Surrounded by youth from across Providence, Taveras signs ordinance saving city pensions and positioning city for the future.
Surrounded by youth leaders from across Providence, Mayor Angel Taveras today signed a comprehensive pension reform ordinance into law that saves city pensions and positions Providence for the future. The Mayor signed the ordinance less than an hour after the structural, sustainable pension reform plan was unanimously approved in a second and final vote of the City Council.
"The Providence Pension Protection Plan is a big step toward the necessary structural changes we must make to put Providence on a sustainable fiscal path and position our city for the future. These reforms have overwhelming support from the community, business leaders and the Local 1033 Laborers union," said Mayor Taveras.
During his budget address one week ago, Mayor Taveras called on the City Council to pass the Providence Pension Protection Plan. City actuaries expect the reforms to save at least $16 million and reduce the city's unfunded pension liability by more than $236 million.
The reforms suspend all guaranteed annual raises (COLAs) for retirees until the pension system is 70 funded and caps all future pensions at one-and-a-half times the median state household income. The reforms also reduced the disability benefit from 66.6 percent of an employee's final salary to 50 percent. Lastly, the reforms changed current rules regarding payments into the system and will now require employees to pay into the pension system for as long as they are earning credit toward a pension.
Mayor Taveras and the City Council have spent months examining the city's pension crisis and have developed a comprehensive plan to save Providence's pension system for current employees and retired city workers. The Providence Pension Protection Plan will save pensions for current employees and all of Providence's retirees and will allow the city to protect and improve the health, safety and quality of life for all Providence residents.
"I want to thank the Mayor for signing this important piece of legislation," said City Council President Michael Solomon. "More than six months ago the City Council set out to fix the pension system with the goal of forming recommendations that would result in a sustainable system for the city, taxpayers, and retirees. After much testimony and deliberation, our Subcommittee on Pension Sustainability made a series of recommendations that will substantially reduce our unfunded liability and put our city and pension system on a path towards fiscal stability."
"Comprehensive pension reform was critical to addressing the city's dire financial situation and protecting retirement benefits for current employees and retirees. With an unfunded liability over $900 million and an annual required contribution skyrocketing, we recognized that the system was unsustainable and chose to act," said City Councilor David Salvatore (Ward 14), who chaired the Subcommittee on Pension Sustainability. "I thank the Mayor and my colleagues for supporting this reform and ensuring that Providence's brightest days are yet to come."