Kentucky pension consultant says to freeze benefits, move worker - WDRB 41 Louisville News

Kentucky pension consultant says to freeze benefits, move workers to 401(k)-style plans

Posted: Updated:
Mike Nadol Mike Nadol

FRANKFORT, Ky. (WDRB) – A consultant hired by Gov. Matt Bevin’s administration recommends fixing Kentucky’s pension debts of at least $35 billion by, among other measures, freezing benefits and moving state and local government workers into less secure, 401(k)-style plans.

The recommendations of the PFM Group were unveiled at a meeting of the legislature’s Public Pension Oversight Board on Monday.

Lawmakers will consider acting on the options during a special session Bevin plans to call later this year aimed at fixing the pension problem.

“We will not kick the can down the road any longer. We were elected to fix this problem and we will,” Bevin said in a statement following the meeting.

Kentucky maintains eight pension providing lifetime retirement benefits to different types of state and local government workers – from police to teachers to state bureaucrats – and the PFM Group’s recommendations vary according to the plan and working status.

For the biggest and worst-funded plan – called KERS Non-hazardous – PFM Group recommends freezing benefits for current workers and giving them a 401(k)-style “defined contribution” plan for their remaining years of service.

Employees could also elect to receive their accumulated benefit in a lump-sum payment that would be rolled into an individual retirement account, allowing the state to shift investment risks off its books.

For public school teachers, the consultant recommends giving new hires access to the Social Security system – in which Kentucky teachers don’t currently participate – along with a 401(k)-style plan.

Current teachers would continue to be promised pensions, but they would have to work until age 65 to receive an unreduced level of benefits upon retirement. Today, teachers can retire with full benefits after 27 years of service regardless of their age.

Mike Nadol, managing director of PFM Group, told lawmakers the changes would be “unpleasant” and “disliked and criticized by different stakeholders” but ultimately provide “a more modern and flexible approach to your retirement benefits.”

“Doing nothing is perhaps the worst path you could take,” he said.

Kentucky's pension debt -- conservatively estimated to be as much as $80 billion -- grew steadily over the 2000s as lawmakers routinely did not fund the plans at necessary levels in the state budgeting process. 

Copyright 2017 WDRB News. All rights reserved.

  • Sign Up for WDRB's Sports Newsletter

    * denotes required fields

    Thank you for signing up! You will receive a confirmation email shortly.
  • Stories by Chris OttsMore>>

  • Now making money on Obamacare, Humana still plans to quit exchanges

    Now making money on Obamacare, Humana still plans to quit exchanges

    Friday, November 17 2017 1:46 PM EST2017-11-17 18:46:53 GMT
    Louisville-based Humana is unexpectedly making money on Obamacare exchange plans this year, company reports show.Louisville-based Humana is unexpectedly making money on Obamacare exchange plans this year, company reports show.

    Louisville-based Humana isn’t budging from its promise to stop selling individual plans in the Obamacare health insurance exchanges -- once and for all – in 2018. There’s only one problem: Humana is finally making money on the plans.

    More >>

    Louisville-based Humana isn’t budging from its promise to stop selling individual plans in the Obamacare health insurance exchanges -- once and for all – in 2018. There’s only one problem: Humana is finally making money on the plans.

    More >>
  • Louisville-based Almost Family to merge with bigger competitor

    Louisville-based Almost Family to merge with bigger competitor

    Thursday, November 16 2017 5:06 PM EST2017-11-16 22:06:51 GMT
    Almost Family's headquarters office in LyndonAlmost Family's headquarters office in Lyndon

    Louisville-based Almost Family Inc. plans to merge with its slightly bigger competitor LHC Group to create a national home-health care giant that will operate in 36 states and generate $1.8 billion in annual revenue.

    More >>

    Louisville-based Almost Family Inc. plans to merge with its slightly bigger competitor LHC Group to create a national home-health care giant that will operate in 36 states and generate $1.8 billion in annual revenue.

    More >>
  • Apartment complex planned on old farm land near Oxmoor mall

    Apartment complex planned on old farm land near Oxmoor mall

    Wednesday, November 15 2017 9:25 PM EST2017-11-16 02:25:57 GMT
    A rendering of the proposed apartment complex at 202 Oxmoor Lane.A rendering of the proposed apartment complex at 202 Oxmoor Lane.

    A 301-unit apartment complex is proposed for a portion of the massive, undeveloped Oxmoor Farm behind Oxmoor Center. NTS Development Co. plans to build more than a dozen 3- and 4-story apartment buildings, as well as an outdoor pool, a clubhouse and a two-story parking deck.

    More >>

    A 301-unit apartment complex is proposed for a portion of the massive, undeveloped Oxmoor Farm behind Oxmoor Center. NTS Development Co. plans to build more than a dozen 3- and 4-story apartment buildings, as well as an outdoor pool, a clubhouse and a two-story parking deck.

    More >>
Powered by Frankly
All content © Copyright 2000 - 2017 WDRB. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.