February 22, 2018
Here are 6 changes proposed by GOP, Bevin in latest pension plan for teachers and state workers
What one senator called a “huge compromise,” the long-awaited pension reform bill filed Tuesday pulls back from most of the controversial provisions that Gov. Matt Bevin and the Republicans offered last fall.
Senate President Robert Stivers, R-Manchester, spoke with reporters briefly Tuesday night about how the new pension reform bill differs with the controversial one released last year.
Here’s what Stivers said about six key aspects of the new bill:
No mandated 401(k) plans
A new pension reform proposal does not require any current or future teachers be placed in a 401(k)-like savings plan. Senate President Robert Stivers, House Speaker Pro Tem David Osborne and Sen. Joe Bowen explain why. Michael Clevenger/Louisville Courier Journal
The bill does not require any current or future teachers be placed in a 401(k)-like savings plan. All employees now in the current defined benefit pension plans can remain in those plans.
No deduction for retiree health care
Unlike the proposal made last October, the bill will not require all teachers and public employees to pay 3 percent more of their salaries for retiree health care. Stivers did say there is “one subcategory” of Kentucky Retirement Systems members – those hired between 2003 and 2008 – who will be required to pay up to 3 percent more for healthcare benefits.
Teacher COLAs reduced
The bill will, for a period of 12 years, reduce the annual cost of living increases in teacher retirement benefits from 1.5 percent to 0.75 percent. (The October proposal would have suspended retired teacher COLAs for five years.)
Future teachers
New teachers will not get traditional defined retirement benefits under the bill but will be put into a less generous “hybrid cash balance plan” with some features of a traditional plan and some of a 401(k)-like plan. Unlike a traditional plan, benefits are not certain and are dependent on investment earnings during a teachers’ working years. Also, the bill includes no cost of living increases for future teachers.
Unused sick days
State workers would no longer be able to use their accumulated sick days as credit to more quickly reach their date of retirement.
Teacher benefit calculation
Teachers with less than 20 years of service as of July 31, 2018, must have at least 35 years of service and be at least 60 years old for their benefits to be based on their highest three years of salary. Otherwise, their pensions will be based on their highest five years.
By Tom Loftus
Louisville Courier Journal
