A bill that will provide relief for quasi-governmental agencies from rising pension costs was approved by the Kentucky Senate Wednesday.
The state Senate approved House Bill 358 by a 25 to 12 margin. The bill will make changes to the retirement plans for regional universities and quasi-governmental agencies in order to give them a financially viable mechanism to continue to operate while still paying for as much of the unfunded liability inside the pension as possible for their employees.
The first section of the bill addresses the universities. It would allow, but not require, the state’s regional universities to stop participating in the KERS by July of next year. University employees hired before 2014 could stay in KERS or join a defined contribution plan. All employees hired after 2014 would be required to join the defined contribution plan, similar to a 401(k) retirement plan.
The second section of the bill addresses the quasi-governmental agencies who participate in KERS. These agencies could also stop participating but their employees’ pensions would be frozen. They could start participating in a defined contribution plan that would also be offered to all new hires.
For groups who stopped participating in KERS, HB 358 contained formulas, in the form of loans through the retirement system, for the universities and quasi-governmental agencies to pay for their share of the unfunded liability.