A Citizen's Guide to Kentucky's Pension Crisis | Page 13

Recommendations As noted previously, some progress has been made in reforming Kentucky’s pension systems. But given their current financial condition and critical level of unfunded liabilities, the Kentucky Chamber believes a number of additional steps must be taken to improve the systems’ operation, transparency and funding levels. These include, but are not limited to: • Comprehensive performance audits of Kentucky retirement systems • Increased levels of transparency in which: each system clearly reports its investment returns net of any fees paid to make the investments (for example, 2014 investment returns for KRS should account for the $126.6 million paid in investment fees); the Governor and General Assembly clearly report the percentage of the actuarially required contribution being funded in the biennial budget; and the development of a database that reports annual pension amounts for individual retirees, including elected officials • An annual report from the PUBLIC PENSION OVERSIGHT BOARD, prepared with the assistance of independent experts, that analyzes the operation of each pension system compared to other states based on such key metrics as: funding levels, investment returns, percentage of the required contribution paid, accuracy of actuarial assumptions and administrative costs • An increase in funding levels of the Kentucky Teachers’ Retirement System by implementing a plan for the General Assembly to phase in paying the full actuarially required contribution, coupled with a decrease in retirement benefits for newly hired teachers (“shared responsibility” model) • A contingency plan that infuses additional cash into the Kentucky Employees Retirement System if investment levels are depleted, coupled with a reduction in retirement benefits for retirees hired after January 1, 2014 (as the inviolable contract does not apply to them) • Reviewing the ramifications of moving employees to a 401K plan • Prohibiting any entity or individual seeking to provide investment services to any Kentucky retirement system from making any political contributions, gifts or offers of employment to any official of Kentucky’s retirement systems, any member of the General Assembly, any member of the Governor’s Executive Cabinet, any constitutional officer or their spouses and/or their children 11