GOP Lawmakers Crafting New Pension Bill; Shift To 401(k)s Remains
A leader of Kentucky’s state senate says a “watered down” version of Gov. Matt Bevin’s pension proposal is being drafted but it would still shift future workers onto 401(k)-type retirement plans.
Senate Majority Floor Leader Damon Thayer said he hopes the bill is revealed to the public before Christmas so it can be reviewed in advance of lawmakers’ return for the legislative session that begins on Jan. 2.
“It doesn’t go as far as I would like it to, but it has many of the changes that were suggested by the public sector,” Thayer said. “It still makes changes in current pensions that are outside the inviolable contract.”
Bevin still says he wants to call a special legislative session for lawmakers to consider changes to the pension systems sometime before the end of the year.
But a special session is increasingly unlikely. Earlier this week, a majority of Republican House members signed off on a letter discouraging Bevin from calling a special session.
Thayer said the new proposal isn’t finished or scored and there is little time for the legislature to “have a session of any meaningful impact” by the end of the year.
“We took the time to consider public sector input and incorporated some of their suggestions into a new bill,” Thayer said. “And because we took that time, now we’re basically running out of time. “I’m a big advocate of a special session, I have been all along. I wish we could’ve gotten it done by now.”
In October, Bevin and leaders of the state House and Senate unveiled a proposal that would phase out Kentucky’s use of a defined benefit pension system for most state workers.
Under the plan, most future and some current state workers would be moved onto 401(k)-type plans in which the state would match employees’ retirement contributions but wouldn’t make monthly payments after retirement.
Current employees would have their conventional pension benefits capped after 27 years of service and moved into 401(k)s going forward.
The proposal would also require employees to contribute 3 percent of their salaries to the retiree health plan, suspend retired teachers’ cost of living adjustments for five years and halt pension benefits for retirees who return to public service full-time.
Thayer wouldn’t provide many details about what’s in the new proposal that’s being hashed out between Bevin and Republican leaders of the legislature.
Republican lawmakers have apparently backed off some provisions affecting current retirees and employees — including the 3 percent fee for retiree health and suspension of cost of living adjustments.
But Thayer said moving future employees onto 401(k)-type plans — technically called 401(a)s — is a “cornerstone” of the plan.
“It’s critical that if we’re going to get this state back on a sustainable pension path that all new employees after July 1 go on a 401(a),” Thayer said.