Kentucky legislators, who often call for greater transparency from the struggling state employee pension system, keep their own retirement accounts in a much better-financed system that publicly offers no information about itself.
Legislators, like judges, collect lifetime pensions from the Kentucky Judicial Form Retirement System. Traditional legislative pensions covered 343 people on July 1 and were 85 percent funded, with $86 million in assets. For those elected since 2012, a “hybrid” cash-balance plan covering 11 people was 83 percent funded, with $24,788 in assets.
By comparison, the chief pension fund for about 120,000 state government employees at Kentucky Retirement Systems had only 19 percent of the $12.3 billion it’s expected to need for promised benefits.
Discovering anything about legislative pensions can be tricky.
I think it’s inexcusable. All public pension systems should have at least a modicum of transparency to show how they operate, and that clearly isn’t the case here.
Jim Carroll, a member of an advocacy group called Kentucky Government Retirees
Jim Carroll, a member of an advocacy group called Kentucky Government Retirees, said he recently looked online for financial information, but the Judicial Form Retirement System has no website. After he did a little digging, Carroll learned the agency’s name and phone number in Frankfort. Eventually, he filed an Open Records Act request, which yielded reports showing that lawmakers have funded a far more stable retirement system for themselves than they have for state workers.
The inequity aside, legislative pensions should not be hidden from view, Carroll said Friday.
“I think it’s inexcusable. All public pension systems should have at least a modicum of transparency to show how they operate, and that clearly isn’t the case here,” he said.
By comparison, the state’s two other pension agencies — KRS and Kentucky Teachers’ Retirement System — have websites where they post financial audits, actuarial statements, investment reports, board meeting schedules and other documents. They’ve had to share even more information since 2013, when the legislature demanded greater transparency from them and created the Public Pension Oversight Board to closely monitor them.
At its October meeting, the oversight board sharply criticized KRS for awarding a 25 percent pay raise to its executive director, Bill Thielen, taking him to $215,000 a year. They also criticized KRS and KTRS for giving out contracts to law firms without the usual legislative contract approval.
“It’s really the height of hypocrisy,” Carroll said. “Some of the legislature’s criticism of KRS for failing to disclose information has legitimacy, except for the fact that they’re enrolled in a system that’s totally out of the public’s sight.”
I don’t think we have anything to hide. But it is an appropriate criticism. I agree. We should have a website. The question has just never been raised before.
State Sen. Jimmy Higdon, R-Lebanon
On Friday, several legislators said they did not realize their own retirement system fails to publish information about its finances. That should be corrected, even if their system’s two-person staff needs additional help to start a website, they said.
“I don’t think we have anything to hide,” said state Sen. Jimmy Higdon, R-Lebanon, a member of the Public Pension Oversight Board. “But it is an appropriate criticism. I agree. We should have a website. The question has just never been raised before.”
The Judicial Form Retirement System is overseen by an eight-member board, appointed by judges, legislators and the governor. Pensions for judges and legislators are handled separately. Judicial pensions, covering 596 people on July 1, had $296 million in assets, or 72 percent of the money they’re expected to need for future benefits.
Kentucky Court of Appeals Judge Laurance VanMeter sits on the system’s board and is past chairman, and he agreed with the legislators that a website is overdue. Unlike KRS, which often falls short of its assumed rate of return on investments, the Judicial Form Retirement System last year saw a return of about 11 percent, well above its assumed rate of 7 percent, VanMeter said.
“We have one investment manager charging us one fee,” VanMeter said. “We’re not out chasing returns, which is where the other pension plans get in trouble nationally, I think.”
He added: “Nobody’s trying to hide anything here. These two pension plans are the best-kept secrets in state government, even if they don’t need to be.”