Raimondo’s office admits second error in pension testimony

November 8th, 2011 at 5:16 pm by under Nesi's Notes

Dingley, left, with Raimondo and actuary Joe Newton

Treasurer Gina Raimondo’s office has acknowledged another error in its Oct. 24 testimony to the joint finance committee about the pension bill.

An explanation of how the legislation would impact a hypothetical retiree miscalculated his pension benefit under current law because it failed to account for changes lawmakers made to the system starting in 2005, Deputy Treasurer Mark Dingley said in response to inquiries from WPRI.com.

“There was a mistake made,” Dingley said on Tuesday. The treasurer’s office has also rewritten a section of the bill that assumed state troopers receive Social Security benefits after WPRI.com reported that they do not.

The new mistake is on page 10 [pdf]. The treasurer’s office told lawmakers “Joe Smith,” a teacher with 28 years of service who is 57 years old, will earn a pension benefit equal to 59.25% of his final average salary as of June 30, 2012. The correct figure is 57.75%, because the General Assembly reduced the amount workers accrue each year.

Therefore, if the Raimondo-Chafee bill passes, Joe Smith’s final defined-benefit pension accrual when he reaches age 62 would be 62.75%, not the treasurer’s figure of 64.25%, and his pension if he retires at 62 would be $49,949, not $51,143, under the first of three transition rules for current workers set out in the bill.

The figures given for Joe Smith’s pension benefit under the other two options are also too high because of the error. A corrected version of the calculations will be given to the joint finance committee at Wednesday’s hearing, Raimondo spokeswoman Joy Fox said. The two panels are expected to vote to approve the bill on Thursday.

The mistake was flagged by Anthony DiGioia, a retired assistant U.S. attorney for Rhode Island, who was skeptical about some of the treasurer’s claims and shared his findings with WPRI.com. “I spent 30 years trying cases – I tell people I was in the suspicion business,” he said.

DiGioia said he’s been dismayed by the way the pension debate in Rhode Island has played out this year. “I can’t help but see this as yet another example of how the well-to-do have gotten the poor yelling at the poor while they’re not yelling at the rich, and so that’s a big part of my interest,” he said.

In response to another question about the bill, Dingley said workers who retire at an earlier age with an actuarially reduced pension can include the smaller defined-benefit they would earn after June 30, 2012, when it gets calculated. There is no actuarial reduction for retirees who take only the benefit they earned up to that date. Retirees can keep the amount in their defined-contribution account under all scenarios.

(photo: Ted Nesi/WPRI)

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13 Responses to “Raimondo’s office admits second error in pension testimony”

  1. Jim Donahue says:

    He found a mistake and they looked and said yes we made an error.

    It’s not as if this changes a whole lot although the union Mafia will blow this up I’m sure.

  2. Rich Coia says:

    The treasurer’s office still has not had the actuarial reports changed to reflect the last two pension changes since 2005. Maybe this is why they forgot to include this in their calculations!

    I cannot get an answer as to why the savings from the last two pension changes are not reflected in the current figures used my the Treasurer’s office. I bet it would make the picture a little brighter!

  3. Looks like the General Assembly is in a major rush to pass the bill so they can find out what is in it!!!
    What other errors are in the bill that is being scuttled through like a blur???

    The General Assembly has a fiduciary duty to analyze this crucial area BEFORE causing negative harm to their constituents. Where is the due diligence? We are talking about peoples’ lives.

    Looks like all they care about is their Thanksgiving turkey.

  4. Jim Donahue says:

    Funny no one complains when a union bill is pushed through like raising the drop out age to 18 so the stats will show more students than there are.

    1. ronald says:

      Jim,

      the “bad guys” are in the State House…..sure there are problems with the Public Sector and Private Sector that need to be addressed but this is what “they” want – employees in both sectors pointing fingers and it becomes divide and conquer. Let’s work together to fight the people who really have caused this State to become the State of Depression and not Hope. These certain people and special interest groups have been milking the system and hurting people’s welfare for decades in this State. These are the politicans (and the list is very long) and special interests who have continued to be voted in and its a problem with the current system which allows for this greed and mismanagement and illegal proposals to be placed on us people without remorse and consequences.

