About 5,000 teachers rallied at the Kentucky State Capitol on Monday to protest the passage last week of a pension reform measure that...well, it doesn't actually do much of anything to change their retirement plans.
But the bill might help bring Kentucky's public sector retirement plans back from the brink of financial collapse.
Under the terms of the bill that zipped through the legislature on Thursday, teachers hired after January 1, 2019, would be moved into a new retirement system using a so-called "hybrid cash-balance retirement plan," which retains some elements of a traditional pension and includes individual investment options similar to a 401(k) plan. Future hires know they won't lose their money—which makes the plans significantly less risky than 401(k) plans in the private sector—but taxpayers will no longer be responsible for making up the difference when the pension investments fall short of expectations. (The Pension Integrity Project at the Reason Foundation, which publishes this blog, provided technical assistance to Gov. Matt Bevin and state legislators as they crafted various pension reform proposals over the past year.)
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