Kentucky Government Employees Protest Pension Reform Proposal

Published November 7, 2017

An organization claiming to represent more than 10,000 current and former Kentucky government employees protested against Gov. Matt Bevin’s pension reform plan on November 1.

Bevin proposes to put new government employees into defined-contribution pension plans, similar to 401(k) pension plans enjoyed by workers in the private sector.

The state’s eight public pension plans, serving approximately 207,000 active government employees are underfunded. The state’s largest public pension plan, the Kentucky Employees Retirement System Non-Hazardous plan, has enough assets on hand to pay 16 cents on each $1 of liabilities, according to a May 2017 report by PFM Consulting Group.

United We Stand-KY Government Employees protested Bevin’s plan at the Kentucky State Capitol on November 2, joined by protestors representing the National Organization for Women, Central Kentucky Council for Peace and Justice, and other activist groups.

Kentucky ‘Basket Case’

Jonathan Williams, chief economist and vice-president of the American Legislative Exchange Council’s Center for State Fiscal Reform, says Kentucky’s public pensions are nearly out of money.

“It turns out that Kentucky is one of the least-funded pension systems in America, ranking right up there, on a funded ratio, with perennial fiscal basket cases like Illinois and Connecticut,” Williams said.           

“Kentucky has gotten cut by a buzz saw, in a way,” Williams said. “It has remained in defined-benefit plans that are expensive and getting more expensive by the year.”

Defined-benefit pension plans guarantee employees a set benefit amount upon retirement.

Less Risk for Everyone

William Smith, director of the Bluegrass Institute’s pension reform team, says defined-contribution plans, such as those proposed by Bevin and Kentucky legislators, are good for employees and taxpayers alike.

“They make a specified payroll contribution into the plan, and they have no additional risk,” Smith said. “When you mitigate risk, it creates certainty.”