There is much debate about how to fix various state pensions systems. But some aspects of the debate are as simple as addition and subtraction.
Kentucky’s state pensions plan (made up of eight smaller state and local government plans) only has about half the money needed to cover its liabilities. That’s a problem. But this year, the Kentucky legislature passed bipartisan legislation that, among other things, requires no new benefit increases, unless funding to cover the new cost already exists, and raises significant additional funds every year to help pay down the unfunded liability. The legislation also creates a new retirement tier for those hired after January 1, 2014.
House and Senate members from both parties staffed a task force starting in June 2012. The task force heard public testimony from public employees, taxpayers, business groups, and local governments. The task force received support from the Pew Charitable Trusts and the Laura and John Arnold foundation in the form of unpaid advisers and independent ananlysis and actuarial support.
The Pew Trusts are so pleased with the results they have issued a brief hailing Kentucky as an example of how a state can successfully get its pension system under control.
