Santa Privitera

SUGGESTIONS FOR CONSIDERATION BY THE PENSION ADVISORY WORKING GROUP:

I am one of many who retired before 2011 after contributing to the pension fund out of every paycheck as required by law, in my case for 39 years as a state employee. With inflation increased by 35% since 2011, living without an annual cost-of-living adjustment has adversely affected my standard of living.

One of my suggestions for the Pension Advisory Group is that there should be a limit on the number of years any retiree can be subjected to the COLA freeze. I’ve been living without a COLA for 13 years now, and it gets harder every year. Our COLA freeze is just a tax by another name, and it’s a tax that increases every year with inflation. The Governor’s proposed tax exemption for seniors is only part of a solution. We also need our annual full COLA restored.

A suggestion for financing the COLA could be revenue from the sale of marijuana. It’s a new source of income for the state, and it should be recommended that it be used toward restoring the pension fund before it gets spent on other things.

I would also like the following to be considered:

As quoted from the General Treasurer’s website: “In 2011, the General Assembly passed the Rhode Island Retirement Security Act (“RIRSA”) to address the public pension fund’s large, unfunded liability.”

Well, RIRSA is not working. In my opinion, the following three elements will guarantee it will never work:

1) Because of the hybrid nature of the retirement system, active employees are now contributing less to the “defined benefit” portion of the pension fund, and the state’s required contributions to the pension fund are now proportionally lower than in pre-RIRSA years. According to a 2013 report by the Economic Policy Institute, the state’s hybrid plan also costs more to operate than the previous defined benefit plan. Therefore, in my opinion, Raimondo’s “defined contribution” portion of the plan is holding back the pension fund’s recovery, and it needs to go.

2) After RIRSA went into effect, General Treasurer Raimondo moved 25% of the pension fund into high risk, low return, high fee alternative investments. The pension fund’s investment fees have skyrocketed from $11 million in 2011, to at least $100 million or as much as an estimated $188 million per year. If those fees weren’t so high, there would be no problem restoring retirees’ annual COLA. The current reality is that money that should be used for retirees’ COLA is going to Wall Street instead. The pension fund needs to be returned to lower-risk, lower-fee, more transparent investments.

3) State budget surplus: In 2011, then-Treasurer Raimondo promised that R.I. General Law 35-6-1(d) – the purpose of which was to require all future state budget surpluses be deposited into the pension fund to restore it to full funding – WAS PART OF THE PENSION REFORM PACKAGE and that it was enacted into law to be an annually recurring function. But in 2015, then-Governor Raimondo went back on her word, and via budget Article 14, RIGL 35-6-1(d) was changed to allow future “excess revenues” to be used to balance the annual state budget instead of being strictly used to restore the pension fund. The General Assembly needs to restore the wording of 35-6-1(d) back to its original purpose.

We retirees are in our 70’s, 80’s, 90’s, and we’re hurting. We need the help of the Pension Advisory Group to change the course of our impending future financial insecurity by advising the General Treasurer and the General Assembly to find a way to restore our full annual COLA. Otherwise, our financial security will continue to be adversely impacted by R.I.’s 13-year-old “pension reform”, and our standard of living will continue to fall.

We are depending on you to do what’s right.

Please help us get our COLA back.

Thank you.

Submitted via online webform