Central Falls slashed one in three of its retirees’ pension checks by more than half this month, with the majority of the city’s former public-safety workers set to lose tens of thousands of dollars a year.
Receiver Robert Flanders reduced 48 of the city’s 141 police and fire pensions by 50% or more, with all but three of those cut 55% from their original amount, according to financial records obtained by WPRI.com.
Only 27 pensions were left untouched. Eight of those are being paid for from a separate pool of assets, while 19 others were shielded from cuts because they’re worth less than $10,000 a year.
Three of the payouts that lost the most cash were granted in July:
- Former acting fire chief Gerard Dion’s pension dropped by $41,684 a year, from $75,789 to $34,105;
- former firefighter Robert Noury’s dropped by $37,628, from $68,414 to $30,786; and
- former policeman Steven Sullivan’s dropped by $36,493, from $66,351 to $29,858.
The smallest reduction went to Catherine Frechette. Her annual pension dropped from $11,522 to $10,000, a cut of $1,522 or 13%. Michael Long, the lawyer and retired police sergeant who is advising the retirees, saw his annual pension cut by $11,512, from $35,423 to $23,911.
Retirees are receiving their new, lower pension benefits for the first time this month after getting the full amount for a final time in August. Once they learned about the pending cuts, Dion and Noury both said they wished they could have continued working rather than retire, though that didn’t happen.
Central Falls filed for bankruptcy Aug. 1 after too few retirees agreed to voluntarily accept the original sizable pension cuts proposed by Flanders. He imposed the cuts unilaterally after the bankruptcy filing, saying the city did not have enough cash to keep paying full benefits.
Lawyers representing Central Falls’ retirees and workers have until Sept. 17 to file their first round of objections in the bankruptcy case, but for now it appears there is nothing to stop Flanders from only sending out the sharply reduced pension checks. No hearings in the case are scheduled at this time.
While the cuts in Central Falls are eye-popping, officials there argue the reductions are still a better outcome than what transpired in Prichard, Ala., where the pension fund ran out and stopped paying benefits altogether. Flanders has also begun charging the city’s retirees premiums for health insurance coverage for the first time.
Decades of poor record-keeping in Central Falls have made the situation worse. The largest benefit cuts increased from 50% to 55% last month after Flanders’ staff discovered errors in the city’s pension documentation.
Flanders has ordered an audit of Central Falls’ files and will ask retirees to certify that the information on record about them is correct, he said in an Aug. 24 letter. Some pensions could be increased if errors are discovered, but they will not be decreased further if employees correct bad information, Flanders said.
Flanders also broached the possibility that more cuts could be coming down the road. “Please be advised that I reserve the right to make future changes to benefits or to conduct investigations into the appropriateness of such benefits, including disability benefits,” he said in the letter.
• Related: Central Falls set to file bankruptcy exit plan delayed by Irene (Sept. 1)
• Related: Why Central Falls owes its retirees $80 million in benefits (July 19)
(photo: Ted Nesi/WPRI)