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Archive for Thursday, May 3, 2012

State Senate rejects 401(k) but passes pension bill

May 3, 2012, 6:10 p.m. Updated May 3, 2012, 8:35 p.m.

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— A proposal for a 401(k)-style retirement plan for new teachers and government workers failed on a tie vote Thursday in the Kansas Senate, but its members later approved other changes designed to bolster the long-term financial health of the state pension system.

Senators’ 20-20 vote on the 401(k)-style plan puts them at odds with Republican Gov. Sam Brownback, who favors the idea, and the House, which approved legislation in March to start an optional 401(k)-style plan for new public employees.

After debating the merits of a 401(k)-style plan, the Senate approved a bill making a less dramatic move away from the state’s existing retirement plans, which guarantee workers’ benefits up front, based on their salaries and years of experience. The vote was 32-8, sending the bill to the House, with the final version of pensions legislation to be written by negotiators for the two chambers.

The Kansas Public Employees Retirement System projects an $8.3 billion gap between the total revenues it anticipates receiving and the total benefits it has promised to current and future retirees through 2033.

Last year, legislators enacted a law to boost the state’s annual payments toward public pensions and require workers to either contribute more of their salaries or accept less generous benefits. But neither Brownback nor the GOP-controlled Legislature believes that the changes are enough to close the long-term KPERS funding shortfall.

“We have a job, to pay our debts from the past, and another job, to provide good retirements without incurring future debts,” said Sen. Jeff King, an Independence Republican and the Senate’s leading advocate of a new 401(k)-style plan.

King and other backers of a 401(k)-style plan argue that the state can’t sustain its current plans because employees’ benefits aren’t tied to revenues and earnings by KPERS on its investments. The 401(k) plans common among private companies base benefits on investment earnings.

“It’s an important part of the mix,” Brownback told The Associated Press.

King offered his proposal — requiring public employees hired after 2013 to join a 401(k)-style plan — as an amendment to the pensions bill considered by the Senate.

Public employee groups and their allies loathe the idea of starting a 401(k)-style plan for new hires, arguing that it will result in less generous benefits. They’ve been aided by projections from the Legislature’s staff showing that creating a new, 401(k)-style plan will come with additional startup and administrative costs.

The Senate’s plan would put teachers and government workers hired after 2014 into a plan in which their benefits would be based on the cash balance accumulated from their annual contributions to their pensions and the state’s partial match. The state would guarantee 6 percent interest annually.

Supporters believe the plan would limit the state’s financial risk but guarantee gains for the workers. The House’s legislation offers new hires a choice between a cash-balance plan and a 401(k)-style plan.

“People realize that the cash balance system is a good alternative,” said Senate President Steve Morris, a Hugoton Republican who’s championed the cash-balance proposal.

Senators didn’t consider a proposal that House members added to their legislation, to use revenues generated from state-owned casinos in Dodge City and Kansas City and south of Wichita to help close the long-term KPERS funding gap.

Comments

Alceste 1 year, 11 months ago

jafs: One can be certain that the "legislators" will take care of themsevles, and that includes the likes of the Lawrence and Douglas county people which includes Barbara Ballard, Tom Sloan, Marci Francisco, Paul Davis, et. all .Does anything else really matter?

Why is each of the above so silent with respect to how they've each managed to manipulate KPERS such that they come out getting PAID?

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jafs 1 year, 11 months ago

The 6% guaranteed return on your contributions plus a match is an interesting idea. Of course, it depends on the state partially matching them, and where will they get the 6% return exactly?

Also, how will they close the huge funding gap in KPERS? Even if we switch to another system for new employees, there's still a big projected deficit just to pay current KPERS benefits for those in the system.

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Alceste 1 year, 11 months ago

Which senate bill is this being reported upon? No number is provided.

What is the status of SB338 and "New Section 18" which read:

"New Sec. 18. (a) Any member of the legislature who has earned a vested retirement benefit under the provisions of K.S.A. 74-4901 et seq., and amendments thereto, or K.S.A. 74-49,201 et seq., and amendments thereto, shall have the present value of such vested retirement benefit, including all employee and employer contributions, earned before January 1, 2014, converted to a lump-sum amount and shall have such lump-sum amount transferred to the employer annuity account of such member. (b) On and after January 1, 2014, any benefit earned or accrued by a member of the legislature under the provisions of this act shall be calculated based only upon all compensation received: (1) As per diem compensation for service during a regular or special session of the legislature pursuant to subsection (a) of K.S.A. 46-137a, and amendments thereto; (2) as per diem compensation for attendance at in-state or outof- state meetings pursuant to K.S.A. 75-3212, 75-3215, or 75-3223, in the amount prescribed under subsection (a) of K.S.A. 46-137a, and amendments thereto; (3) as additional compensation for legislative officers as provided in K.S.A. 46-137b, and amendments thereto; and (4) as any other additional compensation provided by law, excluding any allowances or reimbursements for any expenses incurred." [Page 10 of the bill]. ?????

http://www.kslegislature.org/li/b2011_12/measures/documents/sb338_00_0000.pdf

Are these ward heel "Pay ME FIRST" hacks correcting their twisted, mis-guided ways, or following the Chief Hack Morris "It's a well earned and well deserved perk..." like idiocy?

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