Rhode Island Gov. Lincoln Chaffee is resorting to carrots-and-sticks to force local governments to start funding their public pension plans, Dow Jones reports.Combined, Rhode Island’s local pension plans are only 41% funded with an unfunded liability of $2 billion.
The governor’s plan would set aside $19.3 million for cities and towns that make full annual payments to their pensions over 5 years and report pension data to the state. Starting in 2014, municipalities would also have to make full contributions to retiree health-care funds.
Local governments that don’t comply will face a 5% reduction annual state pension aid.
Rhode Island’s treasurer has also launched a review of the state public pension fund, which has a reported unfunded liability of $5 billion and is among the nation’s worst. The SEC is now investigating whether Rhode Island provided investors with adequate information about the weak health of its pension system.
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