The General Assembly has finally produced a bill regarding public pensions and the fine print reveals some remarkable facts about its potential impact. The fine print in question is the actuarial analysis performed on behalf of Kentucky Retirement Systems regarding aspects of Senate Bill 1.
SB1 would reduce benefits in areas such as compensatory and sick time. Would those changes reduce long-term liabilities? According to the analysis, the answer is “no.” Those changes would have minimal impact. Would a new optional defined contribution plan reduce liabilities? The actuary says “the plan will not decrease the employer cost,” but will simply shift the risks to the workers.
Keep in mind, employer risks already were reduced when a hybrid plan was adopted in 2014. That plan does not guarantee a specific pension benefit amount. What about the legality of benefit reductions? Attorney General Andy Beshear has identified multiple violations of contract law in the bill.
As KRS stakeholders, we have made substantial sacrifices over the past decade in our pension benefits and plan design.
The path forward is clear: the General Assembly must modernize the state’s tax structure to meet unmet needs and avoid further draconian cuts in important services.