Friday, February 22, 2008

Future Kentucky state employees will face higher pension costs

Future state employees will have to contribute more to their retirement than current workers, and work longer before receiving benefits, under proposals Gov. Steve Beshear is recommending to shore up the financially troubled pension system.

If approved by the legislature, the changes Beshear proposed yesterday would save the state employees and teachers retirement systems nearly $500 million in the first year, according to the governor's consultant.

"This is a system that under its current structure cannot sustain itself," Beshear said. "Unless we act it will, down the road, run out of money."

The systems, which serve more than 300,000 current and retired state workers, are expected to go broke by 2022 if nothing is done. Because the state is legally required to keep its pension promises, money would have to come from other services to cover retirement benefits at that time.

Under Beshear's proposal, future state employees and teachers would have to contribute more to their retirement than current workers. State employees, but not teachers, would have to work longer before receiving benefits

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