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C.F. retirees not ready for pension cuts; bankruptcy looming

July 30, 2011

CENTRAL FALLS – City retirees seem to be spurning Receiver Robert Flanders’ proposal to reduce their pension and medical benefits, a course Flanders last week warned could result in the city filing for bankruptcy.
Flanders said he would make an announcement on Monday, but did not specify what it would be about.
After a mass meeting last week where Flanders outlined plans to slash retirement benefits by as much as half, retirees were mailed a packet detailing how each would be personally affected by the proposed changes along with a ballot to be sent back saying whether or not they would voluntarily agree to the reductions. Flanders told reporters after that meeting that a “substantial” percentage of the retirees would have to agree to the changes if the city were to avoid bankruptcy, which he cautioned could result in even more Draconian cuts in benefits.
As of just before noon on Friday, the receiver’s office reported, only 12 of the retired police officers and firefighters had agreed to the voluntary concessions. More than three times as many, 37, rejected the givebacks. Another 57 requested more time to make a decision and 35 did not answer at all.
Flanders’ plan would recalculate – retroactively – the benefits for regular and disability pensions based on new standards he revealed last week. The rules police officers and firefighters retired under allowed them to receive 50 percent of their annual salary as a pension after 20 years (after 25 years for those who retired before July 1, 1992), increasing by 2 percent for each year between 20-25 years of service and an additional 1 percent for each year between 25-30, to a maximum of 65 percent. There was no minimum retirement age.
The new offer by Flanders is 40 percent after 20 years (with the same 2 percent for each year between 20-25 and 1 percent for each year between 25 and 30. But anyone who retired before the age of 60 will be deemed to have taken early retirement, which reduces benefits substantially and that reduction is retroactive.
Those who retired with a disability pension would be reduced from 66.6 percent of final salary to 50 percent.
Cost of living increases would be changed from 3 percent to 2 percent and they would no longer be compounded. That means a retiree with a $30,000 annual pension would get a $600 COLA, but the next year, the COLA would still be $600, it would not be calculated on a $30,600 base.
The receiver, who is also negotiating to get concessions from unions that represent active employees, told reporters it would be a “deal breaker” in avoiding bankruptcy if any of the constituent groups, retired or active refused the givebacks he is looking for.

 

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