Public Pension Debt

The legislature must secure its promise to state retirees and address meaningfully Kentucky's enormous unfunded public pension debt.  The extent of Kentucky's public pension debt is the topic of many national studies and financial reviews.  Kentucky's defined benefit system promises that certain benefits will be paid to those retiring from public service, and that promise must be kept.  However, Kentucky has failed to pay in enough money over an extended period of time so that now our unfunded pension debt is in the tens of billions of dollars.  Kentucky first must cease offering defined benefits and institute statewide defined contribution benefits so that Kentucky is required to place money in an individual's retirement on a current basis, rather than a promise of later.  Kentucky's pension debt is a major contributing factor to decreased credit ratings.  The size of the debt concerns prospective employers in that Kentucky may be forced to raise taxes on corporations and employers to cover pension shortfalls.  Addressing the pension debt will make good on the promise to retirees, increase credit ratings, and give certainty to prospective employers that Kentucky has its finances in order and that it is ready for business.

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