KERS would present a "what-was-needed" figure (in terms of contributions) to the legislature each year for approval. The legislature never had the stones to implement that figure. The financial hole grew exponentially.

So if you're a young teacher in KY...move.

 

I agree and I think there will be a mass exodus out of the state. Those in NKY can go right across the river and increase their pay dramatically. It's unfortunate. Between the lower pay, the garbage heaped on them by administrations, parents and students, and a continuing reduction in benefits I don't see why anyone would want to teach.

In the mid 1980's my wife had to make a choice between staying in the traditional federal pension plan or breaking out and moving to the current plan which has less of a defined benefit component but includes a matching 401K type plan and social security. Due to the outstanding investment performance over the past 30 years her decision to go with the newer plan worked out great. However, for those whose investments didn't perform as well it was the wrong decision.

KERS would present a "what-was-needed" figure (in terms of contributions) to the legislature each year for approval. The legislature never had the stones to implement that figure. The financial hole grew exponentially.

 

Any idea what year it was that the legislature first failed to meet the what-was-needed figure?

Here is a fact that hasn't been mentioned but has a huge impact on pension plan liability / underfunding. If interest rates go up, it will have a big impact on this to the good. Interest rates are a major factor in the calculation on pension plan viability. Higher interest rates reduce underfunding. I can't tell you how big an impact the various increase amounts might have, but I can tell you that increasing interest rates will be a big help to underfunding problems. That is something the state has no control over and can help solve the crisis without the state doing anything other than being patient and waiting for the inevitable increase in rates

Teacher here and voted for Bevin.

 

Asking teachers to teach for 40 years is absurd....too much changes from year to year, much less over 40 for a teacher to remain a top level teacher.

 

I'm all for the under 10 years of service group getting all their money and interest earned and putting it in a 401k then getting a match from the state on new contributions.

 

Over 10, it stays as is.

 

Only concern I have is insurance.

Here is a fact that hasn't been mentioned but has a huge impact on pension plan liability / underfunding. If interest rates go up, it will have a big impact on this to the good. Interest rates are a major factor in the calculation on pension plan viability. Higher interest rates reduce underfunding. I can't tell you how big an impact the various increase amounts might have, but I can tell you that increasing interest rates will be a big help to underfunding problems. That is something the state has no control over and can help solve the crisis without the state doing anything other than being patient and waiting for the inevitable increase in rates

 

The goes back to the actuary problem I was discussing earlier. They made many calculation on faulty interest rate models. Again not the workers fault , but a reality. If you look at some of these pensions and the calculated growth that was charted decades ago it's almost laughable if it wasn't so sad.

 

But good point on interest rates. Most pensions I'm familiar with take into account short, intermediate , and long term rates when calculating benefits. I'm not sure how it impacts the funding aspect though.

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.

 

Yup, those in the past raided the retirement funds, shouldn't that be illegal?

 

As long as they grandfather the current people in then the issue is not as big of an issue. Keep the current promises, with changes the new hires will know what to expect.

Yup, those in the past raided the retirement funds, shouldn't that be illegal?

 

As long as they grandfather the current people in then the issue is not as big of an issue. Keep the current promises, with changes the new hires will know what to expect.

Were the pension funds actually "raided" -- or were pension contributions simply not made (as they should have been) in order to construct a new highway somewhere? I think the latter is the case.

 

A tax increase to fix pension woes simply won't be on the table for this new administration. The Tea Party folks in Boone County would tar-and-feather Bevin if he even entertained the idea.

 

Putting new teachers on a 401(k) seems where we're headed, but does such encourage or discourage talented young people from entering the profession?

Yup, those in the past raided the retirement funds, shouldn't that be illegal?

 

As long as they grandfather the current people in then the issue is not as big of an issue. Keep the current promises, with changes the new hires will know what to expect.

 

Hoping.:thumb:

So if you're a young teacher in KY...move.

 

If it's a viable option - head for the border.

Were the pension funds actually "raided" -- or were pension contributions simply not made (as they should have been) in order to construct a new highway somewhere? I think the latter is the case.

A tax increase to fix pension woes simply won't be on the table for this new administration. The Tea Party folks in Boone County would tar-and-feather Bevin if he even entertained the idea.

 

Putting new teachers on a 401(k) seems where we're headed, but does such encourage or discourage talented young people from entering the profession?

 

Both. Money was taken out of the retirement fund with an "iou" put in. Those "iou's" came due and the monies were never replaced.

 

And remember you can't just count the dollars that were taken out. For instance, the $100 million (made up number) that might have been taken out say between 1998-2001 might today have earned and be worth $600 million. So the legislature will NEVER be able to replace what money they took out with what it would actually be worth today.

Not looking forward to what could happen. With 20 years in I'm not far from looking at retirement.

The goes back to the actuary problem I was discussing earlier. They made many calculation on faulty interest rate models. Again not the workers fault , but a reality. If you look at some of these pensions and the calculated growth that was charted decades ago it's almost laughable if it wasn't so sad.

 

But good point on interest rates. Most pensions I'm familiar with take into account short, intermediate , and long term rates when calculating benefits. I'm not sure how it impacts the funding aspect though.

 

You are very knowledgeable and outspoken on this issue. You should look into the impact of interest rates and be knowledgeable on that. It is a big factor.

This hole is simply amazing in its dept.

 

Some thoughts.

 

Defined contribution is a must in the long term. Defined benefit is a risk factor that can not be taken on by governments or private companies.

 

If it goes like a lot of big companies it will go like this:

- The older group stays on same plan.

- The middle group gets 'converted'.

- The younger group and new workers go straight to defined contribution (matching 401K).

 

Older group should be OK. Younger group will have time to adjust. The tweeners have to re-evaluate everything and double check any math.

 

The current market is not the market of the 1990s. Very volatile, not much strong growth world wide.

 

It is nice to have an account with your name on it. But when that account gets cut in half with a flash crash - it hurts and you have to know to ride it back. And that is not the common person's mentality.