepted this

chapter, as provided in § §§ 45-21-4, 45-21-68, or 45-21.2-3.1.

     (15) "Prior service" means service as a member rendered before the effective date of

participation as defined in this section, certified on his or her prior service certificate, and

allowable as provided in § 45-21-15.

     (16) "Regular interest" means interest at the assumed investment rate of return,

compounded annually, as may be prescribed from time to time by the retirement board.

     (17) "Retirement allowance" or "annuity" means the amounts paid to any member of the

municipal employees' retirement system of the state of Rhode Island, or a survivor of the

member, as provided in this chapter. All retirement allowances or annuities shall be paid in equal

monthly installments for life, unless otherwise specifically provided.

     (18) "Retirement board" or "board" means the state retirement board created by chapter 8

of title 36.

     (19) "Retirement system" means the "municipal employees' retirement system of the state

of Rhode Island" as defined in § 45-21-32.

     (20) "Service" means service as an employee of a municipality of the state of Rhode

Island as defined in subdivision (7).

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     (21) "Total service" means prior service as defined in subdivision (15) plus service

rendered as a member on or after the effective date of participation.

     (22) Any term not specifically defined in this chapter and specifically defined in chapters

36-8 through 36-10 shall have the same definition as set forth in chapters 36-8 through 36-10.

     45-21-4. Acceptance by municipalities -- Effective date.

     (a) Any municipality may accept this chapter by an ordinance or resolution of its

governing body stating the group or groups of employees to be included as provided in § 45-21-

7§ 45-21-7; provided, that any and all labor organizations representing active employees of the

municipality to be included have assented to the participation of their respective memberships,

through collective bargaining, and ratification of the decision by a majority vote of those

members of any participating labor organization present and voting. When the ordinance or

resolution has been approved, a certified copy of it shall be forwarded to the retirement board by

the city clerk or the moderator of the financial town meeting. After the system has begun

operations, the effective date of participation of any municipality shall be the first day of July at

least ninety (90) days following the receipt by the retirement board of the certified copy of the

ordinance or resolution as provided in this section.

     (b) The elections authorized pursuant to §§ 45-21-16(8), 45-21-17(d), 45-21-17(g), 45-

21-41(b), 45-21.2-5, 45-21.2-6, and 45-21.2-14(c) shall be made in accordance with the

provisions of subsection (a) of this section.

     (b)(c) The Smithfield Town Council may by resolution provide that regular police

officers hired after July 2, 1999 and/or regular firefighters who are members of Smithfield's

private pension system may become members of the Municipal Employees' Retirement System of

the State of Rhode Island in accordance with chapters 21 or 21.2 of this title. No resolution may

be adopted by the Town of Smithfield pursuant to this subsection until an actuary study has been

completed to determine the potential cost of the resolution. The cost of the actuary study shall be

paid by the Town of Smithfield.

     (d) Any municipality entering the system pursuant to this section shall, on or before the

effective date of participation, transfer to the system the accumulated contributions of each

member entering the system. The municipality may thereafter elect what portion of the remaining

plan assets to transfer to the system, subject to the approval of the retirement board, which shall

retain the authority to deny the plan entrance into the system if the proposed asset transfer is

found to pose unacceptable risk to the liquidity or sustainability of the new unit.

     (e) In the event a municipality divides a locally administered plan into one or more plans

for purposes of entering the system pursuant to this section, and has insufficient total plan assets

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to transfer to the system the accumulated contributions of each member entering the system as set

forth in subsection (d) of this section, the municipality shall, on or before the effective date of

participation, transfer assets to the system in proportion to the total accrued liability of that

portion of the original undivided plan being transferred to the system, subject to the approval of

the retirement board, which shall retain the authority to deny the plan entrance into the system if

the proposed asset transfer is found to pose unacceptable risk to the liquidity or sustainability of

the new unit.

     45-21-6. Settlement on withdrawal from system.

     (a) Upon withdrawal from the system, the retirement board retains in the system from

contributions made by the members from the municipality and by the municipality the following

amounts:

     (1) An amount equal to the actuarial value, determined in accordance with the actuarial

tables in use by the system, of the retirement and disability allowances in force, being paid to

former employees of the municipality who were granted allowances as members of the system or

to the beneficiaries of those members;

     (2) An amount equal to the actuarial value of deferred annuities to members who have

not retired but who have acquired a vested right to a retirement allowance who may desire to

maintain that vested right; and

     (3) An amount equal to the accumulated contributions of the members who have not

acquired a vested right which shall be refunded to those members.

     (b) Any remainder in the system after providing for the foregoing amounts shall be paid

over to the municipality in such amount as the retirement board shall in its sole discretion

determine to be prudent and legally permissible; provided, that if no remainder exists and a

deficiency to pay those amounts has accumulated, the municipality is liable to the system for the

amount of the deficiency as provided in this section.

     (c) The provisions of this section shall not apply to a municipality withdrawing from the

system pursuant to §§ 45-21-68(b) or 45-21.2-3.1(b).

     45-21-8. Membership in system.

     Membership in the retirement system does not begin before the effective date of

participation in the system as provided in § §§ 45-21-4, 45-21-68, or 45-21.2-3.1, and consists of

the following:

     (a) Any employee of a participating municipality as defined in this chapter, who becomes

an employee on and after the effective date of participation, shall, under contract of his or her

employment, become a member of the retirement system; provided, that the employee is not

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receiving any pension or retirement allowance from any other pension or retirement system

supported wholly or in part by a participating municipality, and is not a contributor to any other

pension or retirement system of a participating municipality. Any employee who is elected to an

office in the service of a municipality after the effective date and prior to July 1, 2012, has the

option of becoming a member of the system, which option must be exercised within sixty (60)

days following the date the employee assumes the duties of his or her office, otherwise that

person is not entitled to participate under the provisions of this section;

     (b) Any employee or elected official of a participating municipality in service prior to the

effective date of participation, who is not a member of any other pension or retirement system

supported wholly or in part by a participating municipality, and who does not notify the

retirement board in writing before the expiration of sixty (60) days from the effective date of

participation that he or she does not wish to join the system, shall automatically become a

member; and

     (c) Any employee of a participating municipality in service prior to the effective date of

participation, who is a member of any other pension or retirement system supported wholly or in

part by a participating municipality on the effective date of participation of their municipality,

who then or thereafter makes written application to join this system, and waives and renounces all

accrued rights and benefits of any other pension or retirement system supported wholly or in part

by a participating municipality, becomes a member of this retirement system and shall not be

required to make contribution under any other pension or retirement system of a participating

municipality, anything to the contrary notwithstanding.

     (d) Notwithstanding the provisions of this section, present firefighters employed by the

town of Johnston shall establish a pension plan separate from the state of Rhode Island retirement

system. If the town of Johnston is thirty (30) days or more late on employer or employee

contributions to the pension plan, the auditor general is authorized to redirect any Johnston funds

to cover the shortfall or to deduct that amount from any moneys due the town from the state for

any purpose other than for education. Disability determinations of present firefighters shall be

made by the state retirement board, subject to the provisions of § 45-21-19, at the town of

Johnston's expense. All new firefighters hired by the town of Johnston shall become members of

the state retirement system.

