4/20/10

RI MUST Change the Pension Fund

The current sorry state of the RI pension fund and its future are squarely before the General Assembly right now and these concerns have surfaced, as they should, in the gubernatorial campaign. General Treasurer Frank Caprio, who is seeking the Democratic nomination for governor, has just come out with a plan of his own to reform the pension plan and curb its excessive spending. Caprio wants to modify the plan by moving all active state workers (plus teachers) into a "hybrid" plan that combines traditional pension coverage (though capped at a much lower level of salary) along with a new 401(k) aspect. This makes much needed sense.

Unions of course don't want any significant changes to the current plan despite the fact that the plan is drowning in red ink and will collapse into insolvency in a decade or less. The unions don't have a solution for the pension crisis.

Neither, it appears, does Patrick Lynch, also a Democrat contender for governor. He doesn't support the move to a 401(k)-type plan. Lincoln Chafee and John Robitaille (independent and Republican for governor respectively) are also calling for fundamental changes in how the pension fund is structured and funded.

Changing the state pension fund (as well as the municipal funds that are structured the same way) is of absolute priority if this state is serious about getting out from under this pension mess we're in.

Unfortunately, many legislators (and their union watchdogs) see things differently. They must be living in a different world than the rest of us.