The Lexington Herald-Leader reports action taken by the Kentucky State Senate to address financial problems with pension funds for state retirees and teachers.
The Senate overwhelmingly approved a measure yesterday to sell more than $800 million in bonds to address financial problems of pension funds for state retirees and teachers.
Sale proceeds will keep the pension funds from going bankrupt, said Senate President David Williams, R-Burkesville.
The proceeds, he said, would be invested by the state retirement systems in hopes that the investments would make more money and offset the bonds' cost, he said. The state would have to provide $60 million a year from the state's General Fund over the next 20 years to pay for the bonds.
The measure also would limit benefits for future state hires but would not affect current state employees and retirees. For example, state employees now can retire with full benefits after 27 years of work. Under the Senate plan, state workers would have to work 32 years and be at least 55 years old before they could retire with full benefits.
Also, new hires would be put into a "hybrid" plan. Under the current plan, employees can count on a specified pension during retirement. Under the hybrid plan, part of an employee's contribution would go into an investment fund, similar to a 401k fund, and their pension would depend in part on the return on that investment.
The retirement system for state employees has $12 billion in unfunded liabilities. The system handles benefits for 300,000 members.
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