(a) The local legislative bodies of the cities and towns may extend to their respective employees automatic adjustment increases in their service retirement allowances, by a resolution accepting any of the plans described in this section:
(1) Plan A. All employees and beneficiaries of those employees receiving a service retirement or disability retirement allowance under the provisions of this chapter on December 31 of the year their city or town accepts this section, receive a cost of living adjustment equal to one and one-half percent (11/2%) per year of the original retirement allowance, not compounded, for each calendar year the retirement allowance has been in effect. This cost of living adjustment is added to the amount of the retirement allowance as of January 1 following acceptance of this provision, and an additional one and one-half percent (11/2%) is added to the original retirement allowance in each succeeding year during the month of January, and provided, further, that this additional cost of living increase is three percent (3%) for the year beginning January 1 of the year the plan is accepted and each succeeding year.
(2) Plan B. All employees and beneficiaries of those employees receiving a retirement allowance under the provisions of this chapter on December 31 of the year their municipality accepts this section, receive a cost of living adjustment equal to three percent (3%) of their original retirement allowance. This adjustment is added to the amount of the retirement allowance as of January 1 following acceptance of this provision, and an additional three percent (3%) of the original retirement allowance, not compounded, is payable in each succeeding year in the month of January.
(3) Plan C. All employees and beneficiaries of those employees who retire on or after January 1 of the year following acceptance of this section, on the first day of January next following the date of the retirement, receive a cost of living adjustment in an amount equal to three percent (3%) of the original retirement allowance.
(b) In each succeeding year in the month of January, the retirement allowance is increased an additional three percent (3%) of the original retirement allowance, not compounded.
(c) This subsection (c) shall be effective for the period July 1, 2012, through June 30, 2015.
(1) Notwithstanding any other paragraphs of this section, and subject to paragraph (c)(2) below, for all present and former employees, active and retired members, and beneficiaries receiving any retirement, disability or death allowance or benefit of any kind by reason of adoption of this section by their employer, the annual benefit adjustment provided in any calendar year under this section shall be equal to (A) multiplied by (B) where (A) is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the "subtrahend") from the Five-Year Average Investment Return of the retirement system determined as of the last day of the plan year preceding the calendar year in which the adjustment is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent (0%), and (B) is equal to the lesser of the member's retirement allowance or the first twenty-five thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000) amount to be indexed annually in the same percentage as determined under (c)(1)(A) above. The "Five-Year Average Investment Return" shall mean the average of the investment returns of the most recent five (5) plan years as determined by the retirement board. Subject to paragraph (c)(2) below, the benefit adjustment provided by this paragraph shall commence upon the third (3rd) anniversary of the date of retirement or the date on which the retiree reaches his or her Social Security retirement age, whichever is later; or for municipal police and fire retiring under the provisions of chapter 45-21.2, the benefit adjustment provided by this paragraph shall commence on the later of the third (3rd) anniversary of the date of retirement or the date on which the retiree reaches age fifty-five (55). In the event the retirement board adjusts the actuarially assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted either upward or downward in the same amount.
(2) Except as provided in paragraph (c)(3) the benefit adjustments provided under this section for any plan year shall be suspended in their entirety for each municipal plan within the municipal employees retirement system unless the municipal plan is determined to be funded at a Funded Ratio equal to or greater than eighty percent (80%) as of the end of the immediately preceding plan year in accordance with the retirement system's actuarial valuation report as prepared by the system's actuary, in which event the benefit adjustment will be reinstated for all members for such plan year.
In determining whether a funding level under this paragraph (c)(2) has been achieved, the actuary shall calculate the funding percentage after taking into account the reinstatement of any current or future benefit adjustment provided under this section.
(3) Notwithstanding paragraph (c)(2), for each municipal plan that has a Funded Ratio of less than eighty percent (80%) as of June 30, 2012, in each fifth plan year commencing after June 30, 2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five (5) plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (c)(1) above until the municipal plan's Funded Ratio exceeds eighty percent (80%).
(d) This subsection (d) shall become effective July 1, 2015.
(d) (1) (A) As soon as administratively reasonable following the enactment into law of this subsection (d)(1)(A), a one-time benefit adjustment shall be provided to members and/or beneficiaries of members who retired on or before June 30, 2012, in the amount of two percent (2%) of the lesser of either the employee's retirement allowance or the first twenty-five thousand dollars ($25,000) of the member's retirement allowance. This one-time benefit adjustment shall be provided without regard to the retiree's age or number of years since retirement.
