The Kentucky Chamber of Commerce wants a full performance audit of the troubled Kentucky Retirement Systems.
Chamber President Dave Adkisson Thursday called on state Auditor Adam Edelen to look into KRS, which is rated as one of the most underfunded pension plans in the nation, with only about 45-percent of the assets needed to cover its retirement obligations.
Adkisson said his group is especially concerned about the burden placed on the actuary who advises the system.
“The assumptions they make lead to KRS recommendations, and a request for money that goes to the Governor,” Adkisson said during a conference call with reporters. “The Governor has to utilize that information to build his budget that goes to the legislature, and all of this is predicated on the assumptions of one actuary. And KTRS, the teachers’ retirement system, uses the same actuary.”
Adkisson says a KRS audit should also look into the amount of investment fees paid by the system, and how that compares to other states. An estimated 30-percent of KRS investments are held in hedge funds and private equity funds, which charge high fees and whose holdings KRS agrees not to reveal.
Louisville educators who support a lawsuit seeking to recoup lost money from Kentucky's underfunded teachers' pension system clashed this week with the head of the Jefferson County teachers' union.
The Kentucky Teachers' Retirement System serves about 145,000 teachers across the state and is underfunded by about $14 billion, largely because the state legislature hasn't in recent years provided the necessary contributions to keep it solvent. New state pension accounting standards to be enacted starting this year will compound that $14 billion liability, raising it to about $22 billion.
The issue was at the center of a panel discussion Monday in Louisville that included Jefferson County Teachers Association President Brent McKim and Chris Tobe, a state pension expert and former Kentucky Retirement Systems board member.
If the legislature fails to take action, the pensions could enter a "death spiral" where it may not be able to make sufficient investments or meet its obligations to pensioners, Tobe and McKim said.
Some, including Tobe, estimate that could happen by 2036.
After years of lawmakers attempting to find solutions to the state’s underfunded pension problems, a group of Republican legislative candidates are hoping to institute a plan of their own. At a news conference Wednesday at the Capitol, the majority of Republican challengers in House and Senate races endorsed a plan to put new lawmakers into a 401k style pension system.