The number of Kentuckians who will retire from state and local government in September is up 37 percent from one year earlier, according to data released Wednesday by the Kentucky Retirement Systems.
Overall, 746 state and local government employees will retire this month. The average number of September retirements over the previous four years was 542. Retirements from public service also were up noticeably during August.
“It doesn’t surprise me at all. We’re hearing a huge reaction from people who are very concerned about what they should do to protect their pensions,” said Jim Carroll, spokesman for the advocacy group Kentucky Government Retirees.
If hundreds of additional people are rushing into retirement, that is likely to aggravate the state’s pension problem, Carroll added.
“We rely on contributions from the state payroll to help fund the retirement system,” he said. “So as we suddenly have more people move from being active contributors on the payroll to being retirees drawing a pension, like me, you’re worsening the imbalance with every passing month. I’m surprised that didn’t occur to anyone.”
Last week, consultants hired by Gov. Matt Bevin recommended an end to defined-benefits pensions for public employees and school teachers in favor of less generous defined-contributions accounts; a raise in the retirement age to 65 for most workers; and the “clawback” of a previously awarded cost-of-living adjustment to some retirees that could reduce their future benefits by 25 percent or more.
“Our benefits team was inundated with requests for appointments,” KRS told its members on Facebook. “We understand that our members would like to come to Frankfort to meet with a retirement benefits counselor face to face. Unfortunately, due to the ongoing discussion about potential pension changes, our appointment availability is extremely limited. Simply put, KRS does not have the staff to meet with every member requesting appointments at this time.”
KRS oversees separate retirement plans for state government employees, local government employees and state police.
The state of Kentucky faces an unfunded public pension liability of tens of billions of dollars, due in part to inadequate funding by the state government and unrealistic fiscal assumptions for most of the past two decades.
The primary KRS retirement plan for state workers — known as Kentucky Employees Retirement System (Non-Hazardous) — is in the worst shape by far, with roughly $15 billion in unfunded pension and insurance liabilities. But the other KRS plans also need assistance, as does the plan for educators at Teachers’ Retirement Systems of Kentucky, a separate agency.
Carroll said his group is advising public employees to act cautiously rather than rush into retirement. Although Bevin’s private consultants issued several potentially alarming proposals, he said, neither the governor nor the General Assembly have revealed any of their own ideas to address the pension shortfall.
At least one of the consultants’ controversial recommendations — the clawback of past cost-of-living adjustments — is “highly unlikely” to happen, House Speaker Jeff Hoover told reporters on Wednesday. But Hoover declined to say what other proposals lawmakers would be willing to consider.
“We’re still waiting for a tangible plan to come from someone in the form of a pre-filed bill for the special (legislative) session,” Carroll said. “Retirement is an irreconcilable decision. Once you’ve retired, there’s no going back. It’s never a good idea to make that kind of decision based on fear or impulse. So I would urge people to consider just waiting for a moment until we know what we’re looking at here.”
Kentucky Employees Retirement System: 279, up 52.5%
County Employees Retirement System: 461, up 29.9%
State Police Retirement System: 6, up 20%