Kentucky’s state pension plans have problems, and a bipartisan legislative task force has approved sweeping recommendations to overhaul them — including putting new employees in a hybrid plans akin to 401Ks.
The task force — with an 11-1 vote — is recommending that the General Assembly start fully funding their pension contributions starting with the next budget in 2014. Lawmakers’ inability to do that is part of the pension plans problems.
It also recommends ending cost of living adjustments and putting new employees in a hybrid plan that acts like a 401K but promises a certain amount of profit every year, guaranteed by the state.
Chairman Mike Cherry says the recommendations were difficult to make but are being suggested to save current pensioners.
“We’re not cutting it, we’re not doing anything to make you pay more for it, and we’re protecting your pension,” he said.
The recommendations will be filed as legislation for lawmakers to start considering in January, when they return to the Capitol.
The task force’s other chairman, Damon Thayer, says he wants to present the recommendations as clean bill to start the session, but says it is likely to be amended before passing.
What wasn’t addressed in the task force’s recommendations were how to fund these changes. Both Thayer and Cherry said with a tax commission still working to a deadline, they didn’t feel it was appropriate for them to decide how to fund the measures.
Here are the full recommendations from the task force:
- Full payment each year by General Assembly starting in 2014
- End automatic cost of living adjustments
- Extend double dipping cool off period to 2 years to virtually eliminate practice
- Change retirement board to 11 members, with more outside influence on board members
- End enrollment in judicial and legislative pension systems in 2013, move new hires to main system
- Create hybrid plan for new hires