     (e) Notwithstanding the provisions of this section, any city of Cranston employees who

are presently members of Teamsters Local Union No. 251, hired between the dates of July 1,

2005, and June 30, 2010, inclusive, and who are currently members of the retirement system

established by this chapter may opt out of said retirement system and choose to enroll in a defined

LC002645 - Page 13 of 37

contribution plan (i.e., a 403(b) plan or equivalent thereof) established by the city of Cranston.

     (f) Notwithstanding the provisions of this section, any city of Cranston employees who

are presently members of the Laborers International Union of North America Local 1322 hired

between the dates of July 1, 2008, and June 30, 2013, inclusive, and who are currently members

of the retirement system established by this chapter may opt out of said retirement system and

choose to enroll in a defined contribution plan (i.e., a 403(b) plan or equivalent thereof)

established by the city of Cranston.

     (g) Notwithstanding the provisions of this section, any city of Cranston employees who

will be members of Teamsters Local Union No. 251, hired after June 30, 2010, shall be enrolled

in a defined contribution plan (i.e., a 403(b) plan or equivalent thereof) established by the city of

Cranston and shall not be a member of the retirement system established by this chapter.

     (h) Notwithstanding the provisions of this section, any city of Cranston employees who

are presently members of the Laborers International Union of North America Local 1322 hired

after April 23, 2013, shall be enrolled in a defined contribution plan (i.e., 403(b) plan or

equivalent thereof) established by the city of Cranston and shall not be a member of the

retirement system established by this chapter.

     (i) Notwithstanding the provisions of this section, any city of Cranston employees

defined in (e) and (f) of this section shall be precluded from purchase of service credit for time

served on or after July 1, 2010, while participating in the defined contribution plan (i.e., a 403(b)

plan or equivalent thereof) established by the city of Cranston should the member cease

employment with the city of Cranston or Teamsters Local Union No. 251 and re-enter the system

with another participating employer who has accepted the provisions as defined, in § 45-21-4.

     (j) Notwithstanding the provisions of this section, any town of Middletown employees,

who will be members of the Teamsters Local Union No. 251 bargaining unit, hired after June 30,

2012, and any town of Middletown employees who are employed as full-time civilian

dispatchers, hired after June 30, 2012, and any town of Middletown employees who are not

affiliated with any recognized collective bargaining representative or union hired after June 30,

2012, shall be enrolled in a defined contribution plan (i.e., a 403(b) plan or equivalent thereof)

established by the town of Middletown and shall not be members of the retirement system

established by this chapter. Said town of Middletown employees defined herein shall be

precluded from the purchase of service credit for time served on or after July 1, 2012, while

participating in the defined contribution plan (i.e., a 403(b) plan or equivalent thereof) established

by the town of Middletown should the member cease employment with the town of Middletown

or in the Teamsters Local Union No. 251 bargaining unit and re-enter the system with any

LC002645 - Page 14 of 37

participating employer who has accepted the provisions as defined in § 45-21-4.

     (k) Notwithstanding the provisions of this section, any town of Middletown employees,

who will be members of the Middletown Municipal Employees Association NEARI Local 869

bargaining unit hired after June 30, 2012, shall be enrolled in a defined contribution plan (i.e., a

403(b) plan or equivalent thereof) established by the town of Middletown and shall not be

members of the retirement system established by this chapter. Said town of Middletown

employees defined herein shall be precluded from the purchase of service credit for time served

on or after July 1, 2012, while participating in the defined contribution plan (i.e., a 403(b) plan or

equivalent thereof) established by the town of Middletown should the member cease employment

with the town of Middletown or in the Middletown Municipal Employees Association NEARI

Local 869 bargaining unit and re-enter the system with any participating employer who has

accepted the provisions as defined in § 45-21-4.

     (l) Notwithstanding the provisions of this section, any Cranston public school employees

who will be members of National Association of Government Employees (NAGE), Local RI-153,

hired after June 30, 2012, shall be enrolled in a defined contribution plan (i.e., a 401(a) plan or

equivalent thereof) established by the Cranston school department and shall not be a member of

the retirement system established by this chapter.

     (m) Notwithstanding the provisions of this section, any Cranston public school

employees defined in subsection (h) shall be precluded from the purchase of service credit for

time served on or after July 1, 2012, while participating in the defined contribution plan (i.e., a

401(a) plan or equivalent thereof) established by the Cranston public schools should the member

cease employment with the Cranston public schools or National Association of Government

Employees (NAGE), Local RI-153 and re-enter the system with another participating employer

who has accepted the provisions as defined in § 45-21-4.

     (n) Notwithstanding the provisions of this section, the chief of police for the city of

Cranston who was hired on or about September 2014, shall be enrolled in a defined contribution

plan (i.e., 401(a) plan or any equivalent thereof) established by the city of Cranston, and shall not

be a member of the retirement system established by this chapter.

     45-21-16. Retirement on service allowance.

     Retirement of a member on a service retirement allowance shall be made by the

retirement board as follows:

     (1)(i) Any member who is eligible to retire on or before June 30, 2012, may retire upon

the member's written application to the retirement board as of the first day of the calendar month

in which the application was filed, provided the member was separated from service prior to the

LC002645 - Page 15 of 37

application, and provided, further, that if separation from service occurs during the month in

which application is filed, the effective date is the first day following the separation from service,

provided that the member at the time so specified for the member's retirement has attained the

applicable minimum retirement age and has completed at least ten (10) years of total service or

who, regardless of age, completed thirty (30) years of total service, and notwithstanding that

during the period of notification the member has separated from service. The minimum ages for

service retirement (except for employees completing thirty (30) years of service) is fifty-eight

(58) years.

     (ii) Effective July 1, 2012, the following shall apply to all members not eligible to retire

prior to July 1, 2012:

     (A) A member with contributory service on or after July 1, 2012, shall be eligible to retire

upon the completion of at least five (5) years of contributory service and attainment of the

member's Social Security retirement age.

     (B) For members with five (5) or more years of contributory service as of June 30, 2012,

with contributory service on and after July 1, 2012, who have a retirement age of Social Security

retirement age, the retirement age will be adjusted downward in proportion to the amount of

service the member has earned as of June 30, 2012, but in no event shall a member's retirement

age under this subparagraph (B) be prior to the attainment of age fifty-nine (59) or prior to the

member's retirement age determined under the laws in effect on June 30, 2012. The proportional

formula shall work as follows:

     (1) The formula shall determine the first age of retirement eligibility under the laws in

effect on June 30, 2012, which shall then be subtracted from Social Security retirement age;

     (2) The formula shall then take the member's total service credit as of June 30, 2012, as

the numerator and the projected service at retirement age in effect on June 30, 2012, as the

denominator;

     (3) The fraction determined in (2) shall then be multiplied by the age difference

determined in (1) to apply a reduction in years from Social Security retirement age.

