Lawrence Verria

Pension Advisory Working Group Statement

Offered by Lawrence Verria, teacher 1983-2023 (lwverria@gmail.com)

I attended the December 14, 2023 Pension Advisory Working Group (PAWG) meeting at CCRI. Based on what I witnessed at that meeting, I decided to add my commentary for your consideration. Since I am most familiar with the teacher’s retirement situation, my comments direct solely the educators’ circumstance.

As best as I could determine, most of the speakers present at the CCRI meeting retired before 2011. Understandably, those retirees voiced the opinion that the Rhode Island General Assembly reinstate the COLA, if need be only for the pre-2011 retirement group. Few speakers addressed the circumstances of those who had retired after 2011, or those teachers who continue to work. Based on those recommendations, the PAWG might deduce that the issue at hand could be satisfied by reinstating the COLA for only the pre-2011 retirees. If the PAWG determined such a position, they would overlook the significant impacts experienced by the post-2011 retirement group. As such, any recommendation presented to the RI General Assembly should direct every vested pension teacher as of 2011, and ideally every affected public employee. Below I will briefly address the circumstances of the post 2011 retirees to clarify the reasoning for this recommendation.

Teachers who retired in the past twelve years paid approximately 12% of their salary to remain in the pension fund, significantly higher than those who retired prior to 2011. Despite their increased payments to the pension fund, the post 2011 retirees’ pension grew at a slower rate than did the pre-2011 group. Further, their pension was based on their last five years’ salary, rather than their last three year salary as was the case for the pre-2011 retirees. Because of these factors, many who retired over the past ten years had to work for more years and contribute more money to earn a lesser pension than did the pre-2011 group. The post-2011 group did not receive a COLA either, though they were vested in the pension system for almost two decades as of 2011. There are other negative impacts that 2012 - 2023 retirees had to endure, but the information above constitutes most of the major effects experienced by this group.

Many teachers who continue to work do so under a dramatically different circumstance than do others who retired prior to 2011. Most current teachers must work until age 67 before receiving their pension. This group’s pension will grow by 1% a year, significantly less than did their colleagues who retired prior to 2011. Many of these current teachers were vested in the pension system in 2011, some for approximately two decades. Regardless, after working well over a decade more than most earlier retirees, they will earn a pension significantly less than those that retired before 2011. (These future retirees do contribute to a 403B.) Further, the 2011 pension reform stipulated that a new retiree must be retired for three years before receiving a COLA (presumably when the RI General Assembly re-establishes a COLA) or when they reach your Social Security normal retirement age, whichever is later. Thus, if a teacher retires at 66 years and 6 months, and their full Social Security retirement age is 66 years and 4 months, the retiree would have to wait until they are 69 and 4 months to receive a COLA.

While the challenges before the PAWG are significant and lend themselves to no undebatable conclusions, certain understandings and principles should guide their recommendation to the RI General Assembly. Please review the points below.

Though by design the 2011 pension reforms affected teachers in varied ways, forthcoming changes should be uniform for all retirees, past and present. (I included two exception to this point, explained in point #2a. below.) As addressed above, the 2011 pension changes affected all retirement groups significantly. While returning everything back to where it was (and should have remained) would prove just, such an undertaking would be logistically and economically most challenging, if not unfeasible. It is best to move forward with a recommendation that impacts all groups similarly.

While reimbursing for lost COLA years may prove too expensive, moving forward the General Assembly should immediately reinstate a full COLA for all retirees, past, present, and future.

While the above should establish a minimum level for change, another approach might include reinstating the COLA to retirees from prior to 2016, and then qualifying each consecutive yearly retirement group annually. As such, each retirement grouping from 2012 onward would endure a five year period before qualifying for the COLA.

Though this arrangement would constitute a shorter no COLA period than the pre-2011 retirees endured, the motion would acknowledge the various shortfalls endured by post 2011 retirees, and allow for a more gradual and feasible implementation process.

Mandate (or urge if mandating is not possible) that all communities require their teachers to participate in Social Security.

Basing any decision on whether retirees are covered by Social Security in the past would not be fair to those who paid into Social Security over the past decades and therefore earned a lesser net annual salary for decades.

Moving forward, consider reducing the years a teacher could qualify for a pension to age 62 (from 67), provided they have taught ten years.

This would permit aging teachers who might be ailing physically to leave the profession.

This would provide an opportunity for younger teachers to enter the profession providing a healthier faculty balances made of veteran, mid-career, and young teachers.

Thank you for your study of this most critical issue and for your forthcoming work to prepare a recommendation to the RI General Assembly. I look forward to your recommendations.

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