According to the Lexington Herald-Leader, under the bill, future state and local government workers, along with classified school employees such as cooks and janitors, would have to work 30 years, instead of the currently-required 27, and be at least age 55 before becoming eligible for full retirement benefits. Hazardous-duty employees such as police and firefighters would have to work for at least 25 years instead of 20 to receive full retirement benefits.
The bill also would prevent employees from earning two pensions if they return to state employment after retiring from one public position, the Herald-Leader said. Most provisions of the bill would be effective for future hires.
The bill also addresses the pension systems’ $26.6 billion shortfall. Representative Mike Cherry said the plan saves the state and local government workers’ retirement system $335 million a year and would save $155 million a year for the teachers’ system, beginning July 1.
The bill calls for retirees to receive annual cost-of-living increases of 1.5% unless the legislature changes that number, and employee contributions for health care would increase by 1%.
The bill is now in the state Senate and is likely to come out looking very differently, the newspaper reported. “We have several other approaches that we’re going to take and we’re going to try to build a consensus in the Senate if we can,” Senate President David Williams said in the news report.
The Senate proposed last year to issue bonds to address the systems’ shortfall and allowing workers to put part of their retirement contributions into a 401(k)-style retirement plan, but the House disagreed with those proposals. The governor also dismissed the bonding idea, saying the state does not have enough money to incur more debt.
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