Analysts say Kentucky will need to hire more state employees or have them pay more into the retirement system in order to reverse the state’s pension crisis, painting a grim portrait of Kentucky’s main public pension system.
Ryan Sullivan says the state will not be able to “invest its way out” of the pension crisis.
“The unfunded liability will actually increase for the first couple of years until salaries can grow fast enough to where this payment grows larger and actually starts to pay down this unfunded liability," Sullivan said.
State Sen. Joe Bowen, a Republican from Owensboro, says that there aren’t many solutions to the crisis.
“There’s obviously only two ways we can do that: employ a bunch more people or require our current employees to pay more,” Bowen said.
In order to remain financially solvent, the state’s annual contribution will have to increase from $560 million in 2015 to $1.4 billion in 2034.
In 2013, lawmakers passed pension reforms which moved new state workers onto 401(k)-style plans and tweaked the tax code to generate more money for the system.
But pension officials say the system still needs more money.
The state has hired another firm to conduct an actuarial audit of Kentucky Retirement Systems.