This week marks National Retirement Security Week. Unfortunately, most Americans face uncertainty when it comes to their retirement futures. Even public employee pension plans, which at one time were considered safe harbors for public workers to save and enjoy their retirement years, are now antiquated and failing the very people they are meant to serve. As more pension systems go without being fully funded, and plans consistently lose money, it’s the workers and retirees who are impacted the most.
Such is the case in Kentucky, which has accumulated more than $37 billion in pension debt due to such factors as inadequate funding and poor investment returns. The system faces insolvency and, without reform, state officials estimate retiree benefit checks could stop coming as early as the next three to six years.
But this week, Kentucky Governor Matt Bevin and legislative leaders introduced a comprehensive plan to stave off the impending pension crisis. The proposal, aimed at making the system healthy and solvent, would go into effect July 1, if passed by a special session of the legislature.
Here are some highlights:
- Kentucky will have to pay its actuarially required contribution every year and create a funding formula to put hundreds of millions of more dollars into retirement plans.
- Retirees will be protected. They will see no change in their retirement checks and their healthcare benefits will remain secure.
- Retirement age for current public workers will remain intact and their current defined benefit plan benefits will continue until the employee attains his or her promised level of unreduced benefit.
- Non-hazardous future employees and teachers will be moved into a modern retirement plan that offers more mobility and flexibility.
The Retirement Security Initiative believes that all workers deserve safe and secure futures and retirement plans should place employees on a path to a secure retirement, regardless of tenure. Governor Bevin’s pension reform plan will do just that.
“The right thing to do is rarely the easiest,” said Bevin. “But we are determined to address the crisis with the most fiscally responsible public pension reform plan in the history of the United States. I am confident that the rest of the country will pay close attention to this excellent work by our legislature and for good reason. For those retired, for those still working, and for those yet to come: we are truly fixing our broken pension systems.”
Growing pension costs are threatening the solvency of public employee retirement plans throughout the country, putting at risk the hard-earned savings of many workers. We tip our hat to Governor Bevin for stepping up to the state’s $37 billion challenge, saying enough is enough, and putting public workers first.