November 4, 201510 yr I asked the question in another thread, but I'm wondering how people would suggest fixing this problem, because it's obviously a problem. From what I know of Bevin's plan, he wants an audit conducted, which is fine but doesn't really fix anything. I also see that he's trying to set up something similar to a 401k plan for new teachers. I know there are people who are opposed to his plan, and I get that. But I would think you'd also have to be upset with how the retirement system has been seriously abused and mismanaged for over decade.
November 4, 201510 yr Would love to know more about the issue . Same here. What are the problems and where does he want to focus?
November 4, 201510 yr Would love to know more about the issue . Same here. What are the problems and where does he want to focus? According to the system's 2014 actuarial valuation, there is a $14 billion unfunded liability and a 53.6 percent funding status. This is compared with the system's $571 million unfunded liability and 95.7 percent funding status in 2000. Beshear appoints group to find solutions for Kentucky's unstable teacher retirement fund | Politics and Government | Kentucky.com
November 4, 201510 yr Same here. What are the problems and where does he want to focus? In a nutshell...it's underfunded by billions of dollars because of past state legislatures raiding the retirement fund for other projects and not only never replacing that money, but for most years the past 20 years not fully funding it to begin with. The retirement fund has been used by the government for many years as their own personal "play" fund.
November 4, 201510 yr Moving from a defined benefit (annuity) plan to a defined contribution 401(k) plan will not be popular with many public educators. It will be interesting to see what "solutions" the Bevin administration will propose that don't call for public workers to make major sacrifices.
November 4, 201510 yr According to the system's 2014 actuarial valuation, there is a $14 billion unfunded liability and a 53.6 percent funding status. This is compared with the system's $571 million unfunded liability and 95.7 percent funding status in 2000. Beshear appoints group to find solutions for Kentucky's unstable teacher retirement fund | Politics and Government | Kentucky.com :scared::scared: Thanks, as usual politicians taking the easy way out and kicking the problem down the road.
November 4, 201510 yr kicking the problem down the road. I think that's a perfect way to describe it.
November 4, 201510 yr Most private sector employers have moved away from a defined benefit plan and gone to less costly 401K match plans. My fortune 500 employer did it 15 years ago. I wasn't happy at the time, but I know that move has made the company stronger. .
November 4, 201510 yr Most private sector employers have moved away from a defined benefit plan and gone to less costly 401K match plans. My fortune 500 employer did it 15 years ago. I wasn't happy at the time, but I know that move has made the company stronger. . The state has done similar with new hires. Those hired the past handful of years are on a different retirement plan than those in my situation (20 years for me). I am not familiar with their plan, but know it's much different than the one I am under and is more 401(k) like. I believe there is also a "hybrid" plan between what I am on and what new hires fall under that some employees are under. But again, since it doesn't affect me I'm not that familiar with it.
November 4, 201510 yr Another problem with the system is the early retirement age availability. Teachers and administrators start drawing from the system in their early 50's. With life expectancy now approaching an average of 80 years - teachers are drawing from the system for decades. The social security system has tried to keep up with the raising life expectancy by raising the age of eligibility - not true with state teacher retirement systems.
November 4, 201510 yr How it is done at most places is to freeze the plan to those under a certain age, 40, 50. Then, you give those folks the actuarial lump sum present value, depending upon actuarial tables, and allow those folks to roll that money into a 401(k) or IRA. They can begin to contribute to a 401(k) and receive a match. Let the older folks roll off the books as they come. Reduces the liabilities and is actually safer for the younger folks as that money can't be touched by their employer once it is in their account.
November 4, 201510 yr How it is done at most places is to freeze the plan to those under a certain age, 40, 50. Then, you give those folks the actuarial lump sum present value, depending upon actuarial tables, and allow those folks to roll that money into a 401(k) or IRA. They can begin to contribute to a 401(k) and receive a match. Let the older folks roll off the books as they come. Reduces the liabilities and is actually safer for the younger folks as that money can't be touched by their employer once it is in their account. What you describe is the likely reality. Defined-benefit pension plans are on the road to extinction ... unfortunately.
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