From the KCEP: Pension Proposal Steers Quasi-Governmental Organizations Toward Breaking Promise to Current Employees
Executive Director, Kentucky Center for Economic Policy
A new pension proposal from the governor’s office encourages quasi-governmental organizations to leave the retirement system in ways that are still very expensive to them, and even less affordable if they would like to keep their current employees who are protected by the inviolable contract in the system.
The proposal is expected to add costs of over $800 million to the underfunded retirement system without identifying any way to pay them.
Proposed payment plans will make it very costly for many quasis down the road
As in prior versions of the bill, the proposal gives quasi-governmental organizations that want to leave the retirement system the option of paying their liabilities as a lump sum or through a payment plan. The payment plan option starts with an initial payment amount equal to the current quasi contribution rate of 49% of employees’ pay and then increases the payment by 1.5% a year each year thereafter.