Kentucky’s floundering pension system is experiencing another thorn in its side, as an alarming number of public employees have decided to retire in the midst of preparations for a pension reform plan set to be enacted this fall.
In September and October, Kentucky Retirement Systems (KRS)—a plan that could become insolvent within five years if no action is taken—saw 1,423 workers announce their retirements. Last year, only 1,018 employees retired in the same period.
The Teachers’ Retirement System (TRS) has also received 120 applications for November retirement, up 64% from last year’s 73 November 1 retirees.
This retirement spike comes at a time where Gov. Matt Bevin and lawmakers have struggled to arrange a special legislation session to discuss state pension reform. Originally, the meeting was to take place in October, but according to Kentucky New Era, the session may instead begin in early November. However, the publication reports that some leaders within the legislature’s Republican majority said that a final pension reform framework could be released to the public this week.
In the meantime, Bevin and legislators have been telling teachers and public employees that there is no need to retire over reform-related concerns, as any reforms passed during the session will not take effect immediately. Bevin and company have assured employees that there will be a window after the special session to retire under the same terms as today.
“I believe, and appreciate, the governor and the legislative leaders’ commitments to giving employees time to make an informed decision,” Brent McKim, president of the Jefferson County Teachers Association, said in an interview with the Kentucky New Era. “But I guess there are some people who are taking what they think is a ‘better safe than sorry’ approach.”
In an August 28 report, financial consulting agency the PFM Group, made recommendations to include in the reform, some of which caused controversy for Bevin and legislative leaders. One such recommendation was to cut past cost-of-living increases from the benefit checks of current retirees, which the governor and lawmakers said would not be part of the final reform.
The PFM Group also recommended raising the retirement age for public employees, as well as swapping traditional pension plans for most current and future state and local government workers to a 401(k)-style plan.