WKYT | Lexington, Kentucky | News

Panel Studying Overhaul Possibilities For State Pensions

FRANKFORT, Ky. (AP) - A panel set up by Gov. Ernie Fletcher is
looking at ways to overhaul the state's retirement system, but that
shouldn't worry current employees and retired personnel, the
panel's chairman said Tuesday.
Changes for future employees could be an option aimed at helping
to alleviate the anticipated pension system crisis facing state
government, Finance Secretary John Farris said.
"Our plan is to honor all obligations that are made and all
commitments that are made, and that's our charge and that's what
we're going to do," Farris said.
The panel has hired an outside attorney as a consultant on the
matter, to determine exactly what the state's obligation is to
current and retired employees, Farris said. A question still
unresolved was whether the state could offer current employees a
choice between the status quo retirement package or the future
employees' changed benefits plan, Farris said.
The task force, made up of government and business leaders, has
a huge task in finding ways to shore up the plan's finances. The
plan provides pension and health care benefits for retired teachers
and state employees, and Fletcher has called it "one of the most
significant fiscal endeavors" the state has faced.
A failed legislative proposal that cleared the Senate earlier
this year and was supported by Fletcher would have sold more than
$800 million in pension bonds to give the systems a cash infusion.
Pension benefits for current employees and retirees would have
remained intact, while future employees' retirement plans would
have changed. Teachers - current or future - would not have seen a
change under the plan.
Some lawmakers have warned that the state's retirement system
could face a financial collapse within 15 years.
The task force has been asked to complete its work and present a
plan to the governor by Dec. 1, which would allow time for the
legislature to tackle the issue when it convenes in January.
Farris said the panel hired outside legal help to determine the
state's obligations. It was still unknown whether the state could
offer changes to current employees on a voluntary basis, he said.
"What if there's a current employee that says, 'I'd rather have
the future employee (benefits),' can we do that?" Farris said.

(Copyright 2007 by The Associated Press. All Rights Reserved.)


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