Kentucky teachers protest pension bill outside the state Capitol

Teachers from across Kentucky gathered in Frankfort to rally against the pension bill that impacts benefits for many state employees.

LOUISVILLE, Ky. (WDRB) – Legislation that would offer drastically different pension benefits for Kentucky’s future teachers – with some tweaks to those offered to state and local government workers – is waiting for action from Gov. Matt Bevin.

Senate Bill 151, which was amended in the House and passed by both chambers Thursday, would place newly hired teachers into so-called hybrid cash balance retirement accounts, which share qualities with defined-benefit and defined-contribution pensions.

Teachers currently receive defined-benefit pensions that largely can’t be altered because of  "inviolable contract" language in state law. But the bill changes that for educators hired after Jan. 1, 2019.

However, a number of teachers and other government workers won’t be able to count unused sick leave toward early retirements after July 2023.

The legislation doesn’t include one of the most criticized pieces of Senate Bill 1, which called for the 1.5 percent cost-of-living adjustments granted to retired teachers to be cut to .75 percent until the funding level for the Kentucky Teachers Retirement System reaches 90 percent.

Here’s a look at how SB 151, if signed into law, will impact public-sector employees in Kentucky:

Hybrid cash balance plans and optional 401(a) accounts

This will be the largest shift for Kentucky educators hired after Jan. 1, 2019, and is similar to pensions offered to many state and local government workers.

While state and local government workers covered by the hybrid plan originally received guaranteed 4 percent returns for their accounts, that’s no longer the case under the bill. Still, investments in the hybrid plan won’t lose money under SB 151.

Teachers and other government workers can also opt for 401(a) defined-contribution accounts instead of the hybrid plan.

Teachers will need to contribute 9 percent of their salaries toward the hybrid plan, with an additional 6 percent of payroll coming from the state and 2 percent from local school districts.

Retirement eligibility

The accounts can be annuitized once teachers hired into the plans are eligible for retirement after they reach age 65 or have at least 30 years of service by age 57.

That’s a change from the current 27 years of service before retirement eligibility.

Sick days

Teachers and other government workers won’t be able to accumulate sick leave after Dec. 31 and apply that total toward their retirement eligibility after July 1, 2023.

Still, those who have built up unused sick leave will be able to count that time toward their pension calculations.

Inviolable contract

New teachers hired into KTRS after Jan. 1, 2019, won’t have inviolable contract rights, meaning legislators will be able to amend their benefits anytime in the future.

Lawmakers inserted a similar provision in a 2013 pension reform bill that placed state workers in hybrid cash balance plans.

Legislative reciprocity

Legislators also addressed the practice of reciprocity, although the legislation only applies to future benefits.

SB 151 says any salaries earned by lawmakers in other public-sector jobs after Jan. 1, 2019, won’t count toward their pension benefit calculations.


SB 151 also ends the practice of double-dipping, in which government workers collect both retirement checks and salaries if they retire and take another public-sector job.

The legislation requires that anyone who retires from government work and takes another public-sector job within three months, they will void their retirement and pay back any benefits earned.

Related stories: 

 Reach reporter Kevin Wheatley at 502-585-0838 and Follow him on Twitter @KevinWheatleyKY.

Copyright 2018 WDRB News. All rights reserved.

Education Reporter