Kentucky Judge Rejects Gov.’s Pension Ruling Request

Kentucky Gov. Matt Bevin’s request for a judge to revisit his ruling on a controversial pension law has been denied.

Judge Phillip Shepherd of the Franklin Circuit Court struck down the pension law, which cut the benefits of Kentucky’s public pensioners, on June 20. Attorney General Andy Beshear had previously sued Bevin to have the law thrown out as it was passed while tucked into a sewage bill at the end of the legislative session.

Shepherd also considered the bill to be an appropriations bill, which requires a majority vote in each chamber. Although the pension law had passed in a 49-46 vote in the 100-member House, an appropriations bill needs 51 votes for full recognition.

Following Shepherd’s June ruling, the governor’s administration filed a request to have the judge amend or vacate his decision, which was declined on Wednesday after Shepherd heard arguments on that motion.

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The governor’s general counsel, Steve Pitt, pushed for the reversal based on whether the new pension reforms violate the state constitution’s rights of the public workers rather than procedural issues. Pitt said the law does not violate these rights and that Shepherd ruled on that issue to provide guidance to future legislatures. Pitt also argued that parts of the bill should not be considered appropriations and receive individual attention.

Shepherd rejected Pitt’s discrepancies. Bevin now has 30 days to appeal the motion, and should he choose to do so, he’ll have to file it with the Kentucky Supreme Court.

In addition, the attorney general, a Democrat, announced his bid to run for governor next year. Bevin, a Republican, has not yet said if he’ll campaign for re-election.

Tags: Andy Beshear, Judge Shepherd, Kentucky, Matt Bevin, Pension

The Australian Securities and Investments Commission (ASIC) has found that the vast majority of the financial advice given in regards to setting up a self-managed super fund did not comply with relevant laws.

The ASIC reviewed 250 client files that were randomly selected based on Australian Taxation Office data. It then assessed compliance with the Corporations Act’s “best interests” duty and related obligations.

The commission found that in 91% of the files reviewed, the adviser did not comply with the “best interests” duty and related obligations. It said the noncompliant advice ranged from relatively minor recordkeeping and process failures to failures likely to result in significant financial detriment.

“It is clear lots of people are setting up self-managed super funds without knowing whether this is the best option,” ASIC Deputy Chair Peter Kell said in a release. “The financial advice sector has significant work to do to lift their performance on this issue.”

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In 10% of files reviewed, the client was likely to be “significantly worse off” in retirement as a result of the improper advice given. And in 19% of cases, clients were at an increased risk of financial detriment due to a lack of diversification.

ASIC said it will take follow-up regulatory action, particularly where consumers have suffered detriment. It also said it conducted market research that included interviews with 28 consumers who had set up a self-managed super fund (SMSF), as well as an online survey of 457 consumers who had set up an SMSF.

“Through this work, we found a lot of people do not understand fully the risks of SMSFs, or their legal obligations as trustees,” said ASIC.

According to the online survey, 38% of respondents found running an SMSF more time consuming than expected; 32% found it to be more expensive than expected; 33% did not know the law required an SMSF to have an investment strategy; and 29% mistakenly believed that SMSFs had the same level of protection as superannuation funds in the event of fraud.

ASIC’s findings are bolstered by a recent superannuation report from the Australian government’s Productivity Commission, which found that SMSFs with balances of less than $1 million perform “significantly worse” than institutional funds.

“ASIC found there is a lack of basic knowledge of the legal obligations in setting up or running an SMSF,” Kell said. “It is also concerning many people with an SMSF have not understood the importance of diversification, which puts their financial future at risk.”

Tags: Australian Securities and Investments Commission, Australian Taxation Office, Peter Kell