From the KCEP: Op-Ed: Watch Out for Attack on Pensions on Session’s Final Day

By JASON BAILEY

Kentucky Center for Economic Policy

The General Assembly adjourned for the veto period without providing relief from soon-to-spike pension costs to quasi-governmental organizations like regional universities and community mental health centers. The legislature can still prevent an unaffordable increase on the session’s final day — March 28 — but must reject attempts to attach harmful pension changes that would set Kentucky back.

In their version of House Bill 358, the Senate proposed tying relief to breaking the inviolable contract for up to 9,000 current employees at these institutions. That illegal plan would immediately freeze their pension benefits and move them to a 401k-style defined contribution plan for the remainder of their service. For a mid-career employee, the result is a massive loss in retirement income.

In addition, both that proposal and the House version of HB 358 would further weaken the Kentucky Employees Retirement System (KERS) non-hazardous plan by moving new employees out of the system and into inferior defined contribution plans. Pension systems need a mix of employees of different ages, with contributions being made from and on behalf of younger workers who won’t need those benefits for decades to come. HB 358 also allows those agencies to pay their liabilities on terms less costly to the institutions but more costly to KERS non-hazardous. By starving the retirement system of resources, it would further stress the severely underfunded plan and increase costs to the state.

Read more here.