Retirements, questions increase as changes loom for Kentucky pension systems
Adam Beam | Associated Press
8:21 AM, Sep 2, 2017
FRANKFORT, Ky. -- Public employees in Kentucky are flooding the offices of the state’s largest pension systems after lawmakers vowed to make substantial changes to one of the worst funded retirement plans in the country.
State workers can retire the first of every month. Retirements Aug. 1 were up 11 percent compared to last year in the Kentucky Retirement Systems, which includes state workers, police officers, firefighters and other local government employees. Retirements for Sept. 1 were not available Friday, but Kentucky Retirement Systems Executive Director David Eager said they will be “considerably higher.”
Teacher retirements were down slightly since July 1, but visitors seeking information increased 18 percent in August. For the Kentucky Retirement Systems, phone calls were up 23.2 percent since July 1 while appointments at the Frankfort headquarters were up nearly 18 percent.
“We have advocated to our members they need to go ahead and retire and lock themselves in,” said David Smith, executive director of the Kentucky Association of State Employees. “If this fight ends up in the court system, they are going to end up in a better position.”
Defined benefit retirement systems like the ones in Kentucky require a balance of workers and taxpayers contributing to the system and retirees withdrawing from the system. A sudden influx of unanticipated retirements could increase the state’s debt.
Eager said while the retirements were increasing, it was not enough put pressure on the system. At least 20 percent of the state’s public school teachers are eligible to retire. As long as they retire gradually over the next several years the system should not see any problems, according to Beau Barnes, general counsel for the Kentucky Teachers Retirement System.
State officials say they are at least $33 billion short of the money needed to pay retirement benefits over the next 30 years. State budget director John Chilton said the legislature will need to come up with a minimum of $1 billion each year going forward, which would require budget cuts of more than 34 percent across most state agencies. Bevin and the Republican legislative majority have pledged not to raise taxes.
Since February, Bevin has vowed to call a special session of the state legislature this year to make changes to the retirement system. But he has not said what those changes would be.
On Monday , a state-funded analysis of the state’s largest pension systems recommended changes that were unpopular with many state workers. They included increasing the retirement age for most workers, eliminating 16 years’ worth of cost-of-living adjustments for some retirees and freezing the benefits of current state workers and moving them into a 401(k)-style plan.
Lawmakers have said they won’t adopt all of the recommendations, but said little else about what they plan to do.
Bevin hosted a Q&A with state workers on his Facebook page the day the report was released. But when asked if he thought any proposed changes would spur a wave of retirements, Bevin said anyone who would “walk out on your classroom in order to serve what’s in your own personal best interest at the expense of your children, you probably should retire.” Bevin added he knows “almost all of you teachers that are watching this don’t think that way.”
His comments prompted a wave of criticism on social media. Republican House Speaker Jeff Hoover said he was “disappointed” with Bevin’s remarks.
Bevin responded Thursday evening with a YouTube video, noting his grandmother, father and two of his siblings were public school teachers. He said when his grandmother retired, the only income she had was her teacher’s pension.
“This is very personal to me,” he said. “I see a lot of commentary to the fact I don’t even perhaps know a public school teacher or not sensitive to what is involved. I am very sensitive to what is involved. This is why I am fighting with everything in my ability to save the pension system.”