  5. Lynn says:

    She is an embezzler, but they will not just kick her out! Before our state really does go bankrupt, like she has been saying all along, “we can’t fund your pensions, folks, we are billions in the red.” If I were governor, Gina dear, you would have been shown the door a long time ago. The money is going to go all in your little designer coat pockets. That is what she has had in mind since Jan. 4th, 2011. They are being too easy on her, essentially. If this were another state, like California, she already would have been finished as an elected official-done-doggone-long-gone-il finito-gone-a goner, recalled, forced to resign. She should be held accountable, she is causing an uprising, turning our state into a war zone. Chaos, chaos, and more chaos is all that’s been happenening ever since Donald Carcieri left office. If they’d only just simply pull the plug on this whole thing, this pension reform dew, then maybe they’d finally be some peace around this town once more.

    1. Grant says:

      OMG! You are holding up California as the benchmark for accountability?!?! The reason CA and RI are in these messes is because we dole out benefits like there is no tomorrow. But finally, government has allowed this dialog to be exposed to the public and the public is flabbergasted. Well it is about time! Accountability? Are you kidding? Your solution is to shut down the public dialog, restore a false “peace in this town” and live high on the hog through unaffordable benefits until the whole system turns into one big Central Falls under Federal receivership. Great solution…

  6. Listen_Here says:

    The third error is that current employees will “keep all the benefits that they have earned to date.”

    If you worked between 5 and 10 years say, paying in 8.75% under the current pension system, then come July 1, 2012 you vest immediately into the “new” pension system. This is complete with a later retirement age (67) and reduced benefits.

    Well, a new employee comes along and for 5 years pays 3.75% for the same benefit.

    What happened to the other 5% that was paid for 5-10 years into the pension system?

    Well, who knows?

    Some have claimed that instead of 1% per year in the “new” pension system, you will get 1.6% per year from your old payments.

    So wait?

    3.75% payroll deduction = 1% salary per year in new pension plan
    8.75% payroll deduction = 1.6% salary per year in new pension plan

    so

    3.75% buys you 1%
    8.75% buys you 0.6%

    How does that add up?

    Do you really keep “all of the benefit” if the retirement age changes so drastically?

    This would not be so infuriating if they said: “You know what, we broke the contract. We’ll give you a chance to cash out.”

    I tell you what will not stand up in court. You cannot take people unvested in a mandatory system and “automatically” vest them without consent and without giving them a way out of the contract first.

    It violates every principal of contract law.

    1. Listen_Here says:

      edit to the above

      It should say:

      3.75% buys you 1%
      5.00% buys you 0.6%

      1. ronald says:

        I agree with you, Listen_here, 100%! They are breaking the law…it is illegal, unfair and downright inmoral what they are doing and want to do to people in this State. They want to just shove this Pension reform bill down our throats without remorse for its consequences on teachers, retirees, State workers, firefighters and local town and city employees who will also be effected and maybe more so in the future! Last night’s Union Rally showed solidarity and allow our voices to be heard! But this is not only about State employees it is about every individual in Rhode Island who lives here under this corrupt system. Everyone needs to come together — private, State, teachers, retiree’s, soon-to-be retiree’s, our younger generation who supposed are “Our Future” and show solidarity and voice their anger and concerns that we will no longer stand for this “rape” of our ability to live a decent life and insult of our intellect! And yes, they can’t wait to get this Pension Reform bill pass so that they can sit down like corrupt knights of the roundtable and eat that very fat Thanksgiving turkey filled with money and the faces of the poor, elderly, children and the disabled in this sewer pipe State! It’s time to change the system!

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  8. g says:

    in that legislation, Gina has promoted herself from ex-officio board member to Treasurer of the Retirement Bd.– under the new hybrid system, there will be lots of 401k cash to invest in outside companies. And it looks like she will be in charge of funneling that cash to outsiders.

    1. Ted Nesi says:

      G, as I understand it, the vendor chosen to manage 401k money will be picked by the State Investment Commission (which the treasurer also chairs), not the Retirement Board.