The report, entitled "Employees' Retirement System Of Rhode Island: Examination Of Turnover Trends Since Retirement Reforms," found, among other things, that the Rhode Island state employee turnover has spiked since 2010.
The most recent actuarial study from 2022 projected that only 31 of 100 new hires will remain employed in Rhode Island state government in 20 years. In contrast, in the 2010 actuarial study (just before benefit changes were implemented) projected that 47 out of 100 new employees would still be employed in 20 years. This reduction in the number of experienced state employees "certainly will have an impact on the quality of public services," said Dan Doonan, NIRS executive director and author of the report, in a release issued in conjunction with the report.
Doonan noted that the situation in Rhode Island is similar to what has occurred in Alaska. "Both situations seem to confirm the impact of changing retirement benefits in worker attrition," he said in the release.
In 2011, significant changes were made to ERSRI retirement benefits. Among other things, the plan changed from a defined benefit pension plan to a hybrid plan with a reduced pension component and mandatory participation in a 401(k)-style defined contribution plan. Participation in the new hybrid plan has been mandatory for all new hires since July 1, 2012, as well as current active workers with fewer than 20 years of service as of June 30, 2012.
As reported, a group formed by the Rhode Island Treasurer's Office, The Rhode Island Pension Advisory Working Group, released a report assessing the impact of the 2011 changes to state retirement benefits and proposed a number of measures to improve the retirement system for consideration by state's General Assembly.
Doonan also noted in the release that "at a time when states like Rhode Island are confronting severe public service worker shortages, it is critical to fully understand the workforce impacts of benefit changes because public service workers typically place a high value on their retirement benefits."
Often times, Doonan added, "pensions serve as worker magnets in terms of recruitment and retention for public sector jobs that typically offer lower salaries than private sector jobs."
Rhode Island Employees' Retirement System currently has about $10.8 billion in assets.
The Rhode Island State Treasurer's Office, which oversees the retirement system, could not be immediately reached for comment,
NIRS is a nonprofit, nonpartisan organization established to contribute to informed policymaking. NIRS membership includes financial services firms, employee benefit plans, trade associations and other retirement service providers.
