Special Session 2011: Pension Showdown Begins

Special Session 2011: Pension Showdown Begins

Calling on state lawmakers to avoid making commitments before hearing all of the facts, House Speaker Gordon Fox kicked off the General Assembly’s special fall session on pension reform by suggesting all sides are going to have to make difficult decisions if the state is going to tackle a nearly $7 billion unfunded pension liability.

A joint session was held last night at the Renaissance Hotel next to the State House, with Fox and Senate President M. Teresa Paiva Weed bringing in two pension experts to offer analysis on how to address Rhode Island’s pension issues.

The experts spent the majority of their presentations offering a broad overview of pensions, ranging from very basic back background information (explaining what a pension is, for example) to breaking down the state-by-state numbers and explaining why some states have fully funded pension systems and others have struggled to keep pace.

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Running Out Of Road

One of experts was Kil Huh, research director for the Pew Center on the States, a nonprofit organization with offices in Washington, DC, and Philadelphia that identifies and provides solutions to critical issues facing states.

Huh offered the national perspective on pension issues, noting that virtually every state has seen in a drop in tax revenue and that for FY 2012, 45 states had budget shortfalls. The poor economy has forced some states, including Rhode Island, to cut back on its pension contributions, which has led to the problems the current system currently faces.

“Some states that have kicked the can down the road are running out of road,” Huh said.

Poll Shows Support For Pensions

Diane Oakley, Executive Director of the National Institute on Retirement Security, a nonpartisan non-profit research institute based in Washington, DC. offered a more general breakdown of the key aspects of pensions for the General Assembly.

Oakley also discussed a poll her organization conducted which suggested 81 percent of those asked believe all American need a pension or independence and self reliance. The poll suggested both teachers and public safety workers deserved pensions and also said that knowledge of employee contributions increases support for public pensions.

AARP Criticized Pension Advisory Group

While the presentations went smoothly, not everyone is completely willing to move forward with slashing pensions to fix the system. Prior to the meeting, the AARP issued a letter saying average residents with a pension should be given more of a voice in the process.

“It troubles us,” AARP State Director Kathleen Connell and State President Anthony J. Regine wrote, “for example, that the Pension Advisory Group members made the time to listen to selected finance experts but provided no way for everyday people who may be affected by the proposed changes to voice their concerns.”
The letter said the threat to cut pensions destroys the confidence of retired people.

“AARP is committed to helping ensure that Rhode Islanders have the resources they need to live their retirement years with dignity,” the letter stated. “Retired people have planned their lives based on a long-honored principle that they could rely on the pension benefits they worked hard for and contributed to their whole lives. Destroying that confidence is a threat to all current and future retirees. It imperils the very concept of planning for retirement security.”

 

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