KRS leaders attempt to put a positive spin on one part of an otherwise unhappy picture
09/13/2012 05:29 PM
Kentucky’s six public pension systems, which cover nearly a half-million retired state, county and city employees and teachers don’t have nearly enough money to cover all their obligations. They are a combined $33 billion underfunded compared to what they would owe current employees and retirees.
Retirement officials testified before the program review and investigations committee Thursday and tried to put on their happiest face for the future.
“This current two and a half month time has been very good in the investment markets, and while it seems like there is a lot of bad news the pension fund has actually done very well over the last several months,” said TJ Carlson, the KRS Chief Investment Officer.
While those numbers may be a step in the right direction the state took in less than $1 billion in funds over the first three quarters of this year and paid out $1.5 billion.
Carlson broke down the causes of the unfunded liability:
1. The funds not making its investment income targets over the last six years.
2. Recent governors and the legislature signed off on increasing pensions with cost of living adjustments — but without designating a way to pay for it.
3. Actuaries were wrong on some of their estimates of salary growth and rate of retirement, which accounted for a small part of the unfunded liability.
4. Recent governors and the General Assembly approving budgets that did not make the full payments into the system. (Those payments are called ARC for Actuarially Required Contributions which is what the state owes as the workers employer.)
5. Investment earnings not made because the fund was short on contributions, and financing of unfunded liability.
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