The Pension Settlement from the Retirees’ Perspective

Two statements of informed belief, upfront:

  1. On average, government retirees in the Rhode Island pension system are getting such a fantastic deal that it takes some blinders and some audacity for them to be up-in-arms over the pension reform, with or without the proposed settlement.
  2. Even reformed, the myths around the pension system will not be sustainable for more than another decade or so, leading to further reductions down the road, and in that light, the Raimondo reform was an excellent deal, not the least by giving active members money that can’t be touched, via the defined contribution component (which gets a boost in the settlement).

That said, I do have a great deal of sympathy for retirees, especially because, with the settlement, whether they know it yet or not, they now have more in common with outsiders, like me, than they used to, and they’d do well to start assessing their situation from that perspective.

I offer the following analysis in the hopes that it might not be too late for them to do something if they object to the pension settlement as individual human beings. From talk around the state, as well as on Twitter, I get the impression that nobody is stepping forward to make sure they understand their position, which is just plain wrong.

What something they can do, I’m not sure. Step 1 is reaching out to their peers who paid the “legal defense fund assessment.” If that doesn’t work, step 2 is complaining to the judge who certifies the class action suit’s classes. Next comes their own vote. And the last chance, for which the disorganized retirees will need the most independent organization, will be pressuring legislators not to approve the settlement.

Here’s what appears to be the plain truth: It is too late for retirees to form a separate group to negotiate on their behalf, or to preserve their rights as individuals. (That is unless the settlement falls apart, of course.)

Some of the confusion comes from the fact that, on the plaintiffs’ side, there will be two votes. According to the agreement (paragraph 3-c-vi), the only retirees who get to participate in the first vote are “Individual Plaintiffs and Members of the Plaintiff Associations,” as listed in Exhibit A, who “have paid the legal defense fund assessment to a Plaintiff Association.” This is the vote on the settlement agreement as a resolution to the legal action for those who’ve already paid in to the lawyer fund.

According to National Education Association – Rhode Island Executive Director Robert Walsh, this group includes about 7,000 retirees. Of them, 50% plus 1 (i.e., 3,501, if there are exactly 7,000) would have to vote against the settlement to scuttle it.

If that doesn’t happen, then the court will presumably certify the classes. In the case of retirees (paragraph 1-a-v), that includes all of them, without regard to their membership in any “plaintiff group.” Moreover (paragraph 1-b), “any settlement of the Lawsuits will be binding on all class members and no class member will be entitled to elect not to participate.” In other words, that’s it: you’re in.

At that point, there will be a vote of the all-inclusive classes. For the retirees to stop the deal — and to preserve their rights as individuals — 50% plus 1 of them have to vote “no.” For illustration purposes, RIOpenGov.org lists 27,864 retirees; 13,933 would have to vote against the settlement, in order to kill it.

That assumes, of course, that the active unions approve the settlement. Some, like the Cranston firefighters, have already explicitly preserved a separate track, but many have not.

Again, with this settlement, somewhere around 21,000 retirees are finding themselves being dealt the same hand that regular Rhode Island taxpayers, voters, and residents hold with every election and every legislative session: having to organize separately and outside of the governing structures that they thought represented them in order to push back against inside groups that are already organized and that get more than one vote, so to speak.

On the bright side, the retirees are different in that the insiders can’t really get away with pulling out all the stops to demonize them and portray them as evil, selfish interlopers for trying to organize in opposition.

Disclaimer: The views and opinions expressed in The Ocean State Current, including text, graphics, images, and information are solely those of the authors. They do not purport to reflect the views and opinions of The Current, the RI Center for Freedom & Prosperity, or its members or staff. The Current cannot be held responsible for information posted or provided by third-party sources. Readers are encouraged to fact check any information on this web site with other sources.

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