PROVIDENCE, R.I. — Decades of bad decisions by policymakers, the rising life expectancy of retirees and poor investment returns are among the factors that have made Rhode Island’s pension system one of the most expensive and poorly funded in the U.S., according to portions of a report by the state treasurer.
Portions of Treasurer Gina Raimondo’s report were released to The Associated Press ahead of a news conference Monday afternoon where Raimondo was expected to propose solutions to the pension problem.
Decisions concerning the pension system’s funding and making payments to retirees were largely driven by politics from the 1960s through the 1990s, with officials promising more in retirement benefits than the state could afford, according to the report. Warnings from actuaries that the pension system was heading toward unsustainability appeared, the report says, as early as 1974.
Meanwhile, retirees are living longer, and returns on pension fund investments have been lower than expected during the past decade.
The report warns that the portion of every tax dollar required to support state pensions has risen from 3 cents in 2002 to 9 cents in 2009, and without immediate action, it is projected to rise to 20 cents in 2018.
The state’s current unfunded pension liability may be as high as $9 billion, a figure reached by using private-sector pension accounting rules. Public accounting rules show that liability to be $6.8 billion.
Monday’s report cites a Boston College study that suggests Rhode Island’s pension fund could run out of assets by sometime between 2019 and 2023.
“It is unrealistic to believe that taxpayers can continue to support these ever-increasing required contributions and unfair to let current state employees and retirees believe that this is likely,” the report says.
Gov. Lincoln Chafee was expected to attend Monday’s news conference.