Public pensioners everywhere should be worried today. There is devastating news from Central Falls, Rhode Island as the city’s receiver has cut the monthly pension payments to retirees. From WPRI.com:
Central Falls slashed one in three of its retirees’ pension checks by more than half this month, with the majority of the city’s former public-safety workers set to lose tens of thousands of dollars a year.
Receiver Robert Flanders reduced 48 of the city’s 141 police and fire pensions by 50% or more, with all but three of those cut 55% from their original amount, according to financial records obtained by WPRI.com.
This is not a surprise as Central Falls had filed for bankruptcy on August 1st and the receiver for the city had announced he would be taking this action. He stated at the time that the city’s pension funds were far from funded but has never given a public account of their finances. There are also deeper issues for Central Falls and Rhode Island as they intend to pay bondholders 100 cents on the dollar while reducing pension benefits.
The plague of underfunded public pension plans is spread across America. Retirees and taxpayers everywhere should be worried. There are many reasons for widespread underfunding and they have been covered up by the opaque disclosure and accounting requirements pension funds have.