Glenn Deck, executive director of the Kansas Public Employee Retirement System, will chat about the system with Journal-World readers. This will follow a Sept. 10 on challenges facing the system.

RalphReed

I have two questions on behalf of my wife a Kansas teacher.

1. Will the changes to KPERS affect only the new employees or will they affect everyone at the same time?

2. What will happen to our contributions and what will happen to the money the state is supposed to have put in?

johnadavies

What steps should someone go through who has 20+ years in the KPER’s retirement system?

Moderator

Hi folks! I’m Joel Mathis, managing editor for convergence here at The World Company. Glenn has joined us early — and because we have so many questions, we’re going to get started.

Glenn Deck

Good afternoon. I appreciate the invitation and look forward to your questions.

lawrencian

It seems like the only news I ever hear about KPERS (which I am paying into as a KU employee) is that it is declining, and reducing benefits. Is there any chance that I am actually going to earn a decent retirement when I am 65 without needing to set up something supplemental for myself? (I’ve been paying in since I was 24.) Thanks!

Glenn Deck

Good question and I understand your concern. If you participate in KPERS and work for 25-30 years and retire at 65 with Social Security you will be able to replace about 70-80 percent of your preretirement income. Each person’s situation is different and the amount they can live on varies. I do encourage you to save in addition to that in a 457, IRA or other retirement vehichle.

justthefacts

Back in the late 1980’s (I think) there was a huge overhaul done on the KPERS system – largely because it was over-invested in local “sweet deal” real estate ventures and was losing lots of money. Now it appears to be losing money again – or at least not gaining enough ground. So, regardless of why KPERS continues to struggle to provide what it promised, should current employees be worried about being able to retire, if they are relying upon KPERS and Social Security funds? And do you think current employees should be allowed to “opt-out” of KPERS or choose their investment options, so they can have more control over their own retirement investments?

Glenn Deck

Current employees should not worry about being able to retire. Your benefits are safe and guaranteed. They are a contractual obligation of the State. The System does face a long-term funding problem that we are addressing with the Legislature, including increased employer contributions, bonds, and potential plan design changes for future employees. I do not believe it is a good idea to allow current employees to opt out . Some members may be able to build a good retirement through their own investments, but many would not want to face the investment risk and choices to make that work.

lamb

I have been working for the state for 21 years, I have been planning on retiring at the age of 60, which is 4 years away. I am able to do this because I will have the magic 85 then. If the ’85’ is taken away and workers are required to work until 65 to get full benefits, what will happen to my plans? Would the change go in immediately or would there be some leeway for those of us who have been planning for retirement within a few years?

Glenn Deck

The 85 point rule allows someone to retire with unreduced benefits when their age plus years of service equal 85. The 85 point rule is not going to be taken away for current employees. It is a contractual obligation and cannot be changed for current members. The Joint Committee on Pensions, Investments and Benefits and KPERS are studying several plan design options that would raise this rule or change the retirment age to 65 for future employees. These changes would require legislation passed by the Legislature.

sleepylady

in the interest of saving money what are the chances of offering an early retirement with 75 points instead of 85?

Glenn Deck

I believe the chances of that are pretty slim at this point. It would require a pretty well thought out plan that saved money by eliminating the positions of the people that retired under such a plan or replaced them with lower paid employees. Experience with such plans in other states have not resulted in documented savings.

Glenn Deck

I do not agree with that assessment. We have a sound investment program that invests in a diversified mix of stocks, bonds, real estate and other investments. Our asset allocation and investment returns are comparable to other state pension systems. Our average annual returns the periods through June 30, 2006 are 1 yr.- 12.3%, 3 -year avg.- 13.3%, 5-year avg. – 7.6% and 10-year -8.5%. Our returns are benchmarked to various indexes and have outperformed those passive indexes. The Board of Trustees and staff closely monitor the performance of our investment managers. In addition, our investment performance is closely monitored by the Joint Committee on Pensions, Investments and Benefits.

Fins

With the increasing costs of healthcare why doesn’t KPERS start a retirement health savings program? This would benefit the employees and there is no cost to the state to run the program.

Glenn Deck

I agree that health care costs are a major issue for retirees, particularly those like state retirees that have to pay the full cost of this coverage. KPERS does not administer the state health insurance program. Our attention has been focused on dealing first with this long term funding issue. Your idea is something that deserves attention and we do need to look for ways to help retirees fund health insurance.

redfred

Is anything being done to give current retirees an immediate COLA or establish a permanent COLA system?

Glenn Deck

Any cost of living adjustment(COLA) must be approved and funded by the Legislature. The last COLAs were a 3% increase in 1998 and a one-time check of one-half of one month’s benefit in 2000. It is very likely that a COLA bill or one-time benefit bill will be introduced in the 2007 Legislative Session. However, such a bill will face a very difficult road to passage because of the cost associated with the bill, the KPERS funding increases, and other budget priorities. For example, a 3% COLA would require a one-time employer contribution to KPERS to fund the liability or annual payments over time to fund this liability. A permanent COLA would be even more expensive.

trinity

is there any hope or chance at all, that us KPERS contributors may one day be able to borrow from our fund?

Glenn Deck

Currently, KPERS members are precluded from borrowing from the fund by State law. Very few other defined benefit funds allow participants to borrow their contributions because of the complicated impact it can have on your benefit calculations and the administrative costs. It may be possible in the future since we are currently establishing a state of the art information system, but it would require legislation.

justthefacts

When did KPERS agree to also cover teachers? How was that fact made known to the KPERS members before it happened and if so did they have a “say” (vote) in whether to go forward with that plan? Is it true that adding teachers as covered employees made the whole KPERS system less secure, i.e. KPERS absorbed the debt(s) the teachers retirement fund brought with it?

Glenn Deck

KPERS was first established in 1962 for state and local employees. The Kansas School Retirement System(KSRS) was established in 1941. This system was absorbed into KPERS in 1971 by action of the Kansas Legislature. I do not believe members had any vote at that time. The Legislature is the plan sponsor and agreed to absorb the liability. KSRS had significant unfunded liabilty that was folded in and the Legislature is committed to making the contributions to properly fund the system.

Pogo

Mr. Deck:

Why are you one of the highest paid State of Kansas Civil Servants in the State; particularly when one compares your annual salary at over $157,000.00 per year to that of the other civil servants who work for KPERS?

Glenn Deck

I am appointed by the Board of Trustees and my salary is set by that group. My salary is comparable to the executive directors of other state retirement systems.

Moderator

We’re going to make that the last question today. Thanks, Glenn, for joining us.

Glenn Deck

I appreciate the opportunity today. There were a lot of good questions. If anyone has additional questions, please feel free to contact me at 785-296-1019 or gdeck@kpers.org.