The Kentucky General Assembly voted Tuesday night to change benefits offered for future employees served by the Kentucky Retirement Systems and pay down the pension system's debt to the tune around 100-million dollars per year. The pension system changes were approved with final passage of Senate Bill 2, which cleared the Senate on a 32-6 vote and the House on a 70-28 vote.
The legislation sponsored by Senate Majority Floor Leader Damon Thayer, will place future state and local government employees, except public school teachers, who are covered under a separate retirement system, as well as judges and state legislators in a hybrid cash balance plan as of January 1st. That plan is similar to a 401K, but with a guaranteed minimum 4 percent return. The bill also requires prefunding of any and all cost of living raises.
The bill will require the state to pay its full contribution to the pension system beginning in February 2015. The ARC totals around 100-million dollars per year which will be paid with revenue generated by House Bill 440, sponsored by House Speaker Pro Tempore Larry Clark. HB 440, which was given final approval by a vote of 82-17 in the House and a vote of 35-3 in the Senate, will generate 95.7-million dollars in fiscal year 2015 and 99-million in 2016. The funding will come from a 10-dollar reduction in the personal income tax credit, a trade-in credit for new cars, a cap on vendor compensation for sales tax collection, and enhanced revenue collection by the state Department of Revenue.
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