KY Pension Problem: "System will Collapse"

"If the legislature does not enact these changes, the system will collapse in about five years," said Rep. Brent Yonts (D) 15th district.

"The biggest problem is your looking at the pension system being bankrupt in five years," said Sen. Mike Wilson (R) 32nd district.

Two lawmakers of different parties and chambers saying the same thing, something has to be done in Frankfort to fix the pension problem in Kentucky.

So, how did Kentucky get in the situation it is in now, not being able to fund retirement for state employees?

"It's inadequate contributions by the legislature, declined economy, and there was some mismanagement we think," said Yonts.

To fight the immediate problem, a task force was formed made up of democrats and republicans to give recommendations for legislation that would fix the problem.

They met for the final time this week and presented suggestions, including the legislature budgeting to help pay for this.

"Beginning in 2014, the next budget cycle, we fully fund what is required to be paid into the systems to make sure we billed out the shortfall that's there and don't get further behind," said Yonts.

They also suggested cutting cost of living allowances and a cash balance plan.

"Basically, it acts very similar to a defined contribution plan where the employee puts in a certain percentage, then that's matched by the employer, but also the defined benefit portion of it is the state will guarantee a four percent rate of return," said Wilson.

There are still some disagreements that may come.

"What we're trying to do is save their pensions, and everybody has to make concessions, so that's what we're trying to do," said Wilson.

However right now, both parties are working together.

This task form did not write any bill to be approved, but lawmakers plan to take their information to make a bill for the upcoming session in 2013.

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