(FRANKFORT, Ky.) – Senate Bill 1, the much-anticipated pension reform measure filed at the midway point of the 2018 General Assembly, offers – if correctly implemented – a significant step forward in addressing the Kentucky retirement systems’ $65 billion liability while creating a fair, healthy and sustainable retirement plan for new state workers and teachers.
“Senate Bill 1, unlike some past measures which were accompanied by much cheerleading but little real progress, reflects a genuine commitment by the legislative leadership in Frankfort to making consequential progress in dealing with the most serious threat to Kentucky’s economic security in our state’s history,” Bluegrass Institute president and CEO Jim Waters said.
In a new policy brief, the Bluegrass Institute Pension Reform Team praises the legislation’s proposal to place all new workers in a cash-balance plan while addressing arbitrary, egregious and costly abuses of the current system as an acceptable compromise between ideological proponents of 401k-style plans and others who advocate for the status quo, which would result in continuing the current – and unsustainable – defined-benefit plan, and is unacceptable.
Senate Bill 1 proposes urgently needed reforms of current benefit enhancements involving teachers, including:
- Capping the use of unused sick days to increase the amount of lifetime pension benefits.
- Requiring new teachers to work longer before retiring with full benefits.
- Reducing automatic cost-of-living increases for Teachers’ Retirement System retirees from 1.5 percent to 1 percent at least for the next 12 fiscal years.
The institute also praises the bill’s proposal to reform lawmakers’ pensions, including stripping egregious benefits from retired politicians who voted for past legislation allowing them to pad their own retirement checks by taking high-paying jobs in other government positions.
“Even with these reforms, it will take a generation to pay off the deficit,” Waters said. “Being willing to offer these substantial reforms in a challenging election year is an example of the kind of political leadership it will take to bring Kentucky’s retirement system back from the economic abyss.”
The Bluegrass Institute Pension Reform Team includes Director William F. Smith, M.D., Aaron Ammerman, a financial advisor and member of the Bluegrass Institute Board of Directors, and Jim Waters, president and CEO of the Bluegrass Institute for Public Policy Solutions.
For more information and comment, please contact Bluegrass Institute president and CEO Jim Waters at 859.444.5630 (office) or 270.320.4376 (cell) or email@example.com.