FRANKFORT, Ky. – A proposal to restore financial solvency to Kentucky’s underfunded pension plans for government retirees will be considered in a special legislative session later this year, Gov. Matt Bevin told reporters Thursday morning.
“The most critical thing is to make sure we get this right,” Bevin said during a press conference. “There are people depending on us.”
Bevin said waiting for special session will give lawmakers time to study actuarial data and for auditors to complete reviews.
“In the course of that, we will discover what is best for everyone within the system,” he said.
Bevin said every public pension plan is severely underfunded, and that required contributions from the state have usually not materialized in recent years. In addition, they were using assumptions that led state officials to believe the amount of underfunding was much less than reality.
“We need to use real numbers,” he said. “We need to use actual data. We need to use true rates of return, and not hypothetical ones.”
Bevin said, over the past five years, the pension plans’ average rate of return on investments was less than Treasury notes.
“We cannot allow these systems to fail,” he said. “There have been too many people who have worked too hard in expectation of things that have been promised to them. It is our obligation to make sure they get those things.”
Bevin was joined at the press conference by Sen. Joe Bowen, R-Owensboro, who has filed a bill that would split off the County Employees Retirement System from Kentucky Employees Retirement system.
Bowen said he is putting that bill on hold for now so that it can receive full consideration in the special session, the date of which hasn’t yet been determined. He said he feared the bill wouldn’t have gotten its due in the few days remaining in the current legislative session.
“That bill deserves more than that; it deserves the light of day and to be in a comprehensive conversation that includes all pensions,” he said.
An audit of the public pension systems is being performed by an outside firm through a contract with the Finance and Administration Cabinet. It is expected to be completed within months.