Pension Reforms Highlights : Rhode Island And Michigan

1517 WordsFeb 17, 20177 Pages
Pension Reforms Highlights: Rhode Island & Michigan In order to make a more comprehensive analysis of the two cases presented in this report the information is going to dissected into three categories: Policy, Politics and Public Opinion in order to convey a more detailed view of the reform process. Rhode Island Background As early as 1993, the net present value of the State Employees’ pension fund represented only about 72 percent of the expected liabilities. The Teachers’ fund was in worse shape. Some modest attempts were made by the General Assembly to improve the situation in the mid-2000s, such as raising state employees’ minimum retirement age. While these changes slowed the decline of Rhode Island’s pension fund stability, they did…show more content…
• 2. Implemented a Hybrid Defined Benefit (DB) and Defined Contribution (DC) Plan: The hybrid DB/DC plan aims to reduce DB liabilities with a DC fund while also maintaining support from union groups who desire the security of a DB system. • 3. An increase in retirement age for current employees so that it matched Social Security’s age thresholds. • 4. Extended Amortization Rate of Liabilities. • 5. A plan to help local governments bring their unfunded pension liabilities under control. • Reforms by itself is not enough, it is crucial to assure that the legislature always make their legally required contributions to the pension fund. Public Opinion • Roughly 62 percent of state employees are union members, meaning that law makers in the GA are generally wary of pushing too hard on publicly unpopular policy reform that affected unionized labor. • Pension-reform allies decided that before they could effectively move pension reform through the General Assembly, they needed to ensure that everyone was clear on the risks to the system and on what reform was trying to accomplish. • They determined that forming coalitions of the interested parties in advance of the legislation would effectively lay the groundwork for reform specifics • Reformers choose to campaign for the reform ideas they settled on to gain buy-in from stakeholders prior to any legislative debate. • A blue ribbon panel “Pension Advisory Group” was a driving

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