Bevin: “Keeping The Promise” Plan Will Save Ailing Pension System
By Travis Thayer
(Frankfort, Ky.) – Kentucky Governor Matt Bevin today unveiled a plan to save the state’s ailing pension system.
Along with Senate President Robert Stivers and House Speaker Jeff Hoover, Gov. Bevin outlined a 10-point “Keeping the Promise” plan during a Wednesday morning press conference.
Highlights of the plan include:
- “Keeping the Promise” will save Kentucky’s pension systems and meet the legal and moral obligations owed to current and retired teachers and public servants
- Requires full payment of ARC and creates new funding formula that mandates hundreds of millions more into every retirement plan, making them healthier and solvent sooner
- For those still working: no increase to the full retirement age, and current defined benefits remain in place until the employee reaches the promised level of unreduced pension benefit
- For those retired: no clawbacks or reductions to pension checks, and healthcare benefits are protected
- For future non-hazardous employees and teachers: enrollment in a defined contribution retirement plan that will provide comparable retirement benefits
- For current and future hazardous employees: will continue in the same system they are in now
- Closes loophole to ensure payment of death benefits for the families of hazardous employees
- Stops defined benefits plan for all legislators, moving them into the same defined contribution plan as other state employees under the jurisdiction of the KRS Board
- No emergency clause: law will not go into effect until July 1, 2018
- Structural changes should improve the Commonwealth’s rating with credit agencies, which have downgraded Kentucky’s rating, citing unfunded pension burdens
“There is no such thing as an insurmountable obstacle,” said Gov. Bevin. “We, as a Commonwealth, have a moral and legal obligation to fulfill the promises that have been made to our public employees. This is not just about fixing our present underfunding problem. It is also about ensuring that we leave a better, financially stable Kentucky to our children.
Bevin plans to call the General Assembly into special session in the coming weeks to pass the much-need reforms into law.
Kentucky currently has the worst funded system in the nation with at least $64 million in unfunded pension liability. Using prior funding patterns, experts conclude that the Kentucky Employee Retirement System, Non-Hazardous (KERS-NH), will run completely out of money by the year 2022 if meaningful pension reform does not occur.
The state’s pension spending has also effectively reduced funds available for other import budgetary priorities such as education, healthcare, public safety and transportation infrastructure.
If the “Keeping the Promise” proposal is passed into law, it would go into effect on July 1, 2018.