To fix Kentucky’s troubled pension system, Gov. Matt Bevin, Senate President Robert Stivers, and House Speaker Jeff Hoover announced the “Keeping the Promise” plan Wednesday.
For teachers, the plan will keep their current pension plan unless they either have or reach 27 years of service; those that do will be moved into 401(k) plans. New teachers will be placed immediately into the 401(k) plans.
In order to slow a large number of retirements, current teachers will be able to remain in their current plans for an extra three years. However, educators will no longer be able to use accumulated sick days to boost their benefits after July 1, 2023. The plan will also bring legislators, who have more generous benefits, into the retirement system of other state employees.
Under the plan, current and future “hazardous duty” workers, such as fireman and police officers, will retain benefits in the current pension system until they either turn 65 or reach 27 years of service, when they will be moved into a 401(k)-style plan. New hazardous duty employees will have the option to switch to a defined contribution plan, but unless they elect to the change, they will still be enrolled in the current cash balance plan.
For those still working, Bevin said the full retirement age will not increase.
“When you have a plan that fulfills every promise, that delivers on everything that is contractually required, that addresses every single person and takes into consideration both what is legally and morally appropriate, and that even when it’s done, everybody is slightly unhappy with, you know you have the right plan, and we have the right plan,” Bevin said in a statement reported by WKYT.
In addition, the plan will begin to pay for retirements in a new way that “mandates hundreds of millions more into every retirement plan, making them healthier and solvent sooner.”
Bevin said that $1.2 billion will be required to fund Kentucky’s $60 billion deficit in the next budget session, which he said will be difficult.
Bevin also said that a special session, now pushed back to early November, will begin as soon as possible, with Hoover adding that public hearings on the pension proposal could also happen prior to any special sessions.
If passed, the law will go into effect July 1, 2018.
Tags: Governor Matt Bevin, Keeping the Promise Plan, Kentucky, Pension, Pension Reform