Pension reform priority in budget plan

PROVIDENCE, R.I. (WPRI) - Governor Don Carcieri is promoting pension reform as a top priority of his emergency budget plan.

According to the Governor, state and municipal pensions cost taxpayers nealrly $500 million each year, and the Rhode Island currently has $7 billion in unfunded pension liability.

In an unprecedented prime time speech Wednesday night, the Governor outlined a three-part plan to reduce the state's retirement spending:

1) Establish Minimum Retirement Age of 59 for all state and municipal workers, including teachers

2) Eliminate Cost of Living Increases

3) Move New Hires Into a 401K-Style Plan

All three must be approved by the General Assembly before they can be implemented.

If approved, the minimum retirement age and cost of living changes could take effect April 1, which may result in a boost in the number of retirees prior to that date.

The third, and most controversial aspect of the plan-the switch to a 401K-style retirement plan-would not take effect until 2010 at the earliest.