The situation of Kentucky teacher pensions is indeed worrisome. Yes, teachers should be concerned: the past 15 years has devastated their retirement fund. That’s fully explained in this letter from Matt Bevin:
Dear Kentucky Teachers,
Most Kentuckians are aware of our state’s looming pension crisis. The crisis is so bad that, last month, Standard and Poor downgraded Kentucky’s credit rating because “Kentucky’s substantially underfunded pension liabilities that are the result of chronic underfunding…”
For over a decade, Democrat leadership has refused to fully fund our public pensions, including the Kentucky Teacher’s Retirement System (KTRS). Instead, state government has been raiding public trusts to cover revenue shortfalls.
Such transfers can harm necessary programs, raise fees and taxes, and continue to inappropriately push expenses down the road.
Consequently, in the last 15 years, KTRS has gone from about 96% funded to around 54% funded, raising our unfunded liabilities from $571 million to $14 billion.
If we continue down the road we are on, as my opponent would like, experts predict we are 3-4 years from pension collapse. That means that if you are retired and receiving a public pension, you could be 3-4 years from losing the benefits promised to you. Without action, the checks will not continue to clear the bank.
I am running for Governor to make sure this does not happen.
We have a moral and legal obligation to fulfill our pension promises to current employees and retirees.
I have been firm in my position that all public pensions, including KTRS, must be fully funded. If elected, I will not allow the raiding of our public trusts to cover shortages in the General Fund. I will end this practice of “robbing Peter to pay Paul” and ensure that if revenues are earmarked for a specific purpose, they will be used for that purpose.
In order to fulfill the financial commitment we have made to existing and future retirees, I have proposed moving away from the current plan structures and enrolling all new hires into a defined contribution plan. Demographic realities now, and into the future, afford us no other viable option.
However, let me be clear that this will not in any way affect the benefits of current teachers or retirees but, in fact, quite the opposite; it will safeguard the state’s ability to continue fulfilling the promises made to you.
Other inaccurate information being spread, in regards to moving the plans, is that there would not be enough people to cover the cost of those who retire if new hires are not part of the group retirement plan. However, our pension plans are not supposed to be pay-as-you-go systems with current employee contributions funding current retirees’ benefits. Our pension plans are supposed to be funded pension systems, where an employee contributes and those contributions are used to pay his or her benefits in the future. So, moving plans for new hires is not an issue for current teachers and retirees.
I have also proposed that we change state law to allow teachers to participate in Social Security. This will give current and future teachers a new source of income when they retire. We must ensure that all future teachers be allowed to participate in Social Security prior to moving from existing plans.
Career politicians have talked about, monitored and studied this issue long enough. Now is the time for action… Specific, bi-partisan and immediate action.
On November 3, please vote for the only person in this race who has a plan to protect the benefits you worked for. Continuing the trend with liberal Democrat leaders will only make certain that state government will not be able to meet it’s obligations to you. Such a result is unacceptable.
Thank you for the generosity of your time in reading this letter.
GOP Nominee for Kentucky Governor