RI gov. signs sweeping public pension overhaul

November 18, 2011 - 4:10 PM

PROVIDENCE, R.I. (AP) — Rhode Island's governor has signed into law sweeping changes to the state's public pension system.

Gov. Lincoln Chafee (CHAY'-fee) said Friday the measure will help restore the state's fiscal health and prevent the need for tax hikes or budget cuts to pay for escalating pension costs.

The new law is intended to save billions of dollars in future years by suspending retiree pension increases, raising retirement ages and creating a new benefit plan combining traditional pensions with 401(k)-style accounts. The changes will affect 66,000 active and retired state workers, teachers and municipal employees.

Chafee signed the measure a day after lawmakers overwhelmingly passed it. Without the changes, Rhode Island needs $7 billion to fully fund its pension fund.

Public-sector unions have vowed to file a lawsuit challenging the new law.