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SOUTH KINGSTOWN â€“ Town Manager Stephen A. Alfred said he supports the proposed state pension plan announced last Tuesday during a special legislative session at the State House in Providence.
The pension plan, proposed by General Treasurer Gina Raimondo and Governor Lincoln D. Chafee is designed to save the state from its only 48 percent funded pension system and $7 billion unfunded liability.
The more than 150-page bill sets forth a new hybrid plan that combines a traditional pension guarantee with a 401(K)-style plan, a suspension of cost-of-living increases for Rhode Islandâ€™s retired government workers for up to 19 years, and a higher retirement age up to 67 years old for current workers 51 years of age.
In South Kingstown, without pension reform, Alfred said between the town and school budgets, $5 million will have to be devoted to paying into the pension of employees next year. Without reform, Alfred said that amount would grow by $4 million to $9 million next year. With the tax levy cap currently at four percent, only $2.6 million could be raised next year, leaving $1.4 million to still be raised for the town. The municipal pension would also continue to be 77 percent unfunded.
However, if the pension plan is adopted, the municipal pension, collectively with teachers and town employees will be 90.5 percent funded, a decline of $12.1 million in the unfunded liability for the town. If there is no salary changes, according to the revised actuarial analysis, the contribution for employers will be approximately the same cost as last year, Alfred said.
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