General Assembly quietly piecing together pension reforms focused on governance
03/07/2014 01:18 PM
The first two Senate bills to clear the state government committee this session were Republican Sen. Chris McDaniel’s measures aimed at undoing “super-sized” pensions for some lawmakers and cleaning up a consequence of last year’s reforms regarding “spiking.”
Both bills unanimously passed the committee Thursday without any changes. And both were placed on the House consent calendar virtually assuring a fast-track to the governor’s desk to become law.
McDaniel’s bill, Senate Bill 4, seeks to achieve something that past General Assemblies failed to do: undo an unpopular provision of a 2005 law that allowed lawmakers who switch to higher paying government jobs to get a fatter pension.
Because of the inviolable contract between the state and retired public employees, the legislature can’t undo that perk. But it can give current legislators and former legislators who benefited or stand to benefit from the 2005 provision, called reciprocity. It only affects current or former lawmakers because new legislators who started after Jan. 1 — like Republican Rep. Suzanne Miles of Owensboro — are part of the new hybrid cash-balance plan approved in last year’s pension change bill.
McDaniel’s other bill, known as the spiking bill , would clarify the calculation of “spiking,” in which a public employee is able to game the system to get more lucrative retirement benefit by somehow getting a sharp increase in pay in the final year or years of service.
Meanwhile, Rep. Jim Wayne, D-Louisville, this week, has offered a measure aimed at cleaning up and shining a light on the way the Kentucky Retirement System, Kentucky Teachers Retirement System and the judicial and legislative retirement funds invest their money.
Wayne’s House Bill 546 would forbid the Kentucky Retirement System from using placement agents, who are middlemen paid to match the retirement fund up with investments often with firms or hedge funds that employ them.
The General Assembly in 2012 required placement agents register with the state as lobbyists among other changes. The effect of that new law was that the Kentucky Retirement System has not paid placement agents since then.
Wayne said it’s time to shut that door for good:
Other transparency requirements in Wayne’s bill would require the system to post online the amount in fees it pays to investment firms. But Wayne said he doesn’t support proposals by McDaniel or Republican Rep. Robert Benvenuti of Lexington that would publicly reveal how much in pension benefits retirees receive. (It’s unlikely either of those measures will become law this year as retiree groups have opposed them).
Other states have used these transparency measures to reveal potential abuses by officials to game the system or improperly pad their pensions. So Wayne said he would consider a way to disclose the names and pension check amounts for those receiving the highest level of benefits.
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