Summary of Dr. Bob Wagoner's remarks from 22 August EKURA meeting
Our speaker for the 22 August EKURA meeting was Kentucky Retired Teachers Association (KRTA) retiring Executive Director Dr. Bob Wagoner. A summary of his remarks in regard to the TRS pension system is included below to keep you up to date on pension happenings. Please keep contacting your legislators about the pension funding - if you think our pensions are safe, I fear you may be mistaken given the current political atmosphere.
Our speaker for the 17 April 2018 meeting after the 2018 legislative session will be the new Executive Director, Tim Abrams. We are also trying to schedule Larry Totten, who is involved with the KRS pension system for the same meeting.
- The Public Pension Oversight Committee that Governor Bevin hired to look at the KY pension systems will give its final report on Monday, 28 August at 1 pm., somewhere in the Capitol Annex. The Committee will deliver its review of the systems and its recommendations for improving them. Dr. Wagoner is not expecting it to be a positive report.
- KRS is currently 17 – 19% funded. TRS is 54% funded.
- Dr. Wagoner is concerned about the 22 new representatives in the House who have no knowledge of the history of the pension funds, and who are listening to older representatives without doing any research of their own.
- Governor Bevin has put up a website on pensions on the State Treasurer’s website. Bevin says the return on pension investments is 4%; Dr. Wagoner feels the return is more likely over 15%.
- In 2016, Bevin included $973 million in the budget for the pension systems.
- Dr. Wagoner believes there will be a push to steer new teachers into 401K accounts rather than TRS. The average 401K in the US is only $45,000, no where near enough to fund a retirement.
- The average TRS pension in Kentucky is $36,000 plus health insurance.
- There are currently 31,000 Kentucky Retired Teacher Association (KRTA) members.
- Question: It’s been rumored that all retirement systems will be combined into one. Is that true? Dr. Wagoner believes that Governor Bevin wants to combine all the pension system monies into one account under a “super board,” rather than combine the systems themselves.
- The underfunding of the pension systems began under Governor Paul Patton, who redirected pension funds into his “Bucks for Brains” program.
- TRS and KRS have different investment companies. A Board of Trustees determines which company is hired.
- Question: Will there be a move to tax pensions? According to Dr. Wagoner, pensions up to $41,000 are exempt. He believes there may be a push by the legislature to tax pensions, but they would also have to consider taxing private business pensions as well. Not expected to go forward.
- TRS is considered actuarially sound at 80% funded.
- K – 12 school systems do not contribute to the pension fund but do contribute to the health insurance pool.
- Other than the state’s Annual Required Contribution (ARC), 70% of pension funding comes from earnings, 30% comes from employee and employer contributions.
Published on August 24, 2017