NEARI’s Walsh not surprised many tracking RI pension debate

October 6th, 2011 at 10:27 am by under Nesi's Notes

The National Education Association Rhode Island’s Robert Walsh isn’t surprised that a new poll commissioned by a group that supports Treasurer Gina Raimondo shows many Rhode Islanders have noticed the pension debate.

“It’s been a hotly discussed topic for the entire summer in Rhode Island,” Walsh told WPRI 12′s Tim White on Thursday morning. “John Hazen White has billboards up. So it’s not surprising people are focused on pension reform in Rhode Island.”

Walsh said he hadn’t seen the Engage Rhode Island poll results yet but dismissed its finding that 87% of likely voters believe the state’s $7 billion unfunded pension liability is “a major problem.”

“That’s a loaded question,” he said. “Consider the source.”

Walsh said the task ahead for organized labor and other groups that don’t support Raimondo’s ideas for changing the pension system is to educate voters.

“The job in the next four weeks is to inform the public what the numbers mean,” Walsh said. “Does this poll mention that most teachers and state employers are paying almost the entire normal cost of their pensions? I think not.”

Before the Retirement Board changed its forecasts in April, state employees’ contributions to the pension fund covered 94% of the future cost of their individual pensions and teachers’ contributions covered 95% of the future cost of theirs, the House and Senate fiscal advisors told lawmakers in a presentation Sept. 14.

Under the Retirement Board’s new, more conservative assumptions, state employees’ contributions cover 77% of the future cost of their pensions and teachers’ contributions cover 80% of the future cost of theirs, according to state actuaries Gabriel Roeder Smith & Co. In both cases, taxpayers cover the rest.

Union officials cite those figures as evidence that the state’s current pension system is affordable in light of changes made by lawmakers since 2005. Raimondo and others say the real problem is the unfunded liability for pensions promised in years past to current retirees and vested workers, which were not saved for in advance.

Update: A reader writes in to note that the contribution figures above are only true for “pure Plan B employees” – that is, workers whose pensions are governed by all the changes made by the General Assembly since 2005, many of which do not affect those who were already grandfathered into the system.

For state employees and teachers who are enrolled in the original pension plan (“pure Plan A employees”), their contributions cover only 55% and 51% of the future cost of their pensions, according to the “Truth in Numbers” report Raimondo’s office released in May [pdf]. (See the third paragraph on page 5.)

“I don’t know what the percentage is for plan A/B employees (which assumes the state prevails in the court challenge regarding the pension changes in 2008 and 2009) but suffice it say that it is in between these two figures,” the reader added.

Those numbers also show how rapidly the state has shifted the burden of paying for pensions onto current workers. Before 2005, an employee was only paying about half the future cost of his or her pension, with taxpayers covering the rest; an employee hired today pays for more than three-fourths of it.

Tags: , , , ,

6 Responses to “NEARI’s Walsh not surprised many tracking RI pension debate”

  1. [...] The National Education Association Rhode Island’s Bob Walsh isn’t surprised by some of the findings, but says others results reflect “a loaded question.” Tags: [...]

  2. Don Botts says:

    Here is what I don’t understand. If what Bob Walsh says is true, then all current state workers and teachers with under 10 years of service should be demanding that they be switched from a defined benefit system to a defined contribution system. Their money would be placed in an individual account and therefore would not be used to fund current or future retirees. They would theoretically see a similar rate of return, if not better over the long haul.

  3. Geoff says:

    Would you expect anything less from Mr. Union Walsh

  4. Al Moncrief says:

    RAIMONDO CANNOT GRASP THAT A PENSION COLA IS AS MUCH A CONTRACTED PENSION BENEFIT AS ANY OTHER PENSION PROVISION.

    Raimondo is terribly confused, for such an educated person she has a quite limited grasp of reality. Her stated intention is not to impact accrued pension benefits, then in the next breath she states that she intends to attempt to take accrued pension COLA benefits. I know that she has the intellectual capacity to understand that a COLA is an accrued benefit, that the COLA has the same force in law as any other pension provision. However, at some level she refuses to accept this.

    If Raimondo worked as a treasurer for an insurance company, and one of the products that was sold by the company was an annuity with a COLA, would she argue that the insurance company did not have a contractual obligation to pay the contracted COLA? Perhaps the company desires to use funds set aside for the COLA to construct a new headquarters building. Would Raimondo argue that it was acceptable for the insurance company to breach its contracts with customers who purchased annuities in order to divert funds to another purpose? Also, for an elected official to even consider theft of a contracted benefit from retirees with the hope that their theft may someday withstand court muster is immoral, and a sad commentary on the state of our nation. If you don’t like the terms of a contract, you should not become a party to that contract. This truth is apparent to nearly all Oxford graduates.

    Prospective, legal pension reform options are available. Visit the NCSL website to find a list. Raimondo has stated that she doesn’t want the legislature to have to revisit this issue in two or three years. That is exactly what will happen if the Legislature adopts prima facie unconstitutional pension reforms.

  5. Larry says:

    “Consider the source.”

    Exactly Mr. Walsh..The source of the money is from the taxpayer…Let’s become bankrup and see what happens…

  6. [...] his umpteenth reminder that taxpayers are now spending less than 3% of workers’ salaries to pre-fund pensions, Walsh acknowledges that “the state bears the majority of the [...]