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Steve D: What state official has said the Warwick plans are in "great shape." That's the first I've heard of that. And, the city officials don't overestimate the returns on the pension plans.

Here is an example of the real problem: The city employees' plan is 71% funded against where it should be. The presumed interest rate is 7.5%. That rate is based on the proposition that the plan has 100% of what it should have set aside already in the clover. But it doesn't. According to the mayor it has only 71% of the required amount set aside. Now to catch up the yield can't be 7.5% but a much higher number -- or the city needs to put in millions per year in additional contributions to keep the 7.5% a good working projection (which it isn't by the way).

Where are those millions per year going to come from? We are already increasing taxes as much as we can. So, city services must go. And when they go, younger employees get laid off. Their contributions are no longer there to float the older employees. So, each year the situation gets worse. The pension requires a higher per year contribution even though there are fewer workers contributing. More people get laid off to carry the pension that has an older and older employee population. All of a sudden the older employees see the handwriting on the wall. They retire.

We all know what happens next. It is called the Central Falls syndrome.

From: Avedisian looks to address weak sister of city’s 4 pension plans

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