     (C) Effective July 1, 2015, a member who has completed twenty (20) or more years of

total service and who has attained an age within five (5) years of the eligible retirement age under

subparagraphs (ii)(A) or (ii)(B) above or subsection (iii) below, may elect to retire provided that

the retirement allowance shall be reduced actuarially for each month that the age of the member is

less than the eligible retirement age under subparagraphs (ii)(A) or (ii)(B) above or subsection

(iii) below in accordance with the following table:

Year Preceding Retirement Cumulative Annual Reduction Cumulative Monthly

LC002645 - Page 16 of 37

Reduction

     For Year 1 9% .75%

     For Year 2 8% .667%

     For Year 3 7% .583%

     For Year 4 7% .583%

     For Year 5 7% .583%

     (D)(1) Notwithstanding any other provisions of section 42-21-16(1)(ii) § 42-21-16(1)(i),

a member who has completed ten (10) or more years of contributory service as of June 30, 2012,

may elect to retire at his or her eligible retirement date as determined under paragraph (i) above

provided that a member making an election under this paragraph shall receive the member's

retirement benefit determined and calculated based on the member's service and average

compensation as of June 30, 2012. This provision shall be interpreted and administered in a

manner to protect a member's accrued benefit on June 30, 2012.

     (iii) Notwithstanding any other provisions of subsection (ii) above, effective July 1, 2015,

members in active service shall be eligible to retire upon the earlier of: (I) The attainment of at

least age sixty-five (65) and the completion of at least thirty (30) years of total service, or the

attainment of at least age sixty-four (64) and the completion of at least thirty-one (31) years of

total service, or the attainment of at least age sixty-three (63) and the completion of at least

thirty-two (32) years of total service, or the attainment of at least age sixty-two (62) and the

completion of at least thirty-three (33) years of total service; or (II) The member's retirement

eligibility date under subsections (ii)(A) or (ii)(B) above.

     (2) Except as specifically provided in §§ 45-21-19 -- 45-21-22, no member is eligible for

pension benefits under this chapter unless:

     (I) On or prior to June 30, 2012, the member has been a contributing member of the

employees' retirement system for at least ten (10) years; or

     (II) For members in active contributory service on or after July 1, 2012, the member shall

have been a contributing member of the employees' retirement system for at least five (5) years.

     (i) Provided, however, a person who has ten (10) years service credit on or before June

16, 1991, is vested.

     (ii) Furthermore, any past service credits purchased in accordance with § 45-21-62 are

counted towards vesting.

     (iii) Any person who becomes a member of the employees' retirement system pursuant to

§ §§ 45-21-4, 45-21-68, or 45-21.2-3.1, shall be considered a contributing member for the

purpose of this chapter.

LC002645 - Page 17 of 37

     (iv) Notwithstanding any other provision of law, no more than five (5) years of service

credit may be purchased by a member of the System. The five (5)-year limit does not apply to any

purchases made prior to the effective date of this provision. A member who has purchased more

than five (5) years of service credit maximum, before January 1, 1995, shall be permitted to apply

the purchases towards the member's service retirement. However, no further purchase will be

permitted. Repayment, in accordance with applicable law and regulation, of any contribution

previously withdrawn from the System is not deemed a purchase of service credit.

     (v) Notwithstanding any other provision of law, effective July 1, 2012, except for

purchases under §§ 16-16-7.1, 36-5-3, 36-9-31, 36-10-10.4, and 45-21-53:

     (I) For service purchases for time periods prior to a member's initial date of hire; the

purchase must be made within three (3) years of the member's initial date of hire; and

     (II) For service purchases for time periods for official periods of leave as authorized by

law, the purchase must be made within three (3) years of the time the official leave was

concluded by the member.

     Notwithstanding (I) and (II) above, service purchases from time periods prior to June 30,

2012, may be made on or prior to June 30, 2015.

     (3) No member of the municipal employees' retirement system is permitted to purchase

service credits for casual, temporary, emergency or seasonal employment, for employment as a

page in the general assembly, or for employment at any state college or university while the

employee is a student or graduate assistant of the college or university.

     (4) A member does not receive service credit in this retirement system for any year or

portion of a year, which counts as service credit in any other retirement system in which the

member is vested or from which the member is receiving a pension and/or any annual payment

for life. This subsection does not apply to any payments received pursuant to the Federal Social

Security Act or to payments from a military pension earned prior to participation in state or

municipal employment, or to military service credits earned prior to participation in state or

municipal employment.

     (5) A member who seeks to purchase or receive service credit in this retirement system

has the affirmative duty to disclose to the retirement board whether or not he or she is a vested

member in any other retirement system and/or is receiving a pension retirement allowance or any

annual payment for life. The retirement board has the right to investigate whether or not the

member has utilized the same time of service for credit in any other retirement system. The

member has an affirmative duty to cooperate with the retirement board including, by way of

illustration and not by way of limitation, the duty to furnish or have furnished to the retirement

LC002645 - Page 18 of 37

board any relevant information which is protected by any privacy act.

     (6) A member who fails to cooperate with the retirement board shall not have the time of

service counted toward total service credit until a time that the member cooperates with the

retirement board and until a time that the retirement board determines the validity of the service

credit.

     (7) A member who knowingly makes a false statement to the retirement board regarding

service time or credit is not entitled to a retirement allowance and is entitled only to the return of

his or her contributions without interest.

     (8) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation had a

higher retirement age than set forth in subsection (1) of this section, shall have a one-time

election to retain a higher retirement age for employees entering the system, not to exceed the

plan's retirement age prior to the effective date of participation, for any employees in active

service as of the effective date of participation; provided, that the higher retirement age shall not

apply to new employees hired on or after the effective date of participation, who shall be subject

to the retirement ages set forth in subsection (1) of this section.

     (9) Should a locally administered plan entering the system not make the election

authorized by subsection (8) of this section, members entering the system shall be subject to the

retirement ages and restrictions set forth in subsection (1) of this section.

     45-21-16.2. Electronic funds transfer.

     All members of the municipal employees retirement system retiring under the provisions

of this title on or after July 1, 1998, or joining the system pursuant to §§ 45-21-68 or 45-21.2-3.1,

are required to participate in electronic funds transfer and to supply the municipal employees

retirement system with a bank routing number to effectuate a monthly transfer of benefits.

     45-21-17. Service retirement allowance.

     (a) Upon retirement from service after January 1, 1969, a member shall receive a

retirement allowance which is a life annuity terminable upon death of the annuitant and is an

amount equal to two percent (2%) of final compensation multiplied by the number of years of

total service, not to exceed thirty-seven and one-half (37 1/2) years for services on and prior to

June 30, 2012. For service on and after July 1, 2012: (i) For members with fewer than twenty (20)

years of total service as of June 30, 2012, a member's retirement allowance shall be equal to one

percent (1%) of the member's final compensation multiplied by the member's years of total

service on and after July 1, 2012; and (ii) For members with twenty (20) or more years of total

service as of June 30, 2012, a member's retirement allowance shall be equal to one percent (1%)

LC002645 - Page 19 of 37

of the member's average compensation multiplied by the member's years of total service between

July 1, 2012, and June 30, 2015, and two percent (2%) of the member's average compensation

multiplied by the member's years of total service on and after July 1, 2015. For purposes of

computing a member's total service under the preceding sentence, service purchases shall be

included in total service only with respect to those service purchases approved prior to June 30,

2012, and those applications for service purchases received by the retirement system on or before

June 30, 2012. In no event shall Subject to the provisions of subsection (g) of this section, a

member's retirement allowance shall not exceed seventy-five percent (75%) of the member's final

compensation. Provided, however, that every person elected prior to July 1, 2012, who has served

as a part time elected official of the city of Cranston for a period of ten (10) years, is entitled to

receive, upon retirement from that part time service, and not being otherwise regularly employed

by the city of Cranston in which that person has served, a service retirement allowance equivalent

to fifty percent (50%) of the salary received at the time of retirement by that part time elected

official; and, provided, further, that if that person retires after a period of service greater than ten

(10) years, the person is entitled to receive an additional service retirement allowance equivalent

to five percent (5%) of the salary received at the time of retirement for each whole year of

service, in excess of ten (10) years up to a maximum additional allowance equivalent to fifty

percent (50%) of the salary received.

