Providence Mayor Angel Taveras on Monday signed a pension reform ordinance into law that freezes automatic cost-of-living adjustments for retired municipal workers.
The mayor signed the ordinance less than an hour after City Council passed it unanimously in a second and final vote. The council gave its initial approval last week, 15-0.
Taveras said the plan is critical to returning the financially struggling capital to fiscal health. His budget plan for the coming fiscal year hinges in large part on nearly $16 million in savings from the freeze.
One large union supports the plan. The firefighters union has not endorsed it. The measure could be challenged in court.
According to a city news release:
- The reforms suspend all guaranteed annual raises 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.
- 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.