Advisory Council to Locally Administered Pension Plans

During the 2024 Legislative Session, the General Assembly enacted legislation requiring municipalities managing their own pension system to submit a statutorily required actuarial experience study to the advisory council to locally administered pension plans. Experience studies were previously submitted to a study commission that has since been dissolved. 

What does this mean to municipalities?

By law, the Office of the General Treasurer must receive the first actuarial experience study from each municipality independently managing an active pension plan no later than January 1, 2025. Subsequent reports will be due within three years of the date of the most recent actuarial experience study submitted to Treasury. 

Noncompliance may result in withholding of state aid consistent with the provisions of R.I. Gen. Laws § 45-65-7 (1).

Who should municipalities or members of the public contact with further questions?

Municipalities or members of the public desiring more information should direct inquiries to Frank Quinn, Director of Debt, at Francis.Quinn@Treasury.RI.gov or 401-462-6951.

Background on the Pathway to Retirement Security for Locally Administered Pension Funds Act

In 2011, the General Assembly passed the “Pathway to Retirement Security for Locally Administered Pension Funds Act” to “promote the sustainability and longevity of pension plans established and administered by municipalities.” R.I. Gen. Laws § 45-65-2. By its express language, the statute aims to: 

  1. Preserve a reasonable and affordable level of pension benefits; 
  2. “Avoid significant and unanticipated retirement benefit deductions”; 
  3. Avoid diversion of resources to satisfy pension obligations; 
  4. Prevent the financial downgrade of municipal bond ratings; 
  5. Encourage ratings agencies “to take positive credit actions on Rhode Island municipal bonds”; and 
  6. Foster economic growth and financial stability in Rhode Island. 

To accomplish that goal, the statute authorized the creation of a five member “advisory council.” The Advisory Council to Locally Administered Pension Plans (the “Advisory Council”). Consistent with the legislative intent of the 2011 law, the Advisory Council ensures responsible management of locally administered pension plans. A locally administered pension plan is a pension system managed by the municipality, as opposed to a system managed by the State under the Municipal Employees’ Retirement System.

Each year, the Advisory Council publishes an annual report that includes a comprehensive assessment of the fund performance, funded status, administrative costs, assumed rate of return, and budgetary capacity for each locally administered pension plan. See id. The Advisory Council completed its most recent study in late April of 2024. 

Access to municipal pension information – and in particular actuarial experience studies – is crucial to gain a complete understanding of municipal pension management. When calculating the annual required contribution of a pension plan, an actuary must make a number of assumptions concerning a host of factors, such as projected investment performance and economic climate, mortality of retired members, attrition of active members, and other demographic conditions. An experience study is a “periodic review and analysis of the actual experience of the plan” relative to these assumptions necessary to test their accuracy and make periodic adjustments accordingly. Employees’ Retirement System of Rhode Island, Actuarial Experience Investigation Reports, accessed Mar. 25, 2025.

Subsequent annual reports issued by the Advisory Council will now reflect a comprehensive review and assess municipal pension practices inclusive of data reported in actuarial experience studies. 

Links