KY Legsilature Thinks About Cutting Pensions, Maybe

Economics, FYI, Kentucky, Politics

For those who don’t know, KY Teachers are forced to pay both Social Security, which is not a tax, and KY Teachers Retirement System. Teachers are not allowed to get Social Security because this is considered double dipping alongside KTRS retirements.  (Below is a link to current article from Courier Journal and here is an article from Heard Leader dated in May. )

Since 2005, KTRS has continued to be under funded because of program reallocations by both Republicans and Democrats. Currently, Gov Bevin is asking the legsilature to address the $70B issue and one proposal looks to curb actuarial and accrual rates in coming years. (Read below for quote.)

Here is what I have to say, “YES!” But, there is a catch. Give me my invested monies with interest, taxed per the coding system, whenever I want it. The investment system is only as good as the actual moment and if they get to play with outcomes then we should have greater access to investment funds. I believe in free and open markets. Let me gain access to these funds and invest them how I wish. Don’t mess around with my investment without allowing me to be a part and act like your system is balanced and fair.  

As charter schools lie on the horizon, how many teachers do you think will flock to these schools, withdraw KTRS funds, and simply make the situation even worse. Free markets work when their is choice and the KY Legislature has given no choice and empty promises to future pensioners.

Courier Journal: KY Pension Crisis

But the Bluegrass Institute, which promotes free-market capitalism and smaller government, made a presentation to the Kentucky Retirement Systems Board last week that in part argued that future benefits accrued by current public employees are not protected and should be reduced as part of the solution to the pension crisis.

“Benefits that have an actuarial basis and have been earned are protected by the inviolable contract. We defend those benefits, and those cannot be cut,” said Jim Waters, chief executive of the Bluegrass Institute, said in an interview. “But the inviolable contract does not cover benefits awarded that do not have an actuarial basis. … Just because a beneficiary received a high benefit one year does not mean the system can always afford a benefit at that level. It must reflect what we can afford.”

Waters emphasized that his group is not advocating a reduction in benefits of current retirees or benefits accrued to date by current employees who have yet to draw benefits.

But he said the alternative to not curbing the accrual rates of pensions of current employees is “a pension system that will absolutely consume every possible General Fund dollar at the expense of education, health care, public safety and so on.”