Rhode Island State Treasurer Gina Raimondo dared to touch the third rail: pension reform. When Raimondo took office in 2011, her home state was nearly insolvent. It had a $7 billion unfunded pension liability, one of the highest per capita shortfalls in the nation, and its retirement system was just 48 percent funded. Raimondo, 42, who co-founded a Providence, Rhode Islandbased venture capital firm before becoming treasurer, ran on a promise of economic change. Shes been the key driver in shaping and shepherding comprehensive pension reform into law. The Rhode Island Retirement Security Act of 2011 added a mandatory 401(k) component and cut benefits for workers and retirees. It also achieved a key objective for Raimondo: preserving the defined benefit system. We approached our reform with the question, What does it mean to be secure in retirement? says the Rhodes scholar and Yale Law School graduate. The answer included a defined benefit system that was affordable for taxpayers. If elected officials are honest about the true costs and fund the plan accordingly, a defined benefit pension plan can play a significant role in providing retirement security, Raimondo contends. It has been shown that 401(k) accounts alone do not provide adequate retirement security. As local labor fights the reforms in court, Raimondo is widely expected to run for governor next year.
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