The bill amends Section 36-10-35 of the General Laws to enhance retirement benefits for state employees and their beneficiaries through the introduction of cost-of-living adjustments (COLAs). It establishes a new section titled "Additional benefits payable to retired employees," which provides that beginning on 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, shall be adjusted based on the annual increase in the Consumer Price Index for all Urban Consumers (CPI-U), published by the United States Department of Labor Bureau of Labor Statistics. The adjustment will be capped at the lesser of the CPI-U increase or three percent (3%), with a minimum adjustment of zero percent (0%). This adjustment will be compounded into the retirees' total retirement benefits each year, and the new total retirement benefit will serve as the basis for subsequent CPI calculations.

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. Additionally, the funding for these COLA provisions will come from the employee retirement system of Rhode Island and will not modify or increase the contributions required from public employers participating in the system. These provisions will sunset and expire on July 1, 2035.

The bill also amends Section 16-16-40, which pertains to retired teachers, establishing similar COLA provisions for retired educators. Beginning on January 1, 2026, and every January 1 thereafter, the defined benefit retirement allowance for all retired former teachers and their beneficiaries will be adjusted based on the CPI-U, with the same caps and minimums as outlined for state employees. The adjustment will also be compounded into the retirees' total retirement benefits each year, and the new total retirement benefit will serve as the basis for subsequent CPI calculations. The provisions for teachers will similarly apply prospectively only, with no retroactive benefits awarded, and will sunset on July 1, 2035.

Furthermore, the bill includes amendments to Section 45-21-2, which defines final compensation for members of the retirement system, ensuring that beginning on January 1, 2026, and every January 1 thereafter, the defined benefit retirement allowance for all retired municipal employees and their beneficiaries will also be adjusted based on the CPI-U, with the same conditions and sunset provisions as those for state employees and teachers.

Statutes affected:
2818: 36-10-35, 45-21-2