Avedesian’s Pragmatic Pension Reform
I will give credit to Warwick Mayor Scott Avedisian for coming up with a plan to save $2 million in pension costs via the extension of retirement ages and reformulating pension payouts for new hires after July 2012.
Avedisian’s proposal would increase the minimum years of service needed for retirement from 20 to 25 for police and firefighters and impose a minimum retirement age of 50. Municipal employees would need 25 years of service and be at least 59 years old to qualify for a pension.
His proposal also recalibrates the formula used to calculate pensions, giving police and fire employees 2 percent of each year’s salary as opposed to 2.5 percent. Cost-of-living pension increases would not be fixed at 3 percent, but would follow a formula currently used for municipal employees that is based, in part, on the Consumer Price Index.
Following a model set by Pawtucket, Avedisian is also looking to reduce disability pensions for police and firefighters who retire due to job-related injuries and currently receive pensions that are the equivalent of about 66.6 percent of their salaries. Avedisian is proposing that those pension payments be lowered to a regular pension payment once those former employees reach normal retirement age.
There are always ways to take a tougher line by reducing the percentages and raising retirement ages even further. Or, as WHJJ’s Helen Glover suggests, implementing mandatory physicals for police and fire, which would mitigate many disability claims.
Yet, again, Avedisian’s proposal is for future employees and we all know the real costs and problems we’re worried about are with current and past pension plans/payouts. Unfortunately, there just isn’t much that can be done about those right now. However, Avedisian explains that this proposal lays the groundwork:
Avedisian said that contracts with police, fire and municipal employees expire in 2012 and he wants the ordinance in place to serve as a footing for contract talks. That is also why the changes will only affect employees hired after July 1, 2012, he said.
While many residents worried about taxes would like to see cities and towns make changes in existing pension plans, the problem can only really be addressed on a “go-forward” basis because of the binding language of contracts, according to the Rhode Island League of Cities and Towns and the Rhode Island Public Expenditure Council.
“You can’t just go in and break contracts,” said Daniel L. Beardsley Jr., the league’s executive director. “Then, you’ll be looking not only at legal fees, but the possibility of costly settlements.”
Look, it would be great to take a hard line, but the makeup and track record of Rhode Island courts doesn’t make one optimistic. Besides, the legal fees required to carry this through the courts would most likely end up eating up any attempted savings (at least for the short term). So, until contract time, this is the sort of thing municipalities are left with. So, it sucks, I know. But as citizens, we need to be ready to buck up our elected officials when the contracts are being renegotiated. Keep your eyes on the long game–the union leaders certainly do.
” implementing mandatory physicals for police and fire”
There must be a mistake. How could there not be physicals???
There are. In Providence anyway.
Mark,
Avedisian’s proposal is about headlines, and saves a tiny amount of money, if any.
Ask yourself this question: why is it when governor carcieri proposed pension reform there were tons of comments in the newspaper from the unions talking about how bad and unfair it was? In the projo article yoy refer to, not one union was even contacted. That’s because they don’t care. And they don’t care because it won’t cost them money.
This is why I think most rhode island republians are disingenuous. They’d rather see a Republican like Scott Avedisian (pro-government worker) in office instead of a Democrat like Andrew Cuomo (pro business/taxpayer).
Mark, you suck.
Mark as someone who I consider to be educated on the issues in Warwick I am disappointed that you have fallen for this propaganda.
Answer this one question. If Warwick switch from defined benefit pension plan to a defined contribution plan, what would be the chance of future liabilities costing millions to taxpayers?
The answer is none.
In addition Warwick uses an unrealistic 8 percent discount rate meaning the current unfunded liabilities are worse then reported. On top of that lifetime healthcare liabilities are almost $400 million and proposed reforms will not eliminate future liabilities.
Councilman Merolla is requesting that the city actuarial firm come before the council and public. You should attend to get more of the facts before prematurely heaping on the praise.