Is pension reform a ‘lose-lose’ proposition? State panel is going to find that out 

Twelve years is a long time to harbor resentment. 

Ask the 28,000 retirees in the state pension system, who are struggling to keep up with daily expenses without the guaranteed annual pension adjustments they were promised. Or the 60,000 active workers within the pension system, working demanding jobs for more time than they originally planned with a smaller pension benefit when they eventually retire. Or the dozens of public employee union leaders who have watched pension reform-induced staffing shortages and high turnover reach crisis level. 

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Pent-up frustrations are spilling over as a new state panel delves into the 2011 pension overhaul aimed at shoring up the state’s beleaguered pension fund. And some critics aren’t convinced their complaints, or the opportunity to remedy them, are being taken seriously. 

“I could write the conclusion of the report right now,” said John Breguet, a Smithfield resident who retired from his job as state labor relations administrator in 2007, after nearly 29 years. “They are going to say, ‘Let things stay the way they are.’” 

That’s been the case for the last 12 years, despite demands from Breguet and other state retirees. This year, their battle cry grew louder, aided by a new Facebook group that mobilized retirees to rally at the State House and flood lawmakers’ inboxes. The R.I. General Assembly took note.  

Not enough to give retirees what they have been clamoring for, namely, reinstating the compounded annual cost-of-living adjustments that were suspended in 2011. But enough to create a review panel to study, and recommend potential changes to, the state pension system. 

The 11-member Pension Advisory Working Group, created under Treasurer James Diossa’s office, kicked off Nov. 4. Its charge: Review the effects, including unintended consequences, of the 2011 pension reforms on the state retirement system, and prepare a report outlining their findings and recommendations, due to state leaders March 1.  

It’s a gargantuan and unenviable task, unlikely to satisfy the aggrieved parties. Even after the inaugural meeting, complaints emerged. Breguet, for instance, bemoaned the State House location as inaccessible for aging retirees. He also wasn’t happy that the first two meetings didn’t allow retirees to speak.  

George Nee, president of the Rhode Island AFL-CIO and co-chair of the pension working group, pushed back against those critiques. 

“I don’t know what people’s expectations are, but personally I think it’s unfair to say at this stage, when we’ve only had one meeting, it’s not a fair process,” Nee said in an interview minutes before the start of the group’s second meeting on Nov. 30. 

No matter what the group decides, Nee knows someone won’t be happy. 

“It’s a safe bet to say it’s kind of lose-lose,” Nee said. 

And in the end, the review may not make much difference if state legislators opt not to act on the recommendations. 

State House leaders, including Gov. Daniel J. McKee, House Speaker K. Joseph Shekarchi and Senate President Dominick Ruggerio, have remained noncommittal, each saying separately that it’s too early to comment until the group submits its report. 

Diossa, who was charged by legislators with overseeing the review process including when and where meetings are held, said he’s listening to the feedback. He agreed to move the next meeting on Dec. 14 from the State House to the Community College of Rhode Island’s Warwick campus to address accessibility concerns of retirees. 

While verbal public comment was not included in the first two meetings, an online portal allows for written testimony at any time. 

“We hear almost daily from retirees,” Diossa said. “I understand their situation, I really do. But at this point, we’re just setting the stage with the facts.” 

The inaugural meeting on Nov. 4 featured a dizzying array of charts, graphs and Powerpoint slides detailing the financial health of the state pension fund. 

Breguet, and other retirees listened as experts explained the financial achievements of the unpopular pension cutbacks: slashing the burden to state taxpayers nearly in half over the last 12 years, while shrinking the dangerously-high $7 billion unfunded liability in 2010 to $2 billion, or 60% funded, as of June 2022, according to the most recent data available. It’s still well below the 80% funding Raimondo hoped to hit before reinstating COLAs, a benchmark which critics consider arbitrary, and, for aging retirees, too far in the distance. 

“What really angers me is the hypocrisy of saying you’re going to get it back in 2031,” Breguet, who is 79, said. “By 2031, most of us will be dead.” 

Meanwhile, the financial hardships are happening now.  

Take Sandra Marzilli Paquette, who lives in Cranston. The 78-year-old retired special educator just dipped into her savings again to pay the medical bill for Murphy, her 4-year-old Bichon Frisé, who suffers from a protein insufficiency that will require continuous care. 

“I don’t want to tell you what the bill was because I don’t want my husband to find out,” Paquette said. 

While she has given up vacations and grocery store indulgences, other retirees have faced even more dire financial straits. 

“A lot of them are elderly, and it’s a disgrace they’re not being treated right,” said Rep. Charlene Lima, a Cranston Democrat and retired teacher who sought unsuccessfully to have COLAs reinstated in the state’s fiscal 2024 budget. “I think they finally realized that they got robbed of their pension, and I think they are suffering so much, and they’re seeing how money is being spent in so many other places and helping other groups.” 

Which is why Paquette, along with other retired teachers and state workers, are spending their retirement days organizing rallies, writing letters to lawmakers and sitting for hours in hard-backed folding chairs at the State House, listening in to the pension working group. 

“When this first started, while it was upsetting and inconvenient, it wasn’t a major trauma,” Paquette said of the pension cuts. “But as time has gone on, inflation has spiked and I am living on the same income I was 12 years ago.” 

Equally outraged are the public employee union leaders and active members, who like retirees, don’t look favorably on the pension cuts. Their grievances, voiced during the working group’s second meeting on Nov. 30, focused on the plight of people still working in public sector jobs, who have to work longer for a smaller pension, or else face an early retirement penalty. 

“This devalues our members, dissuades potential employees and puts current employees and retirees on a path to dramatically reduce retirement security,” said Frank Flynn, president of the Rhode Island Federation of Teachers and Health Professionals. 

Paul Valletta, a lobbyist for the Rhode State Association of Fire Fighters gave a  sharp-tongued rebuke of Gina Raimondo, who led the pension reforms in 2011 as state treasurer. Valletta accused Raimondo of elevating her own political career at the expense of public servants like firefighters, who now have to work an average of seven years longer before retirement under the reforms. 

“Nobody belongs on a fire truck at 67 years old,” Valletta said. “It’s a very physical job. You retire not because you want to but because your body tells you that it’s over.” 

Union leaders have their own set of demands, focused on improving the lives, and retirement income, of active employees. Among the proposals put forth: lowering the retirement age and raising the annual accrual rate, which determines a pension benefit as a salary percentage.  

The wish lists of active and retired employees and their leaders are long. But the funding to give them what they want will be scarce. Not only is the pension fund still struggling to free itself from the albatross of decades of debt, but an economic downturn is expected to strain on the state’s general revenue fund in the years ahead. Meanwhile, the state has to use or allocate the windfall of federal COVID-19 stimulus funds by the end of calendar year 2024. 

Diossa backed legislation during the 2023 session before the working group was formed to give a $500 one-time stipend to retirees rather than reinstating COLAs. He’s still open to a stipend, though he stressed that, as of now, “everything is on the table” when it comes to maintaining pension fund growth even as the state prepares to tighten its pursestrings. 

Breguet, meanwhile, isn’t giving up on his quest to bring back COLAS for retirees. He’s not sure that the pension working group members are listening, but he’s hoping that lawmakers are, especially if retirees can demonstrate the force of their numbers at the upcoming Dec. 14 meeting. 

“I think there are 27,000 retirees, so 26,500 would be pretty good for turnout,” he said. 

Nancy Lavin is a staff writer for the Rhode Island Current.