The bill amends Section 36-10-35 of the General Laws to enhance retirement benefits for state employees, teachers, and municipal employees, specifically focusing on cost of living adjustments (COLAs). It introduces a new section titled "Additional benefits payable to retired employees," which establishes a COLA structure effective January 1, 2026, and every January 1 thereafter. The defined benefit retirement allowance for all retired former state employees and their beneficiaries, excluding retired judges and retired members of the state police, will be adjusted based on the percentage of annual increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Bureau of Labor Statistics for the third quarter of the prior calendar year. The COLA will be capped at three percent (3%) or the CPI-U, whichever is less, and will be compounded into the retirees' total retirement benefits each year. The adjustment will be based on the retirement benefit received by a retiree on January 1, 2026, or for employees not receiving benefits at that time, upon their defined benefit retirement entitlement.

The provisions of this section will apply prospectively only, with no retroactive benefits awarded, and will not modify or increase the contributions made by public employers to the employee retirement system of Rhode Island. Additionally, the provisions will sunset and expire on July 1, 2035.

The bill also amends Section 16-16-40, establishing a similar COLA structure for retired teachers and their beneficiaries, with the same effective date and conditions as those for state employees. The adjustments will be based on the CPI-U, with the same caps and compounding requirements, and will also apply prospectively only, with a sunset provision set to expire on July 1, 2035.

Statutes affected:
8147: 36-10-35, 45-21-2