$1.4 trillion in pension fights foreshadowed in RI

[Psalm 51:17]

http://news.yahoo.com/1-4-trillion-pension-fights-foreshadowed-ri-090348936.html

10/7/12

PROVIDENCE, R.I. (AP) — Retired social worker Jim Gillis was told his $36,000 Rhode Island state pension would increase by $1,100 next year to keep up with inflation. But lawmakers suspended annual increases, leaving Gillis wondering how he'll pay medical bills and whether he'd been betrayed by his former employer.

"When you're working, you're told you'll get certain things, and you retire believing that to be the case," Gillis said. He and other retirees are challenging the pension changes in a court battle that's likely to have national implications as other states follow Rhode Island's lead.

Cities and states around the country are shoring up battered retirement plans by reducing promised benefits to public workers and retirees. All told, states need $1.4 trillion to fulfill their pension obligations. It's a yawning chasm that threatens to wreck government budgets and prompt tax hikes or deep cuts to education and other programs.

The political and legal fights challenge the clout of public-sector unions and test the venerable idea that while state jobs pay less than private-sector employment, they come with the guarantee of early retirement and generous benefits.

more