     (b) This section also applies to any former part time elected official of the city of

Cranston who is presently receiving retirement benefits from the municipal retirement system.

     (c) Every person elected prior to July 1, 2012, who serves or has served at least four (4)

years as a part time elected official of the city of Cranston may include that person's years of

service as a member of the general assembly, and any other credits acquired while serving as a

legislator, when computing the person's period of service to the city of Cranston pursuant to the

provisions of this section.

     (d) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation offered a

different accrued benefit than would otherwise be available pursuant to subsection (a) of this

section, shall have a one-time election to allow members joining the system to receive upon

retirement, their accrued benefit based on their prior service, as of the effective date of

participation. In the event the municipality makes this election, the member shall not otherwise be

entitled to a retirement allowance from the system for prior service calculated pursuant to

subsection (a) of this section, and on and after the effective date of participation of the

municipality, any member entering the system shall accrue benefits on service at the rates set

LC002645 - Page 20 of 37

forth in subsection (a) above.

     (e) Should a locally administered plan entering the system not make the election provided

for in subsection (d) of this section, any members joining the system shall accrue benefits on total

service at the rates set forth in subsection (a) of this section; provided, that notwithstanding any

provision to the contrary in subsection (a) of this section, any affected member's retirement

allowance shall in any case be equal to two percent (2%) of the member's average compensation

multiplied by the member's years of prior service between July 1, 2012 and the effective date of

participation.

     (f) Any member entering the system shall have their total service as of June 30, 2012

utilized for purposes of determining eligibility for participation in the defined contribution

retirement plan established in chapter 10.3 of title 36, pursuant to subsection (a) of this section.

     (g) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation provided

for a lower maximum retirement allowance than would otherwise be permissible pursuant to

subsection (a) of this section, shall have a one-time election to retain a lower maximum

retirement allowance for employees entering the system, which may be no lower than the locally

administered plan's maximum retirement allowance as of the effective date of participation, and

which may not exceed the maximum retirement allowance otherwise permissible pursuant to

subsection (a) of this section, for any employees in active service as of the effective date of

participation; provided, that the plan's election to retain a different maximum retirement

allowance than would otherwise be permissible pursuant to subsection (a) of this section shall not

apply to new employees hired on or after the effective date of participation, which shall be

subject to the maximum retirement allowance set forth in subsection (a) of this section.

     (h) Should a locally administered plan not make the election authorized by subsection (g)

of this section, members entering the system shall be subject to the maximum retirement

allowance set forth in subsection (a) of this section.

     45-21-41. Members' contributions -- Payroll deductions -- Certification to board.

     (a) Prior to July 1, 2012, each member shall contribute an amount equal to six percent

(6%) of salary or compensation earned and accruing to the member; provided, that contributions

by any member cease when the member has completed the maximum amount of service credit

attainable. Special compensation for additional fees shall not be considered as compensation for

contribution purposes. Effective July 1, 2012, each member shall contribute an amount equal to

one percent (1%) of his or her compensation as his or her share of the cost. Effective July 1, 2015,

each member with twenty (20) or more years of total service as of June 30, 2012, shall contribute

LC002645 - Page 21 of 37

an amount equal to eight and one-quarter percent (8.25%) of compensation.

     (b) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation had an

employee contribution rate greater than that set forth in subsection (a) of this section, shall have a

one-time election to retain the higher employee contribution rate, not to exceed the rate in effect

as of the effective date of participation, for any employees in active service as of the effective

date of participation; provided, that the higher rate shall not apply to new employees hired on or

after the effective date of participation, who shall contribute as set forth in subsection (a) of this

section. Should the locally administered plan entering the system elect to retain the higher

employee contribution rate, it may elect to do so on either a temporary or a permanent basis.

     (c) Should a locally administered plan entering the system not make the election

authorized by subsection (b) of this section, members entering the system shall contribute as set

forth in subsection (a) of this section.

     (b)(d) Each municipality shall deduct the previously stated rate from the compensation of

each member on each and every payroll of the municipality, and the deduction made during the

entire time a member is in service subject to termination as stated in the foregoing paragraph.

     (c)(e) The deductions provided for in this section shall be made notwithstanding that the

minimum compensation provided for by law for any member is reduced by the compensation.

Every member is deemed to consent and agree to the deductions made and provided for in this

section, and shall receipt for his or her full salary or compensation; and payment of salary or

compensation less those deductions are a full and complete discharge and acquittance of all

claims and demands for the services rendered by the person during the period covered by the

payment except as to the benefits provided under this chapter. Each participating municipality

shall certify to the retirement board the amounts deducted from the compensation of members.

Each of the amounts, when deducted, shall be credited to an individual account of the member

from whose compensation the deduction was made.

     45-21-42.2. Fiscal impact of proposed legislation impacting the retirement system.

     Proposed legislation which directly impacts the retirement system can potentially affect

the benefits of all plan participants and beneficiaries. Since it is in the best interests of plan

participants and beneficiaries to determine the financial consequences of any proposed legislation

which would directly impact the liability to the retirement system of participating municipalities,

such legislation shall not be approved by the general assembly unless an explanatory statement or

note, prepared and paid for by the retirement system, is appended to the proposed legislation

which actuarially calculates, based upon approved retirement board assumptions, the projected

LC002645 - Page 22 of 37

twenty (20) year cost of the proposed legislation. These statements or notes shall be known as

"pension impact notes," and they shall accompany each such bill or resolution prior to

consideration by the chamber in which the bill or resolution originated. The reasonable cost of

preparing pension impact notes shall be charged as an administrative expense and paid from the

retirement system's restricted receipts account established pursuant to § 36-8-10.1. Only the chair

of the senate committee on finance with the approval of the president of the senate can request a

pension impact note on proposed legislation that originates in the senate. Only the chair of the

house committee on finance with the approval of the speaker of the house can request a pension

impact note on proposed legislation that originates in the house. The governor can request a

pension impact note on proposed legislation recommended in the appropriation acts required by

§§ 35-3-7 or 35-3-8. This section shall be in addition to the requirements of chapter 12 of title 22.

