Pension reform plan won't raise retirement age or reduce pension checks for retirees; future employees and teachers will be put into 401(k) plans; teachers near retirement will get three-year window to stay in current plan to avoid rush of retirements

The Courier-Journal, Louisville, Oct. 18, 2017

Kentucky pension crisis: Bevin reform plan won't raise retirement age
Tom Loftus

After months of planning and closed-door negotiations, Gov. Matt Bevin and the leaders of the General Assembly’s Republican majorities on Wednesday released their plan to tackle Kentucky’s multibillion-dollar pension debt – a plan they say honors past promises to retirees and public employees.

Here are highlights of the multi-point proposal:

► There is no increase in the full retirement age for current workers

► There will be no reductions in pension checks for retirees, and it protects health care benefits for them.

► Future non-hazardous employees and teachers will be required to enroll in 401(k)-style plans.

► Hazardous duty employees, such as police officers and firefighters, will continue in the same system they are in now.

► The plan would close a loophole to ensure payment of death benefits to families of hazardous employees.

► The plan would stop the defined benefits plans for all legislators, moving them into the same plan as other state employees under the jurisdiction of Kentucky Retirement Systems.

House Speaker Jeff Hoover added that teachers nearing retirement will get a three-year window to stay in their current traditional plan. This is meant to avoid a rush of teacher retirements, he said.

Bevin said the plan "will be a model for this nation."

This bill "keeps the promise," he said. "We need to do what is legally and morally right."

Bevin said the changes should improve the state's credit rating, "which has been downgraded repeatedly by this looming crisis."


Officially, the combined debts within Kentucky's retirement benefit plans are about $40 billion.

Bevin says those official numbers are based on optimistic assumptions, and he says the debt is more than $64 billion.

The governor has put a spotlight on the pension crisis since taking office in December of 2015. In the 2016 legislative session, he successfully urged lawmakers to put more than $1 billion of new funding for pensions into the 2016-18 budget.

Since then, he has promised to call a special session in 2017 to take further steps. Initially, the governor said the session must tackle both pension and tax reform together. But since mid-summer, Bevin has separated the two, saying changes to the pension system must be addressed now while tax reform can be taken up next year.