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Rhode Island judge to hear praise, anger in pension deal

PROVIDENCE, R.I. (Reuters) – A public pension overhaul in Rhode Island was “right for the state,” a state lawyer argued in court on Wednesday in an effort to win approval for a settlement that would end litigation over sweeping 2011 reforms that garnered national attention.

Rhode Island’s changes, championed by then Treasurer and now Governor Gina Raimondo, were a model of reform at a time when many U.S. states struggled to rein in pension costs. Several state pension systems, including Illinois and New Jersey, still face huge unfunded liabilities.

Unions sued over Rhode Island’s reforms, but they later struck a deal with the state. After that agreement collapsed, they reached another that is now before Superior Court Judge Sarah Taft-Carter, who gave preliminary approval earlier this year.

The 2011 reforms were already in effect. The settlement amends some provisions and, if approved, must be passed by lawmakers in order to take hold.

Not all 60,000 workers affected agree with the settlement, and anger could erupt over the next several days of hearings in Providence as 69 people testify on whether the deal is fair.

“I’m furious,” retired state worker Brian Kennedy, 67, told Reuters, adding that current employees won out over retirees. He expects to testify.

“If Gina Raimondo had come up my walkway and confiscated my house, my cars, my furniture and my savings accounts, I’d still be better off,” he said. “It is a confiscation of my money for other programs.”

Some in a group of 75 retirees including former teachers will detail the excessive financial burdens the deal represents, their lawyer, Miriam Weizenbaum, told Taft-Carter.

They “worked in the past for future pay that is being denied,” she said, adding that the state would be given “carte blanche” to do it again in other matters if the judge approves the settlement.

But John Tarantino, an attorney for Rhode Island, said the reduced benefits provide much-needed savings for the state.

The deal preserves roughly 90 percent of the savings hammered out in the original reforms. It pushes back some retirement age requirements and offers small cost of living adjustments.

Four years ago as Treasurer, Raimondo, a Democrat, spearheaded the state’s efforts to raise the retirement age, suspend cost of living adjustments for retirees and move some onto a hybrid 401(k)-style plan.

The reforms, estimated to save taxpayers about $4 billion while preserving the retirement system, helped propel her to the governor’s office. (Reporting by Svea Herbst-Bayliss; Additional writing by Hilary Russ; Editing by Megan Davies, Grant McCool and Christian Plumb)

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