If one or more participating municipalities requests an actuarial study or other study that impacts

only the liability of the participating municipality making the request, other than as reasonably

necessary to evaluate membership in the retirement system pursuant to §§ 45-21-4, 45-21-68 or

45-21.2-3.1, the participating municipality making the request shall pay any and all costs

associated with the preparation of the study or report.

     45-21-43.1. Actuarial cost method.

     (a) To determine the employer contribution rate for any participating municipality, the

actuary shall compute the costs under chapters 21 and 21.2 of title 45 using the entry age normal

cost method.

     (b) The determination of the employer contribution rate for fiscal year 2013 shall include

a re-amortization of the unfunded actuarial accrued liability (UAAL) over a closed twenty-five

(25) year period. After an initial period of five (5) years, future actuarial gains and losses

occurring within a plan year will be amortized over individual new twenty (20) year closed

periods.

     (c) The determination of the employer contribution rate commencing with fiscal year

2017 shall include a re-amortization of the current unfunded actuarial accrued liability as of June

30, 2014, over a closed twenty-five (25) year period. Future actuarial gains and losses occurring

within a plan year will be amortized over individual new twenty (20) year closed periods.

Employers shall have the one-time option before August 1, 2015, to remain under the

amortization schedule set forth in subsection (b) above.

     (d) For a municipality joining the system on or after the effective date of this provision,

the determination of the employer contribution rate shall be computed as of the effective date of

participation using an amortization period for the unfunded actuarial accrued liability not to

LC002645 - Page 23 of 37

exceed thirty (30) years as determined by the board, based upon the recommendation of the plan's

actuary. Future actuarial gains and losses accruing within a plan year will be amortized over

individual new twenty (20) year closed periods.

     45-21-56. Credit for other municipal service.

     (a) Any member who was employed by a municipality, as defined in § 45-21-2, which

did not elect to accept this chapter, as provided in § 45-21-4, shall be given credit for that service

for the various purposes of this system; provided, that the member pays to the retirement system a

lump sum amount equal to the full actuarial cost of that credit as certified by the retirement board.

     (b) The retirement board shall fix and determine rules and regulations to govern the

provisions of this section.

     (c) If any member who was employed by a participating municipality is subsequently

hired by a different participating municipality, his or her service credits from the former employer

shall transfer in toto to the current employer. The retirement system shall transfer all prior

employee contributions to the account of the current employing municipality and calculate the

full actuarial value of the accrued benefit with the former employing municipality. If the full

actuarial value of the accrued benefit with the former employer is greater than the total employee

contributions transferred, the retirement system shall also transfer the difference between the full

actuarial value of the accrued benefit with the former employer and the employee's contributions

from the account of the former employing municipality to the account of the current employing

municipality.

     (d) Notwithstanding any provision of this section to the contrary, if an employee of a

participating municipality in critical status as defined in § 45-65-4 leaves employment and is

hired by another participating municipality that is not in critical status as defined in § 45-65-4,

then the retirement system shall transfer the amount of the member's total accrued liability with

the former employer, multiplied by the funded status of the former employer, to the account of

the current employing municipality.

     SECTION 4. Chapter 45-21 of the General Laws entitled "Retirement of Municipal

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

     45-21-68. Retiree membership in system.

     (a) Notwithstanding any provision of this chapter to the contrary, any locally

administered municipal pension plan may accept the provisions of this chapter by an ordinance or

resolution of its governing body stating the group or groups of retired former employees to be

included as provided in § 45-21-7; provided, that:

     (1) Any affected retired former employee has consented in writing to joining the system;

LC002645 - Page 24 of 37

or

     (2) Any duly constituted retiree organization that represents the retired former employees

has assented to joining the system.

     For purposes of this section, "retired former employee" means any individual who has

retired prior to the effective date of participation, pursuant to the provisions of any locally

administered municipal retirement plan.

     (b) Withdrawal of a municipality that had joined the retirement system pursuant to this

section shall be as provided in § 45-21-5; provided, that the withdrawal is conditioned upon the

written approval of each individual retired former employee, or the assent of any duly constituted

retiree organization that represents the retired former employees; provided, further, that the

municipality must agree with the withdrawal, by ordinance or resolution of its governing body,

and to thereafter assume full responsibility for the management and administration of the

retirement and disability allowances in force for each retired former employee, or any

beneficiaries thereof.

     (c) Any group or groups of retired former employees that become members pursuant to

this provision shall receive benefits calculated in accordance with, and shall be subject to all of

the provisions, limitations and restrictions contained in this chapter as of the effective date of

participation, and shall waive any benefits accrued pursuant to the locally administered plan.

     (d) A municipality electing to join the retirement system pursuant to this section, shall be

subject to the provisions of §§ 45-21-4(c) and (d).

     (e) Notwithstanding the provisions of subsection (c) of this section, any locally

administered plan that elects to have a group or groups of retired former employees join the

system pursuant to this section, shall have the opportunity as of the effective date of participation,

to make one-time elections as follows:

     (1) To retain any provisions contained in the locally administered plan related to

retirement eligibility, notwithstanding any provision of § 45-21-16 to the contrary;

     (2) To allow any retired former employee to retain their accrued benefit pursuant to the

provisions of the locally administered plan, in which case the member shall not be entitled to any

retirement allowance or benefit from the system otherwise available or calculated pursuant to the

provisions of §§ 45-21-17, 45-21-17.1, 45-21-17.2, 45-21-27, 5-21-30, 45-21-51 or 45-21-51.1;

     (3) To retain any maximum retirement allowance provided for by the locally

administered retirement plan, notwithstanding any provision of § 45-21-17 to the contrary; or

     (4) To retain any automatic adjustment increases in the service retirement allowances

provided for by the locally administered plan, notwithstanding any provision of § 45-21-52 to the

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contrary.

     (f) Any retired former employee receiving a disability pension pursuant to the provisions

contained in the locally administered plan, shall be subject to the provisions of §§ 45-21-23 and

45-21-24.

     (g) Subject to the provisions of subsection (h) of this section, any retired former

employee entering the system pursuant to this section shall be subject to the provisions of §§ 45-

21-31, and 45-21-54.

     (h) Notwithstanding any provision of subsection (g) of this section, any retired former

employee becoming a member pursuant to this section, who as of the effective date of

participation is also an employee of an already participating municipality, shall not be subject to

the provisions of §§ 45-21-31 or 45-21-54, as long as they remain employed by the already

participating municipality. Should the member terminate employment with the already

participating municipality for any reason, they shall thereafter be subject to the provisions of §§

45-21-31 and 45-21-54.

     SECTION 5. Sections 45-21.2-3, 45-21.2-5, 45-21.2-6 and 45-21.2-14 of the General

Laws in Chapter 45-21.2 entitled "Optional Retirement for Members of Police Force and Fire

Fighters" are hereby amended to read as follows:

     45-21.2-3. Optional retirement for police and fire fighters.

     In addition to the retirement system established under the provisions of chapter 21 of this

title, any municipality may accept this chapter in the manner stated in § 45-21-4. Withdrawal

from the system is in the same manner as stated in § 45-21-5, subject to the provisions of § 45-

21.2-3.1.

     45-21.2-5. Retirement on service allowance.

