Cost-of-living adjustments – COLAs – are at the heart of Providence’s pension problem.
The rogue Retirement Board of 1989 awarded 6% and 5% yearly increases to police and fire retirees, which double a pension’s cash value every 13 to 16 years. As I reported this morning, those added costs were pushed by Senate Majority Leader Dominick Ruggerio and Providence’s unions over city leaders’ objections.
To see the impact, look at former Fire Chief Gilbert McLaughlin, whose COLA has boosted his tax-free accidental disability pension by about $30,000 in the last three years alone, from $155,892 in 2008 to $185,672 now, records show. It’s estimated Providence’s pension fund has paid McLaughlin more than $2 million since 1992.
McLaughlin, a Warwick resident, is 75 years old in 2011. His annual pension will be $208,618 when he reaches age 77; $313,685 when he’s 84; $419,781 if he lives to be 89; and $796,871 if he makes it to the ripe old age of 100, estimates by WPRI.com show.
At that point, McLaughlin would have received roughly $13 million in pension benefits since his retirement.
McLaughlin served as fire chief from July 1990 to September 1991, when he surprised former Mayor Buddy Cianci by abruptly quitting at age 55 due to a neck injury earlier in his career. The retiring chief told a Projo reporter the pain had worsened “a little quicker than I thought,” though he added: “It’s nothing I’m going to die from.”
McLaughlin told the paper in 1991 he’d “got crushed” years ago while on duty, and after his neck and shoulders began bothering him, doctors said he should “not to go through another winter” working for the fire department.
McLaughlin is an extreme example, but he’s far from alone. Nearly two-thirds of Providence’s 2,923 retirees got a compounded COLA of 6%, 5% or 3% as of June 30, 2010, depending on when they retired. Here’s how it breaks down, according to Buck Consultants, the city’s actuary:
Tim White contributed to this report.
More coverage of Providence’s pension crisis on WPRI.com:
- Sen. Ruggerio tried to award 6% pension COLAs in Providence (Nov. 30)
- Mansolillo: Providence pension fund hit by ‘comedy of errors’ (Nov. 28)
- Chafee, Taveras plea for pension aid for ‘too-big-to-fail’ cities (Oct. 18)
- Providence pensions look like next target for Taveras, council (Oct. 7)
- Providence’s rosy return rate may mask $1.46B pension gap (June 30)
- Target 12 scrutinizes tax-free disability pensions in Providence (April 28)