Shaken by mandatory pension cutbacks in insolvent Central Falls, RI, unions in Providence yesterday completed a deal with Mayor Angel Taveras to restructure their pensions and help the state capital avoid bankruptcy. Among the concessions, the unions agreed to forgo cost-of-living increases for retiree pensions for 11 years. COLAs alone have placed a heavy burden on the Providence pension system, as the well-publicized case of a fire chief who retired in 1991 with a pension of about $59,000, but now collects $197,000 in annual pension payments, illustrates.
Pensions will also be capped at 150 percent of the state's median household income. Workers would also have to continue contributing toward the pension system until they retire. Currently, they stop making their own contributions after 25 years of service.
The city, whose pension fund is considered less than one-third funded, estimates the changes will reduce unfunded liabilities by $170 million and reduce budget costs by some $18-to-$20 million annually.
The city, whose pension fund is considered less than one-third funded, estimates the changes will reduce unfunded liabilities by $170 million and reduce budget costs by some $18-to-$20 million annually.
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