Minimal Pension Reform in Warwick

Warwick Mayor Avedisian’s pension reform proposals are currently in the process of being reviewed by the Warwick City Council. In a nutshell, Avedisian proposes the following:
1) Minimum retirement age of 50 years old for Fire and Police and 59 for municipal workers. Right now, they can retire at any age as long as they’ve served enough years. Which leads to….
2) Increase the minimum years of service required to retire to 25 for police and fire (up from 20) and 25 years for municipal employees.
3) Unfortunately, any cost savings projections are immediately obsolete because the proposal also assumes the same 8% or so rate of return that is fast becoming obsolete as the new actuarial reports being presented today show. Former City Councilor Bob Cushman broke down the minimal–delayed–savings at the meeting:

warwickprojpension.JPG

Basically, right now, cost-savings are “on paper” and way in the future.
Anyway, taking it for what it is…upping the retirement age to 50 is defensible for police and fire, but 59 for municipal workers? Why not 65 like the rest of us? Average lifespan is what, 75 now? That means 16 years retired, getting full health care to boot. (As far as I know, Mayor Avedisian isn’t proposing the removal of lifetime health care benefits for city employees). I’ve said it before, this is all nice, but it should have been done a while ago. The flexibility of bureaucracy in action once again.
Unions are fighting this reform because they don’t want pensions to be removed form collective bargaining. So far, the first phase (police pension reform) has been approved 7-2 by the City Council. Apparently, Councilwoman Camille Vella-Wilkinson and Councilman Charles “C.J.” Donovan Jr. couldn’t even approve of this tepid reform. Vella-Wilkinson is the new City Councilor who said of the proposal:

I personally feel that it’s heavy-handed for the city to decide (through ordinance) what pensions should be….We are not giving the unions a chance. They are stakeholders too…. They are not Al-Qaeda. They are not holding us hostage.

Brilliant. I’d urge Vella-Wilkinson to look at the new reports coming out of the General Treasurer’s office. How is she going to hyperbolize when current pensions need to change?
Look, something is better than nothing and the wheels of government turn slowly. But forgive me if, again, I’m less than enthused that some fairly common sense modifications have taken so long to come forth. Congratulations aren’t in order. This should have been a long time ago.

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dave
dave
10 years ago

I’m positive the ProJo’s report said the changes would only apply to new hires after July, 2012.

bobbbbb
bobbbbb
10 years ago

Warwick Beacon- “By 2049 the three plans are projected to collectively save $8.9 million annually”
By then the budget should be approaching a $billion. So that’s a 1% savings.

Rasputin
Rasputin
10 years ago

Marc,
I give you credit for this post. It shows in a non-biased way, that Avedisian’s pension reform is about headlines, not saving taxpayers money.
Scott Avedisian has been using the city treasury to buy union support at the polls for over 1 decade now. That means he gets all the support of the public sector workers who usually vote Democrat, plus he gets the support of Republicans who either don’t pay attention, or make excuses for him because he’s a registered Republican.
I’ve always wondered how long this liberal would get away with this act. Hopefully its catching up to him finally.

Bob Cushman
Bob Cushman
10 years ago

Mark, thanks for further exposing this joke of pension reform by Mayor Avedisian, my Warwick Beacon column on this subject. The Taxpayers’ Spin: Reality of pension costs daunting by Robert Cushman Apr 14, 2011 With Warwick City Council chambers packed with state and local labor leaders, union workers, administration officials, City Council members and taxpayers all listening to experts from the city’s pension and health care actuarial firms testify on the condition of the plans, I posed one simple question to them all. Can the city of Warwick continue to fund a budget that pays retirement benefits at required actuarial levels, fund annual health care benefits and cost of living increases for active employees, maintain all other municipal programs and services, and also fund the school budget? Needless to say, not one person responded, yet the answer was quite obvious after listening to the testimony. Weeks earlier Councilman Steve Merolla submitted a series of questions to dissect the complicated assumptions and terminology used by the firms when recommending the taxpayer and employee contributions needed to fund each plan and identify the unfunded liabilities. Merolla’s questions demonstrated that many of the assumptions, including the assumed 8 percent annual return on plan investments, are over optimistic and unrealistic and paint a picture that the plans are funded at levels greater than reported. The experts reported they “may soon recommend the use of a lower investment return rate in connection with future actuarial valuations.” This would result in higher liabilities and higher required contributions necessary to properly fund the plans. It also would have a direct impact on the city’s ability to maintain all other spending priorities including schools. General Treasurer Gina Raimondo is questioning the same assumptions for the state plans and was quoted in yesterday’s Providence Journal saying the choice comes… Read more »

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