     (a) Retirement of a member on a service retirement allowance for members eligible to

retire on or before June 30, 2012, shall be made, subject to paragraph (a)(11) below, by the

retirement board as follows:

     (1) Any member who has attained or attains age seventy (70) shall be retired as stated in

§ 45-21-16 subject to the discretions contained in that section; provided, that any member who is

a member of the Woonsocket fire department who has attained or attains an age of sixty-five (65)

years shall be retired. Retirement occurs on the first day of the next succeeding calendar month in

which the member has attained the age of sixty-five (65) years.

     (2) Any member may retire pursuant to this subdivision upon written application to the

board stating at what time the member desires to retire; provided, that the member at the specified

time for retirement has attained an age of fifty-five (55) years and has completed at least ten (10)

LC002645 - Page 26 of 37

years of total service, and notwithstanding that the member may have separated from service.

     (3) Any member may retire pursuant to this subdivision upon written application to the

board stating at what time the member desires to retire; provided, that the member at the specified

time for retirement has completed at least twenty-five (25) years of total service, and

notwithstanding that the member may have separated from service.

     (4) Any member may retire pursuant to this subdivision upon written application to the

board stating at what time the member desires to retire; provided, that the member at the specified

time for retirement has attained an age of fifty (50) years and has completed at least twenty (20)

years of total service, notwithstanding that the member may have separated from service;

provided, that the service retirement allowance, as determined according to the formula provided

in § 45-21.2-6, is reduced one-half of one percent (1/2%) for each month that the age of the

member is less than fifty-five (55) years.

     (5) Any member of the South Kingstown police department may retire pursuant to this

subdivision upon written application to the board stating at what time the member desires to

retire; provided, that the member at the specified time for retirement has earned a service

retirement allowance of fifty percent (50%) of final compensation pursuant to § 45-21.2-6.1.

     (6) Any member of the Johnston police department may retire pursuant to this

subdivision upon written application to the board stating at what time the member desires to

retire; provided, that the member at the specified time for retirement has earned a service

retirement allowance of fifty percent (50%) of final compensation pursuant to § 45-21.2-6.2.

     (7) Any member of the Cranston fire department hired after July 1, 1995, or any member

of the Cranston fire department with five (5) years or less of service effective July 1, 1995, may

retire pursuant to this subdivision upon written application to the board stating at what time the

member desires to retire; provided, that the member at the specified time for retirement has

earned a service retirement allowance of fifty percent (50%) of final compensation for at least

twenty (20) years service; final compensation for Cranston fire department members is based on

the compensation components of weekly salary, longevity and holidays with longevity of the

members highest year of earnings and members shall receive a three percent (3%) escalation of

their pension payment compounded each year on January 1st following the year of retirement and

continuing on an annual basis on that date; further, any illness or injury not covered in title 45 of

the general laws relating to the presumption of disability is governed by the collective bargaining

agreement between the City of Cranston and members of the Cranston fire department.

     (8) Any member of the Cranston police department hired after July 1, 1995, or any

member of the Cranston police department with five (5) years or less of service effective July 1,

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1995, may retire pursuant to this subdivision upon written application to the board stating at what

time the member desires to retire; provided, that the member at the specified time for retirement

has earned a service retirement allowance of fifty percent (50%) of final compensation for at least

twenty (20) years service; final compensation for Cranston police department members is based

on the compensation components of weekly salary, longevity and holidays with longevity of the

members highest year of earnings and members shall receive a three percent (3%) escalation of

their pension payment compounded each year on January 1st following the year of retirement and

continuing on an annual basis on that date; further, any illness or injury not covered in title 45 of

the general laws relating to the presumption of disability is governed by the collective bargaining

agreement between the City of Cranston and members of the Cranston police department.

     (9) Any member of the Hopkinton police department may retire pursuant to this

subdivision upon written application to the board stating at what time the member desires to

retire; provided, that the member at the specified time for retirement has earned a service

retirement allowance of fifty percent (50%) of final compensation for at least twenty (20) years

service; final compensation for Hopkinton police department members is based on the

compensation components of weekly salary, longevity and holidays with longevity of the

members highest year of earnings and members shall receive a three percent (3%) escalation of

their pension payment compounded each year on January 1st following the year of retirement and

continuing on an annual basis on that date.

     (10) Any member of the Richmond police department may retire pursuant to this

subdivision upon written application to the board stating at what time the member desires to

retire; provided, that the member at the specified time for retirement has earned a service

retirement allowance of fifty percent (50%) of final compensation for at least twenty-two (22)

years' service pursuant to § 45-21.2-6.3.

     (11) Notwithstanding any provision in this section to the contrary, for any service on or

after July 1, 2012, final compensation shall be defined in accordance with § 45-21.2-2, and no

benefit adjustments shall be provided except as set forth in subsection 45-21-52(c).

     (12) Notwithstanding any provisions of this section to the contrary, with respect to police

officers employed by the town of Johnston, only those police officers hired on or after July 1,

2010, shall be eligible to be members of the Municipal Employees' Retirement System of the

state of Rhode Island in accordance with this chapter.

     (b) Retirement of a member on a service retirement allowance eligible to retire on and

after July 1, 2012, shall be made by the retirement board as follows:

     (1) Any member may retire pursuant to this subdivision upon written application to the

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board stating at what time the member desires to retire; provided, that the member at the specified

time for retirement attained the age of at least fifty-five (55) years and has completed at least

twenty-five (25) years of total service, and notwithstanding that the member may have separated

from service; or

     (2) Effective July 1, 2015, the member makes contributions to the plan effective July 1,

2015, in accordance with § 45-21.2-14, and (i) The member at the specified time for retirement

attained the age of at least fifty (50) years and has completed at least twenty-five (25) years of

total service; or (ii) The member has completed at least twenty-seven (27) years of total service

regardless of the member's attained age, and notwithstanding that the member may have

separated from service.

     (3) Any member with contributory service on or after July 1, 2012, who has completed at

least five (5) years of contributory service but who has not completed twenty-five (25) years of

service, shall be eligible to retire upon the attainment of the member's Social Security retirement

age.

     (4) If a member had ten (10) or more years of contributory service and attained age forty-

five (45) prior to July 1, 2012, and would have been eligible to retire at or prior to age fifty-two

(52) in accordance with the rules in effect prior to July 1, 2012, the member may retire upon

attainment of age fifty-two (52).

     (5) Effective July 1, 2015, a member who has completed twenty (20) or more years of

total service who has attained an age within five (5) years of the eligible retirement age under

subparagraphs (b)(1) or (b)(2) or (b)(3) or (b)(4) above, may elect to retire provided that the

retirement allowance shall be reduced actuarially for each month that the age of the member is

less than the eligible retirement age under subparagraphs (b)(1) or (b)(2) or (b)(3) or (b)(4) above

in accordance with the following table:

Year Preceding Retirement Cumulative Annual Reduction Cumulative Monthly

Reduction

     For Year 1 9% .75%

     For Year 2 8% .667%

     For Year 3 7% .583%

     For Year 4 7% .583%

     For Year 5 7% .583%

     (6) Notwithstanding any other provisions of this section, a member on June 30, 2012,

may elect to retire at his or her eligible retirement date as determined under the rules in effect on

June 30, 2012, provided that a member making an election under this paragraph shall receive the

LC002645 - Page 29 of 37

member's retirement benefit determined and calculated based on the member's service and final

compensation as of June 30, 2012. This provision shall be interpreted and administered in a

manner to protect a member's accrued benefit on June 30, 2012.

