Pension reform in four simple steps

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If Kentucky lawmakers are serious about reforming the state’s ailing public pension system, here are four steps they should seriously consider taking to get on the path to recovery:

1. Make the pension system transparent. Why shouldn’t taxpayers know which politicians and bureaucrats are collecting two, or in some cases three, pension checks at their expense?

2. Move from a defined benefit plan to a defined contribution plan. Right now, taxpayers shoulder all the risk in the funding of the public pension system. A defined contribution would split the risk between the taxpayer and the state employee. This would resemble a 401(k)-type savings plan in the private sector.

3. Remove all private entities from the state public pension plan, including the Kentucky Education Association, Kentucky Association of Counties, Kentucky League of Cities, and the Commonwealth Credit Union in Frankfort. Why should employees of private entities receive taxpayer funded pensions?

4. Legislators are elected to part-time positions. Their overall retirement benefits should be reduced to the same level of other public workers. How many part-time employees do you know that receive retirement benefits?

These steps would go a long way toward setting the public pension system back on a path to solvency. There is no reason why these cannot be implemented by the General Assembly during the next session.

You can learn more about getting Kentucky's public pension system back on track here.