Santa Privitera

n 2008 I retired from the Rhode Island Department of Education after 39 years of public service. For 39 years I paid almost 9% of every paycheck – before taxes - into the pension fund, as mandated by law. Our pensions are not free, as many Rhode Islanders seem to believe.

As you know, inflation has a major impact on the financial security of all senior citizens. Rhode Island claims to care about the well-being of its seniors, yet those of us who retired before enactment of the Rhode Island Retirement Security Act (RIRSA) are now living with the effects of 35% inflation since our COLAs were frozen in 2012, when the terms of our written retirement agreement were changed after the fact. Through no fault of our own, our pensions have shrunk to only 2/3 of what they were when we retired.

Because of inflation, our pre-RIRSA pensions are now approximately equivalent to what current active employees will get as their defined-benefit pension when they retire. However, when current employees retire, they will also have the defined contribution 401K-type portion of their pension in addition to their 40% defined benefit portion. We don’t have that 401K portion. We need our COLA back.

The devastating “unintended” consequences of Rhode Island’s unjust, politically motivated, wall street influenced, over-reaching “pension reform” must be addressed. In my opinion, we need safer investments and more transparency about fees. The pension fund’s investment fees have increased exponentially since 2012. Money that should be used for retirees’ COLA is going to Wall Street instead.

According to RIRSA, we retirees must wait until at least 2031 for a (reduced) COLA to (maybe) be reinstated. For those of us still alive in 2031, inflation will have reduced our pensions even further. How will we afford groceries, medication, house maintenance, and other living expenses with such a dramatically reduced pension, when paying these expenses has already become a challenge?

Rhode Island’s “pension reform” continues to adversely impact the financial security of a specific group of elderly R.I. citizens: former public employees. The token “fractional cola” of 74 cents per day enacted during the 2023 legislative session is too small to be considered inflation protection. And that token only goes into effect during 2024, in the month following the retiree's month of retirement.

In the upcoming legislative session, any new changes made by the general assembly regarding retirement law will probably not go into effect until 2025, forcing us to endure two more years of inflation.

Twelve years is long enough for elderly retirees to go without a significant cost of living increase. We’ve made the sacrifice for the benefit of future retirees, and many who retired with us are no longer here to receive the benefit of that sacrifice. The COLA freeze must stop now. Making us wait any longer is unreasonable and unacceptable.

Additional submission on 12-2-23

I would like to add the following to my previously submitted written testimony dated December 4, 2023.

Included below is a link to the June 20, 2013 report by Monique Morrissey of the Economic Policy Institute, “Truth in Numbers? A Brief History of Cuts to the Employees’ Retirement System of Rhode Island”. This analysis of the 2011 R.I. Retirement Security Act shows:

“…the supposed solutions advanced by Raimondo were extreme, unfair, and counterproductive.”

https://www.epi.org/publication/bp363-brief-history-of-cuts-to-the-empl…

It is mind-blowing to think pension reform could have been done in ways less hurtful to the financial security of elderly retirees.

I’m sharing this report because, in my opinion, it's important to understand the history of how we got here and to learn from it.

Pre-2012 retirees have been without the relief of an adequate COLA for 12 years. For one thing, there should be a limit to the number of years each retiree’s COLA remains frozen before being restored. Twelve years is much too long.

The general assembly has a responsibility to find the funds needed to restore cost-of-living adjustments to public retirees’ pensions. In my opinion, State revenue from the sale of marijuana is a new source of income for the state and could and should be used toward restoration of the COLA.

Respectfully submitted,

Santa Privitera

Submitted via online webform