Provides that retirees in the state pension system receive cost of living adjustments compounded into the retiree’s total retirement benefits each year beginning January 1, 2026. This act would be prospective only.

Rhode Island Pension Cost-of-Living Adjustment Bill

This bill would change how annual cost-of-living adjustments (COLAs) are calculated for retirees in Rhode Island's state pension system. Starting January 1, 2026, these adjustments would be compounded — meaning each year's increase would be calculated based on the retiree's total accumulated benefit at that time, rather than on their original base retirement amount. Think of it like compound interest: the adjustment builds on itself year after year, so the benefit grows at a faster rate over time compared to a simple, flat calculation.

The bill would affect retired state employees, teachers, and other public workers who receive benefits through Rhode Island's state pension system. Under a compounding approach, retirees — especially those who have been retired for many years — would generally receive larger benefit increases over time than they would under a non-compounded system. This could be particularly meaningful for long-term retirees trying to keep up with the rising cost of everyday expenses like groceries, housing, and healthcare.

It's important to note that the bill is prospective only, meaning it would apply going forward from 2026 and would not retroactively change past benefit calculations. The bill has been introduced and referred to the Senate Finance Committee, where lawmakers will likely examine the long-term cost implications for the state pension fund before deciding whether to move it forward.