Graham and other Ky. lawmakers not convinced pension system changes will work
11/05/2013 08:56 AM
This summer, during the National Conference on State Legislature’s national convention, 10 Kentucky lawmakers circulated a letter warning legislators from other states about any potential pension system fixes suggested by the Pew Charitable Trusts.
The Kentucky General Assembly had months earlier passed changes to the Kentucky Retirement System that covers benefits to retired state and local government workers, as well as the state police and employees of some quasi-governmental organizations.
Facing a rapidly dwindling fund that couldn’t cover more than 30 percent of its health and retirement benefits without changes, the General Assembly passed a measure that generated about $100 million in new taxes a year to help the state make its full payment into the retirement fund. But it also changed the benefits for employees hired after July 1 so that they would have what’s called a cash-balance system instead of a set pension determined by their salaries and years of service.
The cash-balance system is like a hybrid between a pension and 401(k) in which a percentage of the workers’ paychecks go into an account, is matched by the state and is guaranteed by the retirement system to get at least a 4 percent return on the money.
But in the letter, the 10 lawmakers said they’re not convinced that approach will save the state in the long-run. And they said they felt hoodwinked by Pew. Read the letter (provided to Pure Politics from an attendee of the NCSL conference): Ky lawmakers letter.pdf
One of those lawmakers who signed the letter was Rep. Derrick Graham, D-Frankfort who represents the highest concentration of retired and current state workers. He explained his concerns in a recent interview:
Graham also responded to bills that will be introduced by Republican Sen. Chris McDaniel of Taylor Mill. McDaniel told Pure Politics last week that he will push legislation to strip officials of their pensions if they’re convicted of felonies or for misdemeanors related to violating the public’s trust. And McDaniel will back a bill to allow the public to find out how much individual pensioners get in benefits from the system. Currently, that information is exempt from Kentucky open records law, although the system did release the number of recipients who received
more than $100,000 a year.
But Graham said he has concerns with both proposals:
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