(B) Notwithstanding the prior subsections of this section, for all present and former employees, active and retired employees, and beneficiaries receiving any retirement, disability or death allowance or benefit of any kind by reason of adoption of this section by their employer, the annual benefit adjustment provided in any calendar year under this section for adjustments on and after January 1, 2016, and subject to paragraph (d)(2) below, shall be equal to (I) multiplied by (II):
(I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:
(i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the "subtrahend") from the five-year average investment return of the retirement system determined as of the last day of the plan year preceding the calendar year in which the adjustment is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent (0%). The "five-year average investment return" shall mean the average of the investment returns of the most recent five (5) plan years as determined by the retirement board. In the event the retirement board adjusts the actuarially assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted either upward or downward in the same amount.
(ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor Statistics determined as of September 30 of the prior calendar year.
In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%).
(II) Is equal to the lesser of either the member's retirement allowance or the first twenty-five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount to be indexed annually in the same percentage as determined under subsection (d)(1)(B)(I) above.
The benefit adjustments provided by this subsection (d)(1)(B) shall be provided to all retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect, and for all other retirees the benefit adjustments shall commence upon the third anniversary of the date of retirement or the date on which the retiree reaches his or her Social Security retirement age, whichever is later; or for municipal police and fire retiring under the provisions of § 45-21.2-5(b)(1)(A), the benefit adjustment provided by this paragraph shall commence on the later of the third anniversary of the date of retirement or the date on which the retiree reaches age fifty-five (55); or for municipal police and fire retiring under the provisions of § 45-21.2-5(b)(1)(B), the benefit adjustment provided by this paragraph shall commence on the later of the third anniversary of the date of retirement or the date on which the retiree reaches age fifty (50).
(2) Except as provided in subsection (d)(3), the benefit adjustments under subsection (d)(1)(B) for any plan year shall be suspended in their entirety for each municipal plan within the municipal employees retirement system unless the municipal plan is determined to be funded at a funded ratio equal to or greater than eighty percent (80%) as of the end of the immediately preceding plan year in accordance with the retirement system's actuarial valuation report as prepared by the system's actuary, in which event the benefit adjustment will be reinstated for all members for such plan year.
In determining whether a funding level under this subsection (d)(2) has been achieved, the actuary shall calculate the funding percentage after taking into account the reinstatement of any current or future benefit adjustment provided under this section.
(3) Notwithstanding subsection (d)(2), in each fourth plan year commencing after June 30, 2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of four plan years: (i) A benefit adjustment shall be calculated and made in accordance with subsection (d)(1)(B) above; and (ii) Effective for members and/or beneficiaries of members who retired on or before June 30, 2015, the dollar amount in subsection (d)(1)(B)(II) of twenty-five thousand eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars ($31,026) until the municipal plan's funded ratio exceeds eighty percent (80%).
(e) Upon acceptance of any of the plans in this section, each employee shall on January 1 next succeeding the acceptance, contribute by means of salary deductions, pursuant to § 45-21-41, one percent (1%) of the employee's compensation concurrently with and in addition to contributions otherwise being made to the retirement system.
(f) The city or town shall make any additional contributions to the system, pursuant to the terms of § 45-21-42, for the payment of any benefits provided by this section.
(g) The East Greenwich town council shall be allowed to accept Plan C of subsection (a)(3) of this section for all employees of the town of East Greenwich who either, pursuant to contract negotiations, bargain for Plan C, or who are non-union employees who are provided with Plan C and who shall all collectively be referred to as the "Municipal-COLA Group" and shall be separate from all other employees of the town and school department, union or non-union, who are in the same pension group but have not been granted Plan C benefits. Upon acceptance by the town council, benefits in accordance with this section shall be available to all such employees who retire on or after January 1, 2003.
(h) Effective for members and/or beneficiaries of members who have retired on or before July 1, 2015, and without regard to whether the retired member or beneficiary is receiving a benefit adjustment under this section, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60) days following the enactment of the legislation implementing this provision, and a second one-time stipend of five hundred dollars ($500) in the same month of the following year. These stipends shall not be considered cost of living adjustments under the prior provisions of this section.
History of Section.
P.L. 1980, ch. 172, § 2; P.L. 1981, ch. 120, § 3; P.L. 1982, ch. 298, § 1; P.L. 1988, ch. 512, § 1; P.L. 2001, ch. 101, § 1; P.L. 2011, ch. 408, § 11; P.L. 2011, ch. 409, § 11; P.L. 2015, ch. 141, art. 21, § 19.