PROVIDENCE, R.I. (AP) — A judge hearing a challenge by public-sector unions and retirees to Rhode Island's landmark pension system overhaul on Tuesday ordered the parties into federal mediation a little over a week after the state asked her to dismiss the lawsuit.

Superior Court Associate Justice Sarah Taft-Carter said Tuesday that she had met with the parties in a pretrial conference and that they had all agreed to try mediation in the case. The litigation, or a negotiated settlement, could have far-reaching implications as states across the country grapple to close the vast gap — more than $1.4 trillion nationwide — between what they have set aside for pensions and what they have promised their retirees.

Unions and retired government workers in Rhode Island sued to overturn the 2011 pension law, which raised retirement ages and suspended pension increases. Their lawyers argue that the changes are unconstitutional and unfair in that they amount to a breach of contract.

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