In less than nine hours Thursday, Republicans introduced and passed their controversial plan to overhaul Kentucky’s pension systems without the public ever setting eyes on the bill.
Here are highlights of the plan that have a direct effect on Kentucky’s current and retired school teachers:
▪ New teachers hired after January 1, 2019, will be put into a hybrid cash-balance retirement plan, where they will contribute 9.105 percent of their salary to their retirement plan, the state will contribute 6 percent of their salary and school districts will contribute 2 percent. Cash-balance plans are individual accounts that are considered less generous than traditional pensions but more reliable than 401(k)-style plans. The new cash-balance plan does not include a guaranteed 4 percent annual return for teachers, unlike the cash-balance plan offered to state and county employees who have been hired since 2014. It does guarantee that teachers won’t lose money on their investments.
▪ Future teachers will have to work longer before becoming eligible for retirement benefits. All current teachers can still retire after 27 years of service and will receive a traditional defined-benefits pension, but future teachers will have to work until their age and years of service add up to 87 or work until they turn 65 before they are eligible to retire.
▪ There are no cuts to annual cost-of-living increases for retired and current teachers, as the Senate had previously proposed.
▪ Teachers will no longer be able to accumulate new sick days to put toward their retirement after December 31. Any sick days accumulated before then can still be put toward their pension.
▪ Teachers will not have to contribute an additional portion of their salary into their retiree health insurance funds, as Gov. Matt Bevin had proposed.
▪ The bill ends the inviolable contract for new teachers hired after January 1, 2019, which means lawmakers can adjust the benefits provided by their retirement plan at any point in the future.
▪ The pension bill does not deal with a provision in Bevin’s proposed two-year state budget that would cut state funding for the health insurance of 8,554 retired teachers who are younger than 65. House and Senate leaders are expected to announce their compromise budget plan in coming days.