Gov. Bevin: Future public hires and those not "given a promise of a defined-benefit" pension will have 401(k)-style plans in reform

10/03/2017 06:33 PM

Gov. Matt Bevin says future government employees, and possibly recent state hires, will be placed in defined-contribution plans as part of efforts to reform the state’s public retirement systems.

Bevin, who called in to the Leland Conway Show on WHAS-AM radio Tuesday morning, told Conway that he had been meeting with legislative leaders for months and “two, three, five, six, seven hours in a row” in recent weeks as they craft a proposal to reform Kentucky’s pension systems in a special session later this year.

Kentucky has one of the worst-funded public pension systems in the U.S., with estimated unfunded liabilities ranging from $37 billion to $64 billion.

“We have very specific ideas of things that we’d like to see, and so when we call this special session, and I’ll be calling it in the next couple of weeks, when we call this, we’ll be able to get down to business in pretty short order because so much wood has already been chopped,” the governor said.

Bevin said benefits will not be altered for those already collecting retirement checks and that current employees will “get what they thought they were going to get when they signed up as state employees.”

But those yet to be hired will see a different benefit structure with defined-contribution plans, which are similar to 401(k)s, he said. Bevin also seemed to indicate that state workers hired into hybrid cash balance pensions, which were enacted in 2013, would also transition into defined-contribution plans.

The 2013 law allows the General Assembly to amend future benefits for those hired into the state, county, legislative and judicial retirement systems on and after Jan. 1, 2014, “if, in its judgment, the welfare of the Commonwealth so demands.”

That law did not alter benefits offered to Kentucky’s future teachers, who receive defined-benefit pensions.

“For those that are not yet state employees or for those who want to stay above and beyond the point at which they would be eligible to retire, there will be structural changes,” Bevin said.

“We will move toward a defined-contribution plan for folks that are not in the plan and have not been given a promise of a defined-benefit plan, so there will be changes, but it will be good, and it will allow us in Kentucky to come out of the hole over the next 30 years in a way that will not bury this state, in a way that will help our credit rating to rise, our cost of borrowing to go down.”

The Courier-Journal reported Tuesday that state leaders could unveil a pension reform proposal this week or next.


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