Pension crisis – hopeful the reform plan is the answer

An ailing pension system threatening our state’s financial stability is the number one issue facing our great Commonwealth. As your State Senator, I have vowed to keep the pension promise to our teachers and public servants, and I am hopeful that the pension reform plan proposed by Governor Bevin and the Kentucky General Assembly will do just that.

The framework of our proposed reform focuses on restructuring the pension funding mechanism to ensure the systems are on the pathway to solvency. In this plan, there will be no Cost of Living Adjustment (COLA) “clawbacks,” and checks for those already retired will not be reduced. Those who are still working will not be forced into an older retirement age and their current defined benefits will remain the same until the employee reaches their promised level of service for their pension type. Additionally, future non-hazardous employees and teachers will be enrolled in a defined contribution retirement plan that provides comparable benefits to the previous plans.

For those enrolled in hazardous duty plans and future hazardous duty employees, their benefits will remain the same. This reform will also close a loophole in death benefits for families of hazardous duty employees, ensuring those who lose their family members in the line of duty will receive their full benefits.

Many people have also asked how legislative pensions will be addressed in pension reform. The proposed plan ends the Legislative Retirement Plan and transfers its assets and administration to the KRS Board. New legislators and legislators elected after 2013 will be placed into the same defined contribution plan as public employees.

Other legislators will see their pension benefits reduced as any future benefits will be in the KRS plan. The legislation also ends the ability of current legislators to “supersize” their pensions and it will reduce the monthly benefit of retired legislators who did increase their pension by closing a loophole and recalculating benefits.

Although I personally do not receive a legislative pension, as officials elected and held accountable by you, the citizens of our great Commonwealth, we want to ensure these reforms are put in place across the board.

Lastly, I want to emphasize that there will be no emergency clause attached to this proposed legislation. That means the reforms will not go into effect until July of 2018, offering sufficient time for current state employees to consider how the changes may affect them. Ultimately, we hope these reforms help us better utilize taxpayer dollars, improve the Commonwealth’s rating with credit agencies to strengthen our economy, and most importantly, provide a sustainable retirement for our public servants.

If you have any questions or comments about these issues or any other public policy issue, please call me toll-free at 1-800-372-7181 or email me at Max.Wise@LRC.ky.gov . You can also review the Legislature’s work online at www.lrc.ky.gov .

Note: Senator Max Wise (R-Campbellsville) represents the 16th District which encompasses Adair, Clinton, Cumberland, McCreary, Russell, Taylor, and Wayne Counties. He is chairman of the Enrollment Committee and the Government Nonprofit Contracting Task Force; Vice Chair of the Education Committee; co-chair of the Government Contract Review Committee; as well as a member of the Appropriations and Revenue Committee; the Economic Development, Tourism and Labor Committee; the Health and Welfare Committee; and the Veterans, Military Affairs, and Public Protection Committee. He is the Chair of the Budget Review Subcommittee on Transportation and a member of the Budget Review Subcommittee on Economic Development and Tourism, Natural Resources and Environmental Protection. He is also a member of the Education and Assessment and Accountability Review Subcommittee, the Tourism Development Subcommittee.