The Rhode Island Retirement Security Act of 2011 (RIRSA)

Executive Summary

• November 17, 2011
  passed in the House of Representatives 57 -15 and in the Senate 35 - 2
  
• November 18, 2011
  signed by Governor

The passage of the Rhode Island Retirement Security Act represents what can happen when a thoughtful process and leaders come together for the people of Rhode Island.  RIRSA passed because Rhode Islanders called for action and change. This bill is a great step forward as the state continues to work toward a secure path of growth and prosperity.
RIRSA represents the culmination of 11 months of thoughtful, fact-based analysis and input from retirees, employees and taxpayers. It is affordable, sustainable and secure. The law:

• Provides retirement security to hard working public employees
• Saves Rhode Islanders approximately $4 billion over the next two decades
• Keeps costs steady and predictable for taxpayers for decades to come, while sharing the risk fairly among all groups – state employees, teachers, municipal employees, retirees and taxpayers
• Immediately reduces the unfunded liability by about $3 billion
• Brings the funding status of the state system from 48 percent funded to over 60 percent funded and put it on a healthy path

RIRSA’s design was rigorously stress-tested through actuarial and legal analyses, and discussed with a wide range of stakeholders across the state.

RIRSA provides a secure retirement for all 66,000 members of our state retirement system.  This comprehensive law modernizes and ensures that the pension system is well-funded, while providing a similar level of retirement benefits for active employees as the old system, within a structure that shares the market risk more evenly between taxpayer and employee. 

The new design encompasses safeguards to prevent the annual pension line item in the state budget from spiking to unaffordable levels in the future. It also balances the current cost burdens, across all stakeholders – employees, retirees and taxpayers.  In addition to stabilizing the state-administered pension system, its self-correcting mechanisms are designed to avoid the need for subsequent reforms.
RIRSA design components include:

• Cost-of-living adjustment tied to the funding level of the pension system
• Tying cost-of-living adjustments to actual investment returns
• Raising the retirement age to match the Social Security retirement age, with transition rules for those closer to retirement
• Creating a combined defined benefit pension and mandatory defined contribution program

To learn more about RIRSA, visit: http://www.treasury.ri.gov/secure-path-ri/legislation.php