Puerto Rico to overhaul public pension system

AP News
Posted: Apr 04, 2013 6:47 PM

SAN JUAN, Puerto Rico (AP) — Senators in Puerto Rico have approved a bill to overhaul the island's crumbling pension system as hundreds of irate public employees protested outside the seaside Capitol building.

The House of Representatives was expected to approve the bill late Thursday, and Gov. Alejandro Garcia Padilla was expected to sign it as well.

The bill calls for a higher retirement age, a nearly 2 percent increase in worker contributions and reduced benefits and monthly pensions for certain employees. It also would transfer the bulk of employees from a defined-benefit plan to a hybrid plan that includes a defined contribution component.

The current pension system faces a more than $37 billion unfunded liability, one of the highest compared with any U.S. state. The liability is almost four times the island's annual government budget.