Christmas carols with a twist sung at protest of surprise legislative session
After Gov. Matt Bevin called it into special session late Monday, the Kentucky General Assembly is considering two bills that would reshape the state’s public pension systems. Here are the highlights of House Bill 1 and House Bill 2, as proposed by Bevin.
▪ Teachers hired in Kentucky after Jan. 1 wouldn’t get traditional defined-benefits pensions guaranteed to last the rest of their lives. They would be enrolled in hybrid cash balance accounts that would shift more of the burden to them to save money for their retirement.
▪ Apart from their own contributions to their cash balance accounts, teachers would receive employers’ contributions of 8 percent of their wages. University educators would get 4 percent.
▪ Accumulated sick leave for teachers would be capped as of Dec. 31 — less than two weeks from now — in how it could be calculated to enhance their retirement benefits.
▪ A retirement allowance would be phased out that had been offered to a select group of teachers — those hired before 2008 and who have worked for 30 years — if they do not claim it by July 2024. The allowance, which was 3 percent of their final average salary, was meant as an incentive to keep teachers on the job longer.
▪ The bill also provides relief for local governments and related entities, such as health departments and libraries, by capping the growth of their annual pension contributions at no more than 12 percent until 2028. This part actually is law already, having been passed as House Bill 362 in the 2018 legislative session last winter.
▪ State and local government employees hired since 2014 already have been placed in cash balance accounts. The terms of their accounts would become less generous to match the teachers’: They would collect 85 percent of the investment returns in their accounts with a zero percent rate of return guarantee. That means they are protected against investment losses, but they are not guaranteed investment gains in bad years.
▪ A 1 percent paycheck deduction for state and local government employees, previously proposed to shore up the retiree health care funds, is not included this time.