     (c) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation had a

higher retirement age than otherwise provided for herein, shall have a one-time election to retain

a higher retirement age for employees entering the system, not to exceed the plan's retirement age

prior to the effective date of participation, for any employees in active service as of the effective

date of participation; provided, that the higher retirement age shall not apply to new employees

hired on or after the effective date of participation, who shall otherwise be subject to the

applicable provisions of this section.

     (d) Should a locally administered plan entering the system opt not to make the election

authorized by subsection (c) of this section, members entering the system shall be subject to the

otherwise applicable retirement ages and restrictions set forth herein.

     45-21.2-6. Service retirement allowance.

     (a) Upon retirement from service pursuant to § 45-21.2-5, a member receives a retirement

allowance which is a life annuity terminable at the death of the annuitant and shall be an amount

equal to two percent (2%) of final compensation multiplied by the years of total service, provided

that a member who retires upon the attainment of age of fifty-seven (57) years and has completed

at least thirty (30) years of total service shall receive a retirement allowance which is a life

annuity terminable at the death of the annuitant and shall be an amount equal to the greater of: (i)

Two and one quarter percent (2.25%) of final compensation multiplied by total years of service;

or (ii) The member's accrued benefit determined as of June 30, 2012, plus two and one quarter

percent (2.25%) of final compensation multiplied by member's years of service after June 30,

2012; provided further that the life annuity under this subsection (a) shall not exceed seventy-five

percent (75%) of final compensation.

     (b) Notwithstanding any provision of subsection (a) of this section to the contrary, any

locally administered plan entering the system shall have a one-time election to allow members

joining the system who thereafter retire upon the attainment of age fifty-seven (57) years, and

who have completed at least thirty (30) years of total service, to have the enhanced rate of

pension benefit accrual as set forth in subsection (a) of this section apply:

     (1) Only to the number of years of service rendered on or after the effective date of

participation; or

     (2) To total service, but only after the member has completed the number of years of

LC002645 - Page 30 of 37

service on or after the effective date of participation, as established by the locally administered

plan upon the effective date of participation.

     (c) Notwithstanding any provision of this section to the contrary, any locally

administered plan which, prior to the effective date of participation, offered a different accrued

benefit than would otherwise be available pursuant to subsection (a) of this section, shall have a

one-time election to allow members joining the system to receive upon retirement, their accrued

benefit based on their prior years of service as of the effective date of participation. In the event

the municipality makes this election, the member shall not otherwise be entitled to a retirement

allowance from the system for prior service calculated pursuant to subsection (a) of this section,

and on and after the effective date of participation of the municipality, any member entering the

system shall accrue benefits on service at the rates set forth in subsection (a) of this section.

     (d) Should a locally administered plan entering the system opt not to make the elections

provided for in subsection (b) or (c) of this section, any member entering the system shall accrue

benefits on total service at the rates set forth in subsection (a) of this section.

     (e) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation; provided,

for a lower maximum retirement allowance than would otherwise be permissible pursuant to

subsection (a) of this section, shall have a one-time election to retain a lower maximum

retirement allowance for employees entering the system, which may be no lower than the plan's

maximum retirement allowance as of the effective date of participation, and which may not

exceed the maximum retirement allowance otherwise permissible pursuant to subsection (a) of

this section, for any employees in active service as of the effective date of participation; provided,

that the plan's election to retain a different maximum retirement allowance than would otherwise

be permissible pursuant to subsection (a) of this section, shall not apply to new employees hired

on or after the effective date of participation, who shall be subject to the maximum retirement

allowance set forth in subsection (a) of this section.

     (f) Should a locally administered plan entering the system opt not to make the election

authorized by subsection (e) of this section, members entering the system shall be subject to the

maximum retirement allowance set forth in subsection (a) of this section.

     (b)(g) Upon retirement, the member may elect to receive the actuarial equivalent of his or

her retirement allowance in a lesser retirement allowance as determined by actuarial calculation,

which is payable throughout life with the provision that:

     (1) Option 1. A reduced retirement allowance payable during the member's life with the

provisions that after his or her death it shall continue during the life of and be paid to the person

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that he or she nominated by written designation duly acknowledged and filed with the retirement

board at the time of retirement; or

     (2) Option 2. A reduced retirement allowance payable during the member's life with the

provision that after his or her death an allowance equal to one-half (1/2) of his or her reduced

allowance shall continue during the life of and be paid to the person that he or she nominated by

written designation duly acknowledged and filed with the board at the time of retirement.

     (c)(h) If prior to July 1, 2012, a member elected an optional form of benefit other than a

life annuity in accordance with paragraph (b)(1) or (2) subsection (g)(1) or (g)(2) of this section

above, the member may elect to change his or her form of benefit to a life annuity by filing an

election with the retirement board on or before June 30, 2013, provided that the member's

beneficiary is still alive at the time the election is filed.

     45-21.2-14. Contributions.

     (a) Each member shall contribute an amount equal to seven percent (7%) of the salary or

compensation earned or accruing to the member provided that effective July 1, 2015, each

member shall contribute an amount equal to nine percent (9%) of the salary or compensation

earned or accruing to the member. Special compensation or additional fees shall not be

considered as compensation for contribution purposes.

     (b) Deductions are made in accordance with § 45-21-14 and credited in accordance with

§ 45-21-43.

     (c) Notwithstanding any provision of this section to the contrary, any locally

administered plan entering the system, which prior to the effective date of participation had an

employee contribution rate greater than set forth in subsection (a) of this section, shall have a

one-time election to retain the higher employee contribution rate, not to exceed the rate in effect

as of the effective date of participation, for any employees in active service as of the effective

date of participation; provided, that the higher rate shall not apply to new employees hired on or

after the effective date of participation, who shall contribute as set forth in subsection (a) of this

section. Should the locally administered plan entering the system elect to retain the higher

employee contribution rate, it may elect to do so on either a temporary or a permanent basis.

     (d) Should a locally administered plan entering the system opt not to make the election

authorized by subsection (c) of this section, members entering the system shall contribute the

amount as set forth in subsection (a) of this section.

     (c)(e) Each municipality shall make contributions to the system to provide the remainder

of the obligation for retirement allowances, annuities, and other benefits provided in this section,

after applying the accumulated contribution of members, interest income on investments, and

LC002645 - Page 32 of 37

other accrued income. The contribution shall be compiled in accordance with §§ 45-21-42 -- 45-

21-44, except that contributions for the first five (5) years of the system shall likewise be

determined by the board.

     (d)(f) Provided, that members of the South Kingstown police department, beginning July

1, 1985, and until June 30, 2012, contribute an amount equal to eight percent (8%) of salary or

compensation or additional fees are not considered as compensation for retirement purposes. For

service on and after July 1, 2012, a member of the South Kingstown police department shall make

contributions in accordance with paragraph (a) above.

