RI Pension Overhaul May Head to the Courts

By DAVID KLEPPER | November 18, 2011 | 2:35 AM EST

PROVIDENCE, R.I. (AP) — Rhode Island is taking steps to solve one of the nation's biggest public pension problems, but the true battle with public-sector unions may be just starting.

Lawmakers passed sweeping changes Thursday to the pension fund covering 66,000 active and retired public workers and teachers.

The legislation, which Gov. Lincoln Chafee (CHAY'-fee) says he will sign, suspends pension increases, raises retirement ages and merges future pensions with 401(k) accounts.

Supporters say the changes are vital to Rhode Island's economy. But union leader Philip Keefe says the changes are unfair and that the courts will have the final say.

Without the changes, Rhode Island needs $7 billion to fully fund its pension fund. Nearly every state confronts similar problems caused by escalating pension costs, huge investment losses and recession-induced budget deficits.