General Treasurer Raimondo: Some Public Retirees Are Looking at a Pension Haircut of 20%-30%

Normally, it would have been big enough news that the magnitude of Rhode Island’s unfunded pension liability is such that it made PBS’s NewsHour (tonight, best I can tell).
This has been completely dwarfed, however, by some remarkable statements made during the program by Rhode Island’s General Treasurer.

[NewsHour Economics Correspondent] PAUL SOLMAN: So, what’s the hit that the average pensioner of Rhode Island is going to take? What’s the haircut, as it’s called?
GINA RAIMONDO: I think it could be a significant hit.
PAUL SOLMAN: Twenty percent, 30 percent hit, it could be?
GINA RAIMONDO: It could be. It could be.
You know, in Rhode Island, we have 105 pension systems. So, for certain sections, the haircut will be significant, you know, 30, 40-plus percent. For other, you know, systems, it will be less.

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Tommy Cranston
Tommy Cranston
10 years ago

I hope I live to see it. States are already cutting pensions for existing pensions. That’s right Virginia-people already “Retired”. Sleep tight union whores: Nathan W. Armes for The Wall Street Journal By JEANNETTE NEUMANN A showdown is looming over whether commitments made to retirees by government pension funds can be scaled back in dire economic times. Facing shortfalls, some public pension funds are responding by paring back payouts pledged to retired workers. Earlier this year, pension funds in Colorado and Minnesota curtailed annual cost-of-living increases. “No matter how draconian you got on the new hires, you ran out of money” if you didn’t cut benefits to current retirees, said Meredith Williams, chief executive of the Colorado Public Employees’ Retirement Association, with $34.2 billion in assets. Retired special education teacher Kathy Ratz is opposed to legislation to reduce the pension benefits to current retirees that was proposed by Brandon Shaffer, the Colorado Senate president. PENSION PENSION In February, Colorado lawmakers passed a bill that reduced the pension system’s cost-of-living adjustment from a fixed 3.5% a year to a maximum of 2%—but possibly less for current and future retirees. The new law also increased contributions from employees and employers. For example, retirees who were expecting a 3.5% increase in cost-of-living adjustments this year will receive no increase. In response, Colorado and Minnesota have been hit by lawsuits filed by retirees, who claim the changes violate state law. Those retirees have “lived up to their end of the bargain, and the state is not living up to theirs,” says Stephen Pincus, a Pittsburgh lawyer representing plaintiffs in both states. The legal fight could decide whether financial commitments to retired public workers are sacrosanct, as many employees have long assumed. While many retirees from the private sector have seen retirement benefits weakened in… Read more »

glockster
glockster
10 years ago

Rookie question but can they reduce the pensions of folks who are already retires? I’d love to see that too. What jerks me is I’m putting into a system that is going to collapse. I’d love to pull my money and no longer contribute.

Patrick
Patrick
10 years ago

I’m not so sure they should be able to cut the actual amount that retirees currently get. Eliminate or reduce COLAs, ok, but cut the amount they’re already getting? That’s a little tough. There was an agreement between the retirees and the pension system, to change them now when the retirees can do nothing about it is a little rough. It isn’t their fault. Doesn’t exactly sound very fair.
But glockster, you’re a teacher right? You’re in a union? Ask them to write that option into your next contract where you could opt out of the pension system and invest for yourself. See how well that goes over. But hey, the union knows what’s best for its members, right?

dave
dave
10 years ago

The unionistas should demand that the RI law prohibiting anyone from collecting a pension more than they made while working be inforced. Start taxing all the over-the-top disability pensions and stop the PENSION SPIKING by administrators. The 99K/year retires are going to kill the golden goose for every one of their brothers and sisters.

Tommy Cranston
Tommy Cranston
10 years ago

I am told that there are some of Providence’s “finest” and “bravest” who, if they live to 90 will get pensions of OVER half a million a year under the 6% compounded deal. Some are already at $200k.
Plus free health care and uniform allowance of course.

Mike Cappelli
Mike Cappelli
10 years ago

michael,
Any thoughts on this?

John
John
10 years ago

Dear teachers and other public sector union members: Too many of you are undoubtedly looking at each other over drinks these days, and trying to make sense of what our Democratic General Treasurer is saying. Let me help you out. 1. Your union leadership has, over the years, negotiated some of the nation’s best pension and post retirement health care benefits for you. 2. Your union leadership has, over the years, agreed to have you contribute some of the nation’s highest percentages of your pay (relative to public sector employees in other states) for these benefits. Given the relative generosity of these benefits, that makes sense. So far, so good. 3. At the same time, your union leadership has, over the years, progressively reduced the power of management in the organizations where you work. This has led to such well known phenomena as parental frustration when their child’s good teacher is bumped out by a weaker teacher with more seniority, and the world class service that every Rhode Islander has come to expect at the Registry. 4. This has led to a growing perception over the years on the part of private sector voters and taxpayers (and not a few of your fellow union members) that they are not getting value for money in exchange for the high taxes they pay in RI. 5. These high taxes, as well as our relatively weak schools and anti-business regulatory and political climate have driven businesses from RI. In turn, this process has drastically reduced the number of private sector union employees in RI. 6. In the face of declining union numbers, for the past 20 years or so organized labor in RI has been in a pact with the devil, so to speak — they have been forced to ally with the… Read more »

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