What’s going on with pension talks in Frankfort? Will my pension be there when I need it? Will I even be able to retire?
These are just some of the questions I hear every week from city employees in Richmond and members of the community worried about their friends and neighbors. It’s a rough time to be a public employee.
I want to clear up some misconceptions and give a clear vision of what city leaders across our state believe is the best path forward.
It is important people realize city, county and school employees are not bleeding the state’s pension systems. They belong to the County Employees Retirement System. The state does not directly appropriate money toward the CERS actuarially required contribution. That has consistently been paid at 100 percent by city, county and school employers.
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
CERS nonhazardous retirees — people who served children in school cafeterias, drove school buses or helped at city hall — are paid an average benefit of $11,000 a year. Hazardous retirees, the police and fire employees who keep you safe, earn an average of $25,000 in benefits annually. These are not high-wage retirements.
CERS is funded at a much higher percentage than the struggling Kentucky Employees Retirement System, which covers state employees. Both are managed by the Kentucky Retirement Systems. The governor says all state pension systems are in peril, but an actuary hired by the Kentucky League of Cities predicts CERS will be fully funded by 2043, if reforms passed in the 2013 session are given a chance to work.
The problem is CERS is often lumped in with KERS as the KRS board makes changes and recommendations. We believe it’s time for a change.
A coalition of 25 employer and employee groups advocates that CERS separate from KRS and form its own nine-member board. It would have three members with at least 10 years of investment experience, three members with at least 10 years of retirement-management experience and three members elected by members.
It would be a board fully focused on the success of CERS, to ensure promises made to its members are kept and taxpayer money is managed responsibly. It will decide if administrative changes are needed and how to make those changes without devastating the system. Local management of local pensions would lead to a more efficient system.
CERS has 63 percent of the membership in KRS and pays 63 percent of administrative expenses. That amounts to $22 million a year, a fee much higher per person than other state systems that manage their own retirement.
CERS accounts for 73 percent of the assets managed by KRS, but only has 35 percent representation on the KRS board. That is not local control of local pensions.
It’s time to break free of politics and ensure no future political changes impact the board overseeing tax dollars contributed to local retirements. The governor and legislators are meeting right now to draft a pension plan for the special session; they need to include CERS separation.
It is the best path forward for the city workers I know and respect so they can have the retirement they’ve earned and the respect and dignity they deserve.
Jim Barnes is mayor of Richmond.