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HB 8147

AN ACT RELATING TO PUBLIC OFFICERS AND EMPLOYEES -- RETIREMENT SYSTEM -- CONTRIBUTIONS AND BENEFITS

2026 Regular Session Introduced by Sam Azzinaro and 9 co-sponsors

The bill adds prospective, CPI-based COLAs (capped at 3% or CPI-U, whichever is less) for retirees, sunsetting after 2035 and tied to funding ratios.

04/16/2026 Committee recommended measure be held for further study
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WeVote Research Nonpartisan
Bill Summary · HB 8147

Summary of HB 8147 (Rhode Island, 2026) – Public Officers and Employees Retirement System – Contributions and Benefits

Purpose and Overall Intent

  • HB 8147 introduces broad changes to how cost-of-living adjustments (COLAs) and certain post-retirement adjustments are applied to retirement benefits for:
    • State employees and their beneficiaries
    • Teachers and municipal employees and their beneficiaries
    • Legislators and their beneficiaries
    • Municipal retirement participants (through the municipal employees’ retirement system)
  • The bill establishes new, ongoing, prospective COLA rules and a separate, sunset-enabled set of CPI-based adjustments. It does not modify member contribution requirements.

Key framing notes:
- Provisions are prospective and apply to retirees starting from specified dates (primarily January 1, 2026, and onward).
- The act emphasizes adjustments to be added to the base retirement allowance (compounded annually) but keeps certain caps and triggers tied to funded ratios and CPI measures.
- The act explicitly states it does not change employee contribution levels.

Major Provisions and Changes

1) State Employees, Teachers, and Municipal Employees – Additional Benefits (Cost-of-Living Adjustments)

  • Section 1 (36-10-35) and Section 2 (16-16-40 for teachers; 45-21-2/other municipal provisions) introduce a framework for annual COLAs, to be added to the original retirement allowance or the allowance as computed per the statute.
  • New COLA framework (prospective, not retroactive):
    • Base method: COLAs can be up to CPI-U increases, but not exceeding 3% in some cases, with a floor of 0%.
    • Specific historical tiers remain intact for older retirees, but the bill adds new modernized caps and layering for post-1980 cohorts.
    • In some sections, COLAs are calculated as a function of:
    • The annual CPI-U change (third-quarter prior year) or a fixed percentage (e.g., 3%), whichever is lower.
    • Certain portions (e.g., subsections (g) and (h)) create additional, staged adjustments that depend on funding levels (funded ratio thresholds, e.g., 80%).

2) Five-Year and Other Investment-Based Adjustments (G, F subsections)

  • The bill includes conditional benefit adjustments tied to the retirement system’s funded ratio (80% threshold) and five-year or five-year-plus cycles.
  • When funded ratio is below 80%, certain additional adjustments are suspended; when above 80%, adjustments may be reinstated. The schedule contemplates recalibration every five plan years for the continuation of adjustments.

3) One-Time Stipends

  • For retirees who were already retired as of specified dates, the bill provides one-time stipends (e.g., $500 for retirees as of certain dates; $500 paid in the year following enactment), separate from ongoing COLAs.

4) CPI-U Based Adjustments Post-2026 (New Tier)

  • Beginning January 1, 2026, and annually thereafter, defined benefit retirement allowances for retirees (certain groups) would be adjusted by CPI-U changes, subject to a cap of 3% (or CPI-U, whichever is less), with compounding annual increases.
  • The adjustment is based on:
    • The retiree’s benefit as of Jan 1, 2026, or their entitlement for those not yet receiving benefits at enactment.
  • This provision is prospective and sunsetted after July 1, 2035.

5) Municipal Employees – Final Compensation and Service Credit

  • The act redefines “final compensation” for municipal employees under various eligibility timelines (pre/post-2012 and post-2024 changes) to reflect shorter or longer averaging periods, with protections to avoid reductions compared to June 30, 2012 levels.
  • It also introduces a CPI-based COLA for municipal retirees starting 2026, with the same cap rules (≤ CPI-U or 3%, whichever is less; no negative adjustments).

6) Definitions and Cross-References

  • Section 3 updates definitions for the Municipal Employees Retirement System, including terminology for active members, beneficiaries, and other core terms, aligning with the broad changes to COLAs and adjustments.
  • Section 4 states the act takes effect upon passage.

Who Would Be Affected

  • Retired state employees and their beneficiaries with service or disability retirement, including legislators who receive a retirement allowance.
  • Retired teachers and associated beneficiaries.
  • Retired municipal employees and their beneficiaries (including those in regional districts and housing authorities participating in the municipal system).
  • Active employees who are planning for future retirements under these systems (indirectly via COLA mechanics and final compensation definitions).
  • The Rhode Island Retirement Board, which administers the COLA computations and funded-ratio triggers.

Procedural and Timeline Aspects

  • Effective Date: The act takes effect upon passage.
  • Prospective Application: Most new COLA provisions apply to future retirees or future entitlement calculations; some existing retirees receive one-time stipends as a condition of enactment.
  • Sunset Provisions: The CPI-U-based COLA adjustments for both state and municipal plans are set to sunset on July 1, 2035.
  • Funding Triggers: COLA adjustments are subject to funded ratio thresholds (e.g., 80%), with reinstitution or scaling of adjustments based on actuary calculations.

Practical Implications

  • Potentially higher ongoing retirement benefits for many retirees due to CPI-U-based COLAs, subject to caps and funding triggers.
  • Increased predictability for retirees to receive periodic increases, albeit with contingent funding requirements.
  • No change to employee contribution rates; the act focuses on benefit adjustments, not contribution levels.
  • The 2035 sunset on CPI-based adjustments suggests re-evaluation of sustainability and funding viability in the mid-2030s.

Note: This summary aims to present the bill’s substantive provisions in accessible terms. For detailed language, consult the bill text and fiscal impact statements.

Compiled from official sources — confirm details with the bill’s official record.

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