Last week, an independent consultant group presented a series of recommendations to legislators on how to shore up the state’s struggling public employee and teacher pension systems.
It didn’t take long for concerns about how legislators might change the pension systems to surface at the Daviess County Sheriff’s Department.
“I met with one of my officers this morning for over an hour on this very issue,” Sheriff Keith Cain said Wednesday. Deputies “have concerns, and I have concerns for them.”
The consultants from PFM Group recommended dramatic changes to the pension systems. The firm suggested law enforcement officers retain their current plans but recommended raising the retirement age to 60 for an officer to receive a full pension.
There are different types of law enforcement pensions. Officers hired before January 2014 currently receive a pension based on their three highest-paying years of service. Those officers have to work either 20 or 25 years, depending on whether they were hired before or after 2008.
Officers hired after January 2014 receive a “hybrid 401(k)” plan, which gives employees contributing to their retirement a guaranteed 4 percent return on their investments annually, plus 75 percent of the earnings above 4 percent.
Legislators have said there is no plan in place yet on how to address the pension problems. The systems have both been underfunded and have underperformed over the years. The Kentucky Employees Retirement System for nonhazardous duty employees only has 13.8 cents for every dollar in benefits it must pay, Sen. Joe Bowen told the Greater Owensboro Chamber of Commerce earlier this summer.
The County Employee Retirement System and the state system for hazardous-duty workers each have about 59 percent of the funds they need.
Clark County Sheriff Berl Perdue Jr., who is president of the Kentucky Fraternal Order of Police, said he fears officers and deputies will leave the profession if the recommendations are adopted.
“My personal opinion is any legislator that passes this is going to leave a legacy of destroying law enforcement and public service,” Perdue said.
“Recruitment and retention is at an all-time low,” Perdue said. “… With the changes in (2014) putting people into a hybrid 401(k) plan, there’s no incentive for a person to stay in law enforcement.”
At an August meeting of the Kentucky Law Enforcement Council, officials said they were seeing officers retire early before any pensions changes are made in Frankfort.
Perdue said officials shouldn’t address pensions until they modify the state’s tax code. Legislators are expected to tackle both issues during a fall special session.
“They have the cart before the horse,” Perdue said. “I think tax reform should have been done first, to find a dedicated (revenue) stream” to help fund the pension systems, he said. “Or, it should be done in a special session.”
Perdue said the FOP was opposed to setting law enforcement retirement with benefits at 60 years old.
Moving the retirement age to 60 “gives no one an incentive to stay in this position,” Perdue said. If the age were raised to 60, a “Tier II” officer “could retire after 25 years and have 10-plus years before you can draw a pension.
“You’re talking about getting back to the way it was in the ’50s and ’60s, when you had 65- and 70-year-old policemen on the street who couldn’t afford to retire,” Perdue said.
Cain said he is advising deputies to not make decisions until legislators put forward a plan. Legislators have said previously any pension bill won’t have an “emergency clause,” which would make the changes go into effect the day the bill is signed into law by the governor.
The position of law enforcement organizations such as the Kentucky Sheriff’s Association is that law enforcement officers who are currently working should retain the system that was in place when they were hired.
“Those of us who have been in the system and have been for an extended period of time, we view (the pensions) as a promise, and we feel a promise needs to be kept.”
James Mayse, 270-691-7303, firstname.lastname@example.org, Twitter: @JamesMayse