Legislation to change the pension plan for future teachers in Kentucky moves to the full Senate in the final days of the 2021 session.
House Bill 258, sponsored by Rep. Ed Massey, would create a new tier in the Kentucky Teachers’ Retirement System (KTRS) for any newly hired teachers in the state that would be partially defined benefit plan like the existing pension plan and part defined contribution plan, more like a 401(k).
The bill serves as a retirement plan as well as social security replacement plan, as teachers in Kentucky do not pay into social security and do not receive the benefit in retirement. The new system would provide a supplemental plan with two percent paid in by both the employee and the state, which is portable to allow an employee to take those benefits with them should they leave the teaching profession, unlike the existing KTRS pension plan.
A stabilization account is also included that can be utilized in the event funding for the plan falls below 90 percent, so the state doesn’t find itself in another deficit situation like the one that currently exists, wherein the state is the only party on the line to pay it back.
House Bill 258 makes no changes to any benefits provided to current or retired teachers.
Legacy debt continues to be a huge issue facing the state with the current plan and paying benefits for anyone currently in the system, but the legislation does avoid adding more personnel to the same system and piling on additional costs to that current plan.
Changes to HB 258 were made in committee, including raising the retirement age from 55 to 57 with 30 years of service and no retroactivity for benefits during any period where the stabilization fund would need to be utilized to ensure the funding level of the system remains stable. Anti-spiking provisions that would move evaluations from the high three years of service to high five years and no second retirement accounts for teachers who retire and then come back to work were also provisions added into a Senate committee substitute.
The amended version of House Bill 258 passed the Senate State and Local Government Committee with 7 yes votes and 1 pass vote Monday and now moves to the full Senate for a vote on the floor. The bill would then need to go back to the House for concurrence before it is sent to the governor.