C.
Falls slashes dozens of pensions by 55%; one gets cut $41K
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.
Only 27
pensions were left untouched. Eight of those are being paid for from a separate
pool of assets, while 19 others were shielded from cuts because they’re worth
less than $10,000 a year.
Three of the
payouts that lost the most cash were granted in July:
- Former acting fire chief Gerard Dion’s
pension dropped by $41,684 a year, from $75,789 to $34,105;
- former firefighter Robert Noury’s
dropped by $37,628, from $68,414 to $30,786; and
- former policeman Steven Sullivan’s dropped by $36,493, from $66,351 to
$29,858.
The smallest
reduction went to Catherine Frechette. Her annual
pension dropped from $11,522 to $10,000, a cut of $1,522 or 13%. Michael Long,
the lawyer and retired police sergeant who is advising the retirees, saw his
annual pension cut by $11,512, from $35,423 to $23,911.
Retirees are receiving their new, lower pension benefits for the first time
this month after getting the full amount for a final time in August. Once they
learned about the pending cuts, Dion and Noury both said they wished they could have continued
working rather than retire, though that didn’t happen.
Central Falls filed for bankruptcy Aug. 1 after too few
retirees agreed to voluntarily accept the original sizable pension cuts proposed by Flanders. He imposed the cuts unilaterally after the
bankruptcy filing, saying the city did not have enough cash to keep paying full
benefits.
Lawyers
representing Central Falls’ retirees and workers
have until Sept. 17 to file their first round of objections in the bankruptcy case,
but for now it appears there is nothing to stop Flanders
from only sending out the sharply reduced pension checks. No hearings in the
case are scheduled at this time.
While the
cuts in Central Falls are eye-popping, officials
there argue the reductions are still a better outcome than what transpired in Prichard, Ala.,
where the pension fund ran out and stopped paying benefits
altogether. Flanders has also begun charging
the city’s retirees premiums for health insurance coverage for the first time.
Decades of
poor record-keeping in Central Falls
have made the situation worse. The largest benefit cuts increased from 50% to
55% last month after Flanders’ staff
discovered errors in the city’s pension documentation.
Flanders has
ordered an audit of Central Falls’
files and will ask retirees to certify that the information on record about
them is correct, he said in an Aug. 24 letter. Some pensions could be increased
if errors are discovered, but they will not be decreased further if employees
correct bad information, Flanders said.
Flanders also broached the possibility that more cuts
could be coming down the road. “Please be advised that I reserve the right to
make future changes to benefits or to conduct investigations into the
appropriateness of such benefits, including disability benefits,” he said in
the letter.
• Related:
Central Falls set to file bankruptcy exit plan delayed by
Irene (Sept. 1)
• Related:
Why Central Falls owes its retirees $80 million in benefits
(July 19)
http://blogs.wpri.com/2011/09/02/c-falls-slashes-dozens-of-pensions-by-55-one-gets-cut-41k/