The City of Providence, R.I., could start a defined contribution plan for city employees hired starting in July 2007 and freeze its defined benefit plan, according to a proposal by Mayor David N. Cicilline. Current city employees and retirees would be covered by the $300 million Providence Employees Retirement System defined benefit plan, said Rhodes Alderson, mayoral spokesman. The pension plan was underfunded by about $615 million as of July 2005, according to a recent pension study report on the city's website.
The proposal is in an ordinance to be reviewed by the city's finance committee and then by the full City Council, which requires two votes of approval for passage. Alex Prignano, the city's finance director, said it could take three to six months for the council to vote on the proposal, which includes a call to issue pension obligation bonds to cover the DB plan shortfall.
