Monday, June 30, 2008

Kentucky Governor Signs Pension Reform Bill into Law

The Kentucky General Assembly kept its promise by passing a measure retooling the state's chronically underfunded pension system in a five-day special session.

The measure, which reduces retirement benefits for future hires and commits the state to fully fund the retirement systems by 2025.

"It is a giant step toward solving the state pension crisis that is dragging down many other states," Governor Steve Beshear said at a 2 p.m. bill signing in the Capitol.

About 435,000 people are covered by the state retirement system. Lawmakers say it faces eventual financial collapse if left ignored. The system has an unfunded liability of more than $26 billion.

Under the proposal, future state employees would have to work longer before being eligible for retirement. To retire with full benefits, the sum of an employee's age and years of employment would have to total 87. The plan would also require new employees to contribute 1 percent of their salaries to health insurance.

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