I am deeply concerned about the pension reform framework recently made public.
These proposals challenge the contract rights of members, lower the standard of living of employees now and in retirement, and will worsen the cash-flow crisis in the state employee pension plan.
A state Supreme Court justice recently questioned the legality of freezing participation in the judicial pension plan at 27 years. We share the same concern for Kentucky Retirement Systems members whose benefits also are covered by an inviolable contract. The framework imposes a new 3 percent employee contribution to help fund health insurance expenses. State workers already are underpaid and losing ground every year. Moreover, the KRS health insurance trust funds are a fiscal bright spot with improving cash flow and dramatically increasing funding ratios.
Finally, the conversion to a 401(k)-style plan will divert contributions from new employees from KRS to Wall Street. The legacy plans will still have to pay down the existing unfunded liabilities even as they are closed.
Yes, pensions must be addressed. The legislature failed in its duty to adequately fund pensions, with an inevitable result. We look forward to a vigorous discussion of revenue sources that address pension funding without betraying the promise to workers and retirees.
President, Kentucky Government Retirees