By Ted Nesi
PROVIDENCE, R.I. (WPRI) – More than half of Rhode Island’s 39 cities and towns have an independent pension plan that’s not part of the state-run system, but only one of those plans is funded above the 80% level experts say is adequate.
The 36 locally run plans spread across 24 cities and towns are the next big battleground in Rhode Island’s pension fight after they were largely excluded from the overhaul approved last month. A WPRI.com analysis of their financial health shows 13 of the 24 communities’ local plans are in more dire straits than the state retirement system was before the new law.
Unlike the dozens of pension plans in the state-run Municipal Employees Retirement System (MERS), which are required to be funded and are mostly in good shape, two-thirds of the independently managed so-called “non-MERS” pension plans are classified as “at risk” by the auditor general’s office.
The healthiest locally run pension plan is Jamestown’s police plan, which is 99% funded, followed by Middletown’s plan for most employees hired before 2001, which is 78% funded.
After Central Falls’ two plans, which are being restructured in bankruptcy, the worst-funded are in Cranston (16% funded), Scituate (23%), Coventry (25%), West Warwick (26%) and Johnston (27%).
Using the most recent data from the auditor general’s office, WPRI.com ranked all 24 by funding status after crunching the numbers to get a single statistic for those cities and towns that have more than one locally run pension plan. These are the results:
However, the auditor general doesn’t account for the wide variation in valuation dates, investment forecasts and mortality tables used by the 36 plans; for example, North Providence’s figures date back to 2007. Treasurer Gina Raimondo has warned that many communities need to update their numbers, and the pension law requires them to complete new studies by April 1.
One measure that allows for a quick comparison is investment return forecasts, or the amount cities and towns expect their pension funds to earn on average each year. When the state revised its pension data in April, it lowered its return forecast from 8.25% to 7.5% based on outside asset experts’ advice.
The auditor general’s data shows 17 of the 24 cities and towns with a locally run pension plan are banking on earning more from their investments than the 7.5% return the state thinks it can get. Here are those numbers – note that some of the communities with multiple non-MERS pension plans use different forecasts in their different plans, so they’re listed twice:
• 8.50% East Providence, Providence, Smithfield
• 8.25% Scituate, Woonsocket
• 8.00% Bristol, Coventry, Cranston, Cumberland, Lincoln, Portsmouth, Warwick, West Warwick, Westerly
• 7.875% Pawtucket
• 7.75% Central Falls, Johnston
• 7.50% Central Falls, Little Compton, Middletown, Narragansett, Newport, Tiverton, Warwick
• 7.25% North Providence
• 7.00% Coventry, Jamestown, Warwick
• Related: Target 12: Warwick has RI’s biggest average pension payouts (Nov. 16)