From KCEP: ‘Sky is Falling’ Pension Story Not Backed by Facts

Thanks to Jeff Wiggins for sending us this.
By JASON BAILEY
Executive Director, Kentucky Center for Economic Policy

As the pension bill that passed in the 2018 session awaits a ruling from the state Supreme Court, we’re hearing false claims the systems will collapse if the bill is struck down. Those warnings are not based on analysis done by the systems’ actuaries or plausible scenarios of the future.

In a recent interview with The Hill, the governor stated that striking down the bill “would destroy the pension system in Kentucky. There’s a 100 percent chance the system fails.” Likewise, he told reporters “whether or not the systems survive” is at stake in the ruling. And the governor’s Twitter account tweeted that “Kentucky’s pension systems will COLLAPSE” without the bill, with the Kentucky Employees Retirement System (KERS) “likely insolvent by 2022” and the Teachers Retirement System (TRS) “likely insolvent by 2036.”

The actuarial analysis to the bill itself takes issue with these claims. Changes in the bill have little to no effect on existing unfunded liabilities, which exist primarily for already retired employees and secondarily for current workers, most all of whom have their benefits covered by the inviolable contract. SB 151 makes little-to-no difference in the funded ratios of the plans, which are projected to improve without the changes the bill makes, as shown in the graphs below.

Read more here.