PROVIDENCE, R.I. (WPRI) – Providence has made good on nearly $2 million it owed hundreds of former city workers as part of a pension settlement agreement reached in 2013.
The city paid 1,290 retirees or their beneficiaries a $1,500 stipend last month, according to Victor Morente, a spokesperson for the city. Approximately $300 from each payment was withheld for federal taxes and most had $75 in Rhode Island taxes withheld, Morente said.
The majority of retirees who received the payments were former public safety workers.
- Related: Everything you should know about Providence’s finances
- Follow: Providence politics on Facebook
The 2013 agreement between the city and its public safety unions and retirees over pension changes implemented under former Mayor Angel Taveras guaranteed that any former police officer or firefighter whose annual pension was less than $100,000 a year would receive a $1,500 stipend by Jan. 31, 2018. (As of last April, 33 former city employees were earning more than $100,000 a year from their pension.)
The stipends, which were prohibited from coming out of the city’s retirement fund, were part of a deal that suspended cost-of-living adjustments (COLAs) for city retirees between 2013 and 2022, eliminated 5% and 6% COLAs forever and shifted how pensions are calculated. The deal also moved retirees over the age of 65 to Medicare.
The same group of retirees are also eligible for another $1,500 stipend by Jan. 31, 2020.
The settlement agreement between the city and its public safety unions and retirees was hailed as a landmark deal that would reduce Providence’s unfunded pension liability by $170 million. Supporters argued that it saved the city from bankruptcy, but critics have said the city should have followed the state’s lead in suspending COLAs until the pension system is healthy, rather than just 10 years.
The vast majority of city retirees were included in the agreement, but more than 60 former public employees opted out and challenged the changes in court. A Superior Court judge dismissed their lawsuit last year, but they have appealed to the Rhode Island Supreme Court.