Rhode Island Legislator wants a panel to study state retirement system

Rhode Island House Speaker William J. Murphy wants a study of how the state can either finance — or reduce — the cost of $4.9 billion in unfunded pension promises it made to current and future retirees in rosier times.

The bill creates an 18-member panel to study “all aspects” of the state retirement system, including “funding, investments and management, eligibility, age of retirement, benefits, contributions, vesting, disqualification and any other matter that is related to the state pension or retirement system.”

Despite efforts to rein in spiraling pension costs 2½ years ago, the state’s share of the pension bill for teachers alone is expected to soar from $80.2 million this year to a projected $94.8 million next year, and for state employees, from $135.6 million to $148.2 million, according to the state budget office.

New age-and-work requirements adopted by lawmakers in 2005 were aimed at stemming the growth in cost. But longtime state workers and public school teachers can still retire at any age — and newer employees at age 59 — with an almost unheard of benefit in private industry: a defined-benefit pension that pays them up to 75 percent of what they were making in their final years of work, with guaranteed annual cost-of-living increases of up to 3 percent.

Both Murphy, a Democrat, and Rhode Island Governor Donald Carcieri, a Republican, have expressed interest in shifting from a defined-benefit pension plan, in which employees are guaranteed specified benefits when they retire, to a defined-contribution plan, such as a 401(k), for new employees.