Pension Reforms in Rhode Island

PEW CENTER ON THE STATES INFOGRAPHIC Rhode Island's pension reforms Faced with rising penslon costs, Rhode Island just passed pension reforms that went further than those of any other state. The changes aim to shrink the $6.8 billion funding gap between what the state $6.8 billion promised workers and the amount it has on hand. Advocates say the measures were Rhode Island's funding gap needed to curb expanding costs. Opponents clalm the reforms go too far. Pew illustrates the Meet Mike, a 25-year-old who begins working for impact of the reforms on a hypothetical state worker. Rhode Island in 2012. OLD NEW plan plan Mike can retire with full benefits at age: 62 67 Mike's guaranteed annual pension assuming a final average salary of $65,000: $47,288 $27,300 Mike's annual 401 (k)-style account benefit: $13,524 Under the new plan: Mike's 401 (k)-Style benefit would have an estimated value Final annual benefit: of $338,106.* If he withdrew 4 percent $47,288 $40,824 a year, he would have $13,524. OLD PLAN NEW PLAN "Mike's 401(k)-style retirement account would have $338,106 upon retirement based on Pew's assumption of a final average salary of $65,000, and assumptions by the Employees' Retirement System of Rhode Island of a 7.5 percent expected retum on investments and changes in salary over time. Pew Center on the States, 2011