CUMBERLAND — The town council Wednesday will consider a resolution authorizing Mayor Daniel J. McKee to submit to the state a funding improvement plan for the town pension system. The council meeting begins at 7:30 p.m. at Town Hall, 45 Broad St.
The Rhode Island Retirement Security Act of 2011 also requires that the town create a funding plan to improve the funded percentage of its pension fund to 60 percent within the next 20 years.
To achieve that goal, the town entered into a $30,000 contract with the Indiana-based Nyhart Company to provide pension design and cost modeling for the town's pension fund, as well as various plan design scenarios that show the impact on the pension plan's liability and future contribution requirements and 30-year projections for each of those scenarios.
With that work completed and a funding improvement plan for the town pension system in place, the council will vote Wednesday to authorize McKee to forward the plan to the state.
Rhode Island's far-reaching Rhode Island Retirement Security Act of 2011, which took effect July 1, 2011, created a hybrid plan merging conventional public defined-benefit pension plans with 401(k)-style plans. It also included a suspension of cost-of-living adjustment increases for retirees and raises the retirement age for employees not yet eligible for retirement.
Officials estimate the new law will enable the state to trim its $7 billion unfunded pension liability by roughly $3 billion over 20 years. They also say the move will save cities and towns $1 billion over the next two decades.
The town had another agreement with Nyhart to provide actuarial services pertaining to the pension, an accord that was approved by the town council last September. The mandated actuarial report and evaluation of Cumberland's municipal pension plan and other post-employment benefits had to be submitted to the state by the end of last year