Legislation would allow some organizations to opt out of Kentucky Retirement System
03/19/2014 05:33 PM
A bill to allow quasi-governmental agencies o opt out of Kentucky’s public pension system if they payoff their retirement liabilities unanimously passed the Senate’s State Government Committee on Thursday.
House Bill 216, sponsored by Senator Chris McDaniel, R-Taylor Mill, has the backing of the Kentucky Retirement System, which is in legal battles with organizations such as Seven Counties Services, a community mental health center in Louisville that filed for bankruptcy last year over increasing payments to the retirement system.
Contributions for employers in the state pension plan have increased from 5.9 percent in 2006 to a projection of 38 percent in 2015.
“In essence it will give a option to the board of directors of those organizations to make a decision to leave the retirement system on a date certain,” said McDaniel.
The bill has additional provisions that would allow state cabinets and the executive branch to withhold agency funds if public employers choose to suddenly cease payments to the Kentucky Retirement System.
McDaniel says the bill addresses concerns such as why some companies are even in the state retirement system to begin with.
“There’s no excuse we should have for-profit corporations inside the pension plan,” said McDaniel.
McDaniel told committee members that the legislation would have huge benefits for the commonwealth.
“We begin to help repay the unfunded liability,” said McDaniel. “We have additional security for the responsibilities for some of these exiting employees and we’re able to stabilize the network of what are now quasi-governmental or not for-profit organizations who provide some critical services across the commonwealth.”
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