Raimondo: Pension System 'Much Healthier' Following 2011 Reforms

About 18 months after the Rhode Island General Assembly passed a sweeping set of state pension reforms, the retirement system for state employees is "much healthier" than it was before, Treasurer Gina Raimondo said during a recent interview.

Raimondo, who spoke with Patch at Mt. Hope High School, oversees the state's $7.6-billion pension investments. She explained that the fund originally "had less than 50 percent of the funds it needed to cover the liabilities," whereas "today, the system is healthy and well-funded."

In order to fix the system, Raimondo and Gov. Lincoln Chafee proposed a number of changes, including suspending Cost of Living Adjustments (COLAs), for 19 years; raising the state retirement age to match a retiree's Social Security eligibility age; and adding a 401(k)-type defined benefit plan.

Those reforms took severe criticism from union leaders, who suggested a refinancing of the pension plans debt and lowering the mortality age to reduce the future liability of the program.

Recently, Raimondo told the state Investment Board that about $1 billion of the state's investments have been moved into hedge funds, bringing about a 7.72-percent return on that money, the Providence Journal reported.

In response to criticism that hedge funds are too risky, Raimondo estimated that the state could have avoided some $500 million in losses during the market crash of 2008 if some of its money had been in hedge funds, the newspaper noted.

What do you think? Do you agree with Raimondo that the state pension system is "healthy?" Let us know in the comments section.