Kentucky Governor Matt Bevin has signed legislation to reform pensions in the hope that it eases the financial burden for quasi-government agencies, such as mental health agencies, rape crisis centers, local health departments, etc. The legislation calls for the freezing of contributions from these agencies for another year, allowing them to basically pay half of what they owe until the piper calls in 2020. That won’t be a pleasant experience when those bills come due!
Another key element of the legislation permits these organizations to withdraw from the state’s pension system and pay off their debt, with interest, over 30 years. The Kentucky pension system is currently the worst funded in the nation at 16%, and the deferment of contributions will likely negatively impact the ongoing funding. Shockingly, these agencies can move anyone hired after 2013 out of the defined benefit plan and into a defined contribution plan (I can’t imagine that action not being tested in court).
The state’s 118 quasi-governmental agencies can start leaving the Kentucky Retirement System in April. If they do, they have to provide other options for their employees, such as a 401(k), but here’s the rub, they don’t have to continue contributing money toward their retirement! Given that directive do you think that any will?