Kentucky Senate Finally Files Anticipated Pension Bill

SB 1 contains a variety of changes from Gov. Bevin’s controversial October bill.

On the 33rd day of the 60-day regular legislative session, Kentucky finally delivered its long-overdue pension bill, filed in the Senate Tuesday.

The 30-year plan known as Senate Bill 1 (SB 1) was designed to save the Bluegrass State’s public pension system. According to, the bill’s sponsor, Sen. Joe Bowen, said months were spent by lawmakers reaching out to state employees, teachers, experts, and taxpayers in addition to the drafting process for SB 1.

“Future generations of Kentuckians are counting on us to get this right,” Bowen said, reported by WKYT. “We were elected to solve big problems, and this plan…unravels the biggest fiscal crisis Kentucky has ever faced.”

The new bill is different from the controversial one Gov. Matt Bevin released last October as it does not require current or future teachers to transfer to a 401(k)-style plan.

Teachers and government workers will also not be required to pay an additional 3% of their salaries as part of a retiree health benefit. However, the Courier Journal reports that Kentucky Retirement System members hired between 2003 and 2008 will have to put in an additional 3% toward health benefits.

Although current teachers can stay in their current defined benefit plans, new ones will go into a hybrid cash balance plan, which will incorporate some elements from both traditional pensions and 401(k)s. As for cost of living adjustments (COLA), new teachers will not see any increases while current ones will see theirs cut in half from 1.5% to 0.75% for a 12-year duration. This is still a slight upgrade from October’s proposal, which would have frozen COLA’s for five years.

Unused sick days will also no longer be allowed to be used as an early retirement credit.

The Journal also reports that benefit calculations will be done differently for teachers. Those with less than 20 years of service by July 31, 2018, will require a minimum 35 years of service and be at least 60 years old to get a pension based on their salaries of their highest three years. If not, their highest five years will be calculated instead.

Before the legislature takes action on SB 1, the public will be able to review the new bill. Senate Majority Leader Damon Thayer is hoping SB 1 passes within the next week so discussion may move to the House.

“We are committed to funding our plan, meeting our obligations to state employees, and to making systemic reforms to ensure these systems will be financially sound for current and future employees. When this bill passes, we will over time eliminate the unfunded liability that has been estimated to be as much as $60 billion,” Senate President Robert Stivers said in a statement obtained by the Journal.

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