Three out of four ain’t bad.
That would be one way to look at the pension reports filed prior to the April 1 deadline to meet the requirements under the Rhode Island Retirement Security Act, the state pension reform bill approved last November by the General Assembly and signed into law by the governor.
Another way to look at it is that, with the exception of the closed Police and Fire Pension I Plan, Warwick pension plans are in far better shape than many other municipalities.
A third way to look at it is the position being taken by Mayor Scott Avedisian.
In an exchange of emails last week with the Beacon, Avedisian disclosed he and other city representatives met with representatives from the General Treasurer’s office last Tuesday and that they are working on plans to address the underfunded Police and Fire I plan. Yesterday, he expanded on those plans, saying one of the options he is considering is the purchase of life insurance for retirees with the city as the beneficiary, as is being done in Bristol.
According to the pension reports, that plan is 22.3 percent funded. Further, if the city were to meet the annual required contribution for a 30-year level payment amount, it would need to increase its projected payment from $14.8 million to $21.2 million in the next fiscal year. The $14.8 million is based on a 40-year level payment plan adopted 18 years ago, which Avedisian feels the city would be foolish to abandon, with 12 years to go.
Avedisian said he has enlisted “a retired judge and a prominent
attorney to look at the plan to see if there are other avenues available to assist in the funding mechanisms.” The mayor did not name those people he has contacted, but went on to say, “We are also looking at other scenarios that might in fact look at strengthening the overall pension fund.” He said he would ask them to do a cost analysis of purchasing life insurance.
Joy Fox, spokeswoman for General Treasurer Gina Raimondo, said the groups talked about possible ways to tackle pension problems.
“The mayor and his staff understand the complexities of their plans and were prepared with the results of their updated experience study and assumptions,” she said.
Avedisian said, “We discussed the four pension plans that we administer and brainstormed a number of options to shore up the one plan that is problematic.”
Fox went on to say, “The treasurer believes it is important to remember there is no one-size-fits-all solution for these locally-administered plans. Each has unique situations, varying widely in their design, funding status and membership. In light of this, she remains committed to working with municipal leaders as they develop comprehensive solutions to achieve retirement security for their employees.”
Early in the discussion of state pension reforms last summer, the city administration was proactive in adopting the more conservative investment return and mortality assumptions that have now been adopted by the state. This reduced the funded ratio of the pension plans as calculated by actuaries. Nonetheless, the city’s three other plans are all above the 60 percent funded threshold considered as critical.
The Police II plan is 86.5 percent; Fire II is 78 percent; and the Municipal Employees Retirement Plan is 71 percent funded.
“While the city of Warwick Municipal Retirement Plan [Warwick MERP] was not included in this analysis, we believe that the future experience of Warwick MERP, with regard to termination, disability, mortality, and compensation increases, will be similar to those expected in other municipal retirement systems in Rhode Island. Therefore, we believe these updated assumptions are consistent, reasonable, and more accurately portray the retirement system’s liability and cost,” wrote Joseph P. Newton, FSA, EA, MAAA, senior consultant with Gabrier Roeder Smith & Company, in his report to the city.