A recent report recommending changes to Kentucky’s ailing pension system is sparking concern amongst some retired teachers in west Kentucky.
Consulting group PFM suggested moving current state workers and new teacher hires into a 401(k)-style plan and eliminating cost-of-living raises for some state retirees among other changes. Calloway County Retired Teachers Association President Marshall Ward says the proposition is an “unenlightened approach” that will harm the state’s economy.
“So when you talk about economic impact, you’re talking about a huge amount of money and that will affect everybody in this community. Store owners, other types of businesses, doctor’s offices, the theater, people going to Murray State basketball games. Everybody will be hit if some of these dollars are taken away from our economy,” said Ward.
A recent report from the left-leaning Kentucky Center for Economic Policy and union-funded Keystone Research Center claims switching to a 401(k) plan will ‘harm’ public employees due to higher costs and lower investment returns. The report shows workers in the Jackson Purchase received more than 150 million dollars in retirement funds last year.
Ward says the association is determined to find an alternate solution.
“We have some retired professors in finance, economics, and we’re obviously willing to work with our legislators to come up with a solution. Cut cut cut is very easy. That is easy to propose the hard lifting will be coming with finding new revenue streams that everybody can be on board with,” said Ward.
Ward says if the presented cuts are mandated, some teachers could see a 25 percent cut in their pension checks. PFM also suggested combining the Teachers Retirement System with both the Kentucky and County Employees Retirement Systems. Ward says this will decrease the overall solvency, harming all three systems. Without the changes, Kentucky will need to add an estimated one-billion dollars more per year towards pensions.