The Kentucky House recently passed a state bill that would place newly-hired Kentucky teachers into a new “hybrid” retirement plan design. The new hybrid plan would blend a “foundational” defined benefit pension plan with a “supplemental” defined contribution plan as a means of de-risking the Kentucky Teachers’ Retirement System, which is only 58.4 percent funded today.
The legislation, which is now before the Senate’s State and Local Government Committee, ultimately seeks to control future employee, retiree and taxpayer costs. The Teachers’ Retirement System of Kentucky already has nearly $15 billion in unfunded liabilities.
An actuarial analysis of the bill, House Bill 258, projects that it would save Kentucky $3.57 billion over 30 years. While the legislation is not a panacea, if enacted, it would be a positive step in the right direction for Kentucky’s overall public pension challenges, which rank among the most difficult in the nation.
Author(s): Alix Ollivier
Publication Date: 19 February 2021
Publication Site: Reason