A new study shows that Kentucky has the worst-funded pension system in the nation, compounded by the fact that of all the states, the commonwealth is doing the worst at paying off its pension debt.
According to a new survey by S&P Global Ratings, Kentucky has $31. 2 billion in unfunded pension liabilities, and the state’s various pension funds have 37.4 percent of the money they need to make payouts to current and future retirees, the lowest ratio of all states.
Last month, state pension officials reported that the main pension fund for state workers — the $1.9 billion Kentucky Employees Retirement Systems non-hazardous fund — is only 17 percent funded and declined by about $347 million over the fiscal year that ended on June 30.
Officials blame $326 million of the loss on “negative cash flows associated with employer contributions” — which includes funds from local governments, the state and other agencies that participate in KERS — and a 4 percent increase in the number of retirees to whom the system had to pay benefits. The fund also saw a 0.68 percent decline in investment returns, attributing that to a loss of $21 million.
Meanwhile, the agency that manages the fund, Kentucky Retirement Systems, paid $123 million in fees to investment managers — a practice that has drawn fire from some lawmakers for being too secretive and costly.