| Draft of Pension Plan Obtained by Hebert WHAS 11 News |
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Draft of Pension Plan Obtained by WHAS 11 News
A draft of Governor Beshear's plan to overhaul and financially stabilize Kentucky's public employee retirement systems has been obtained by WHAS 11 News.
The draft summary shows new state and county employees will have to work longer and contribute more of their pay to get full retirement benefits. The plan would take effect July 1st and only impact new employees.
There are more than 400-thousand teachers, police and government workers in the various retirement systems which are facing a projected future unfunded liability of more than $15 billion.
Beshear's plan attempts to shore up the finances of those systems without impacting current workers. Here are a couple of the highlights in the draft plan:
All workers except teachers and those who are classified at "hazardous duty" would be required to work until they're at least 55 years old to receive full retirement benefits. A "rule of 85" would apply, meaning an employee's age + yrs. of service = 85 before they can fully retire. Right now, most state and county employees can retire after 27 years of service.Hazardous duty employees would be required to work 25 years, instead of the "20 and out" they have now.
All employees, including teachers, would pay an additional 1% of their salary into the retirement system with the extra money going to pay for health care.
The benefit factor for every category of public employees would be reduced. For instance the KERS benefit factor is currently 1.97%. Under Beshear's plan, employees would have to work more than 30 years to get to 2.0%.
10-20 years: 1.3%
20-26 years: 1.5%
27-30 years: 1.75%
31+ 2.0%
Also, all retirees would only be guaranteed a 1 1/2% Cost of Living Adjustment each year. The legislature could approve a higher rate. Right now, many of them can get up to a 5% COLA, based on the CPI or actions or the legislature.
Beshear is talking about setting up a Legislative Pension Oversight Committee to review pension bills and provide oversight. And a Pension Investment Review Commission would be established in the Finance Cabinet to take a closer look at the retirement systems' investments and allocations and make recommendations to the 2010 legislature.
Gov. Beshear's spokesman Dick Brown says the governor plans to unveil his pension reform bill on Thursday.
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