Rhode Island Pensionary Red

As the Ocean State heads to court this morning to defend its landmark pension overhaul law against a challenge from public sector unions, it’s not clear the state will sport a united front. Gov. Lincoln Chafee this week expressed his view that the state should explore “reasonable settlement options,” while Treasurer Gina Raimondo wishes to remain steadfast: “We should litigate that case forcefully. The law is on our side and we have a very good case.” The kerfuffle is over the legal challenge to the Rhode Island Retirement Security Act of 2011, which Gov. Chafee signed into law a year ago last month, new law that created a hybrid plan merging conventional public defined-benefit pension plans with 401(k)-style plans. It also included a suspension of cost-of-living adjustment increases for retirees and raises the retirement age for employees not yet eligible for retirement. The new law was guesstimated to cut Rhode Island’s $7 billion unfunded pension liability by roughly $3 billion over 20 years—and the state’s hard-pressed cities and towns $1 billion over the next two decades. Five public-sector unions are challenging the law in the Rhode Island Superior Court.