November 18, 2015 – The city of Providence, Rhode Island, claimed its long-time actuary, Buck Consultants, incorrectly estimated savings it would see from suspending COLAs for retirees.
A U.S. district court has dismissed a lawsuit in which the city of Providence, Rhode Island, claimed a miscalculation by Buck Consultants caused it to miss out on cost savings for its pension plan by leading it to settle a lawsuit with a union and retirees.
The city alleges that Buck overestimated the amount the city would save by suspending cost-of-living adjustments (COLAs) for the city’s pension plans, causing it to negotiate and approve a settlement with the unions representing police officers and firefighters, as well as the association representing retired police officers and firefighters, which it would not have agreed to had it known of Buck’s error. The city and the Providence Retired Police and Firefighters’ Association, Inc. were ordered into mediation in litigation concerning the constitutionality of a pension ordinance that would suspend COLAs for the pension plan as of January 1, 2013.
The city contends that Buck’s estimate negligently overestimated the city’s savings by using the incorrect start date for the COLA suspension (January 2011 instead of January 2013).
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