Most of the proposed reductions would apply only to future government workers, but the panel created by former Gov. Ernie Fletcher also suggested several tweaks to the state's health benefit plans that would mean more money out of the pockets of existing state workers and retirees.
However, the panel rejected a key proposal that would have eliminated guaranteed pension benefits for future government workers and offered them 401(k)-style investment accounts as a substitute.
The group's recommendations now go to incoming Governor Steve Beshear, who must deal with a $25 billion unfunded liability in the retirement systems that threatens to gobble up huge chunks of the state budget in coming years.
One key provision in the panel’s final report recommends that lawmakers study a variety of suggested ways to extend the careers of future employees beyond current requirements, which allow some state workers to retire in their 40s and 50s.
For example, the panel suggested lawmakers consider implementing a "rule of 85" that would require state and local government workers in non-hazardous positions to be at least 55 years old and have 30 years of service before becoming eligible for full retirement benefits.
They also recommended eliminating automatic cost-of-living raises for retirees. Instead, lawmakers would consider such adjustments on a year-by-year basis.
The retirement systems' unfunded liability, which will eventually lead to bankruptcy if not corrected, has grown dramatically in recent years as lawmakers increased benefits while failing to supply the amount of money recommended by financial analysts. Meanwhile, returns on stock market investments declined.
Thursday, December 20, 2007
Task Force: Paring Kentucky retiree benefits urged
The benefits of thousands of current and future government employees could be reduced if recommendations of a governmental task force are implemented by state lawmakers.