There is a growing gap between pension obligations and outstanding liabilities. This is a concern for retired public servants relying on a comfortable pension fund to sustain their future. Inaction on part of lawmakers to close the gap is unacceptable. Kentucky is an example of a state with a mismanaged pension crisis. The annual report revealed that the five pension plans that make up the Kentucky Retirement System increased from $21.17 to $26.75 billion in the last fiscal year. The $5 billion liability jump is a concerning one.
The Kentucky Retirement Systems Board lowered the assumed investment rate of return recently to provide a more realistic outlook of the pensions on Kentucky’s pension balance sheet. The Board Chairman, John Farris, stated, “When you apply real numbers, not Fantasyland numbers that were done for 13 years, yeah, the number [for total liability] is going to go up.”
The Kentucky General Assembly will use these numbers to make budgetary decisions this year. It is important that the legislatures take into consideration the real liabilities rather than the “Fantasyland” numbers previous lawmakers have been using. Retirees and their families depend on it.