A pension reform bill has finally been filed in the Kentucky Senate.
Senator Joe Bowen introduced the bill that would not require current or future teachers and state employees to enter into a 401k type plan. Current employees and teachers would remain in a defined benefit plan and future hires would enter a “hybrid cash balance plan,” according to Senator Whitney Westerfield of Hopkinsville, who says putting all new hires into a 401k would not be cost effective or feasible.
The effective date for all changes in the legislation would be January 1, 2019—giving employees considering retirement time to look over how it will affect them before making a final decision.
The new bill also would not require all employees and teachers to pay an extra 3 percent of their salary for a retiree health benefit.
Senator Westerfield says the bill is “not perfect,” but he will support it because it puts Kentucky on the path to get out of its pension hole.
The legislation does not address the lack of funding in Governor Matt Bevin’s proposed budget to help pay health insurance costs for employees between their date of retirement and when they become Medicare eligible at the age of 65. Senator Westerfield says that’s strictly a budget issue and he will advocate to have that money restored during the budget-making process.
Members in the Senate and House have said they will give legislators and the public ample time to review the legislation and offer feedback before taking action.
Click here to find links to read the pension reform bill in its entirety.