     (e)(g) Provided, further, that for service on or prior to June 30, 2012, members of the City

of Cranston fire department hired after July 1, 1995, beginning July 1, 1995, contribute an

amount equal to ten percent (10%) of their weekly salary; and those members of the City of

Cranston fire department with five (5) years or less of service effective July 1, 1995, have the

option to either remain in the City of Cranston pension plan to which they belonged prior to the

adoption of local ordinance by the Cranston city council as stated in § 45-21.2-22 or contribute to

the State of Rhode Island optional twenty (20) year retirement on service allowance an amount

equal to ten percent (10%) of their weekly salary commencing July 1, 1995. The City of Cranston

may request and the retirement board may authorize additional members of the City of Cranston

fire department hired after July 1, 1987, the option to either remain in the City of Cranston

pension plan to which they belonged prior to the adoption of local ordinance by the Cranston city

council as stated in § 45-21.2-22 or contribute to the State of Rhode Island optional twenty (20)

year retirement on service allowance an amount equal to ten percent (10%) of their weekly salary

beginning on a date specified by the retirement board. For service on and after July 1, 2012, a

member of the City of Cranston fire department shall make contributions in accordance with

paragraph (a) above and a member's benefit shall be calculated in accordance with subsection 45-

21.2-22(b).

     (f)(h) Further, provided, that for service on and prior to June 30, 2012, members of the

City of Cranston police department hired after July 1, 1995, beginning July 1, 1995, contribute an

amount equal to ten percent (10%) of their weekly salary; and those members of the City of

Cranston police department with five (5) years or less of service effective July 1, 1995, have the

option to either remain in the City of Cranston pension plan to which they belonged prior to the

adoption of local ordinance by the Cranston city council as stated in § 45-21.2-22 or contribute to

the State of Rhode Island optional twenty (20) year retirement on service allowance an amount

equal to ten percent (10%) of their weekly salary commencing July 1, 1995. The City of Cranston

may request and the retirement board may authorize additional members of the City of Cranston

LC002645 - Page 33 of 37

police department hired after July 1, 1987, the option to either remain in the City of Cranston

pension plan to which they belonged prior to the adoption of local ordinance by the Cranston city

council as stated in § 45-21.2-22 or contribute to the State of Rhode Island optional twenty (20)

year retirement on service allowance an amount equal to ten percent (10%) of their weekly salary

beginning on a date specified by the retirement board. For service on and after July 1, 2012, a

member of the City of Cranston police department shall make contributions in accordance with

paragraph (a) above and a member's benefit shall be calculated in accordance with subsection 45-

21.2-22(b).

     SECTION 6. Chapter 45-21.2 of the General Laws entitled "Optional Retirement for

Members of Police Force and Fire Fighters" is hereby amended by adding thereto the following

section:

     45-21.2-3.1. Retiree membership in optional retirement plan.

     (a) Notwithstanding any provision of this chapter to the contrary, any locally

administered municipal pension plan may accept the provisions of this chapter by an ordinance or

resolution of its governing body stating the group or groups of retired former employees to be

included as provided in § 45-21-7; provided, that:

     (1) Any affected retired former employee has consented in writing to joining the system;

or

     (2) Any duly constituted retiree organization that represents said retired former

employees has assented to joining the system.

     For purposes of this section, "retired former employee" shall mean any individual who

has retired prior to the effective date of participation, pursuant to the provisions of any locally

administered municipal retirement plan.

     (b) Withdrawal of a municipality that had joined the retirement system pursuant to this

section shall be as provided in § 45-21-5; provided, that the withdrawal is conditioned upon the

written approval of each individual retired former employee, or the assent of any duly constituted

retiree organization that represents said retired former employees; provided, further, that the

municipality must agree upon withdrawal, by ordinance or resolution of its governing body, to

assume full responsibility thereafter for the management and administration of the retirement and

disability allowances in force for each retired former employee, or any beneficiaries thereof.

     (c) Any group or groups of retired former employees that become members pursuant to

this section shall receive benefits calculated in accordance with, and shall be subject to, all of the

provisions, limitations and restrictions contained in this chapter as of the effective date of

participation, and shall waive any benefits accrued pursuant to the locally administered plan.

LC002645 - Page 34 of 37

     (d) A municipality electing to join the retirement system pursuant to this section shall be

subject to the provisions of §§ 45-21-4(c) and (d).

     (e) Notwithstanding the provisions of subsection (c) of this section, any locally

administered plan that elects to have a group or groups of retired former employees join the

system pursuant to this section, shall have the opportunity as of the effective date of participation,

to make one-time elections as follows:

     (1) To retain any provisions contained in the locally administered plan related to

retirement eligibility notwithstanding any provision of §§ 45-21.2-5 or 45-21.2-22 to the contrary;

     (2) To allow any retired former employee to retain their accrued benefit pursuant to the

provisions of the locally administered plan, in which case the member shall not be entitled to any

retirement allowance or benefit from the system otherwise available or calculated pursuant to any

provisions of §§ 45-21.2-6, 45-21.2-13, or 45-21.2-20, 45-21.2-21, or 45-21.2-22 to the contrary;

     (3) To retain any maximum retirement allowance provided for by the locally

administered retirement plan, notwithstanding any provision of §§ 45-21.2-6 or 45-21.2-22 to the

contrary; or

     (4) To retain any automatic adjustment increases in the service retirement allowances

provided for by the locally administered plan, notwithstanding any provision of § 45-21-52 to the

contrary.

     (f) Any retired former employee receiving a disability pension pursuant to the provisions

contained in the locally administered plan, shall be subject to the provisions of §§ 45-21-23 and

45-21-24.

     (g) Subject to the provisions of subsection (h) of this section, any retired former

employee entering the system pursuant to this section shall be subject to the provisions of §§ 45-

21-31, and 45-21-54.

     (h) Notwithstanding any provision of subsection (g) of this section, any retired former

employee becoming a member pursuant to this section, who as of the effective date of

participation is also an employee of an already participating municipality, shall not be subject to

the provisions of §§ 45-21-31 or 45-21-54, as long as he or she remains employed by the already

participating municipality. Should the member terminate employment with the already

participating municipality for any reason, he or she shall thereafter be subject to the provisions of

§§ 45-21-31 and 45-21-54.

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     SECTION 7. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC FINANCE -- RETIREMENT OF MUNICIPAL EMPLOYEES AND

CLOSED MUNICIPAL RETIREMENT PLANS

***

     This act would create the "Rhode Island Closed Municipal Retirement Plans Trust Fund

Act" to streamline the process for locally administered municipal retirement plans to join the

municipal employees retirement system (MERS) of the state of Rhode Island, by providing

greater flexibility in funding policies than would otherwise be required, depending upon the needs

and circumstances of each municipal plan. This act would also enable eligible municipal

governmental entities to allow the state investment commission, in conjunction with the office of

the general treasurer, to invest the assets of eligible municipal plans closed to new participants, in

order to maximize the efficient and cost effective investment of such assets, as well as to improve

their safety and liquidity.

     This act would take effect upon passage.

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