Archive for Wednesday, February 19, 2014

Kansas workers criticize proposal to switch KPERS to 401(k)-style plan for new hires

February 19, 2014

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— A proposal to change the government employee pension plan for new workers to a 401(k)-type plan was criticized Wednesday as putting more financial risk on employees and lowering their retirement benefits.

But state Rep. John Rubin, R-Shawnee, told the House Pensions and Benefits Committee that House Bill 2519 would help resolve financial problems within the Kansas Public Employees Retirement System.

Referring to the $10 billion unfunded actuarial liability in KPERS, Rubin said, "The first thing you do when you're in a hole is to stop digging." The unfunded actuarial liability is the difference between promised pension benefits and what KPERS is taking in.

Under KPERS reforms approved in 2012, the unfunded actuarial liability will be paid off in 2033.

Several legislators who voiced support for Rubin's bill said they didn't have confidence that the Legislature would continue its part of the reforms by increasing contributions in KPERS.

Rubin's bill would enroll state hires after Jan. 1, 2016 in a 401(k)-style plan. Current employees could switch to the plan if they wanted.

Rebecca Procter, chairwoman of Keeping the Promise Campaign, said 401(k)- type plans for public employees in Nebraska and West Virginia found that workers retired with much lower benefits.

She said that would impact the entire state because retirees would be spending less in their home communities. "We have a fix that was passed in 2012. Stay the course," she said.

Comments

James Howlette 1 year, 1 month ago

If they already fixed the funding issues, it seems to me that this is just a back door way to punish retirees in the future. They don't trust themselves to keep their own word (with good reason, apparently) and keep funding their obligations, but this move would absolutely guarantee that they weren't funding their obligations. They won't be getting any new funds to replenish KPERS coffers, since it would be going to the 401k, so at some point they'd have to throw all the retired teachers and fire fighters under the bus and say, "Oh well. Bankruptcy. Oopsies!"

Meanwhile, the Kochs must have their tax cuts.

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