The problem facing Kentucky’s public retirees is straightforward:
· The average pension benefit across all plans was $18,828 annually (FY23).
· Two-thirds of KPPA pension recipients receive less than $20,000 annually.
· The last COLA, 1.5%, was paid on July 1, 2011.
· The Consumer Price Index shows that it takes $1.36 in December 2023, to have the same buying power as $1.00 did in July 2011.
· Many of the 125,000 public retirees across the Commonwealth face great personal stress over their finances.
At the PPOB October 2021 meeting, and based on the FY20 valuation, KPPA’s actuary estimated:
· A one-time, permanent 1.5% increase would cost $352 million.
· A “13th check” option, essentially a single lump-sum payment of a retiree’s current monthly benefit, would cost $188 million. (Actuairies estimate $199 million at FY23.)
CERS retirees should be included in any plan and the estimates above included those employees. The average pension payment for a CERS Non-Hazardous retiree was $12,284 (FY23).
With $3.7 billion in the Budget Reserve Trust Fund, there appears to be money available to do something for public retirees. And, as of June 30, 2023, all ten pension and insurance plans managed by KPPA exceeded their assumed rates of return for the year.
We have before us a “Window of Opportunity,” the right time to help mitigate this situation.
