KY Pension "Fix" Will Make Problem Worse

The repug Senate's plan to "fix" horrifically underfunded state pensions - earned retirement for public employees repugs despise - not only would not solve the problem but would make it worse. Who could have predicted?

Beth Musgrave at the Herald:

A controversial provision included in a pension-overhaul bill approved last week by the state Senate could cost the state millions more in coming years, a union and public employee group said Monday.

Steve Barger, coordinator of the Kentucky Public Pension Coalition, which represents state workers and retirees, urged the General Assembly to take its time considering legislation that could have unintended costs and consequences.

"We have quite a bit of concerns about the process," Barger said. "They moved too quickly and did not get all of the facts."

Senate Bill 2 would overhaul the state's pension system by moving new state employees to a 401(k)-style hybrid plan, called a cash-balance plan; eliminating annual cost of living increases for state retirees; and requiring lawmakers to fully-fund the state's retirement systems by 2015.

That would be the same kind of 401(k) plan that is forcing millions of workers across the country to keep working into their 80s because even without the stock market crashes that have been near-annual events, the plans simply do not allow workers to save enough for retirement.

Eliminating cost of living increases would mean that even the barely-sufficient payments from the current plan would erode to nothing from inflation.

And fully funding the plan's shortage of billions in just two years is, simply, impossible.

As for this stupidity, cigarette taxes are a disappearing funding source: the higher you raise them, the fewer people pay them. It will lower the smoking rate in the state just as surely as it will leave the pension cupboard bare.

Read more here: http://www.kentucky.com/2013/02/11/2512606/opponents-say-key-portion-of-pension.html#storylink=cpy