Tag: hybrid pension

New Research Offers Comprehensive Guide on Public Sector Hybrid Retirement Plans

Mary Pat Campbell
New Research Offers Comprehensive Guide on Public Sector Hybrid Retirement Plans

Full report link: https://www.nirsonline.org/wp-content/uploads/2021/05/Hybrid-Handbook-F8.pdf

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Excerpt:

A new report provides a comprehensive  overview of the many aspects of public sector hybrid retirement plan designs. The report finds that some shifts to hybrid designs were made without a proper evaluation of the long-term implications of the plan changes. In contrast, other hybrids are well-thought-out and more likely to provide retirement security to employees, enabling public employers to recruit and retain a qualified workforce.

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A hybrid is not one particular plan design, but instead is an umbrella term capturing a wide range of different plan designs. Some hybrids are defined benefit (DB) pensions with risk-sharing provisions, while others blend attributes of DB and defined contribution (DC) plans. Each of these plan designs offers tradeoffs in terms of retirement benefits, risks, and costs.

Author(s): Dan Doonan, Elizabeth Wiley

Publication Date: 10 May 2021

Publication Site: National Institute on Retirement Security

Kentucky legislature overrides teacher pension veto, putting new hires on ‘hybrid’ plan

Mary Pat Campbell

Link: https://www.courier-journal.com/story/news/politics/ky-general-assembly/2021/03/29/kentucky-general-assembly-overrides-teachers-pension-reform-veto/6997915002/

Excerpt:

Kentucky lawmakers have overridden Gov. Andy Beshear’s veto of a bill that would change pension benefits for future teachers.

In what some Republican legislators hope will be the beginning of larger pension reform, the House and Senate voted to override the veto of House Bill 258 Monday. 

The House voted 63-31, followed by a 25-13 vote in the Senate.

Beginning in 2022, new Kentucky teachers will be placed on a “hybrid” pension plan that combines elements of defined contribution and defined benefit plans.

Author(s): Olivia Krauth

Publication Date: 29 March 2021

Publication Site: Courier-Journal

Kentucky Lawmakers Override Pension Bill Veto

Mary Pat Campbell

Link: https://www.ai-cio.com/news/kentucky-lawmakers-override-pension-bill-veto/

Excerpt:

The GOP-run Kentucky state legislature has overridden Democratic Gov. Andy Beshear’s veto of a pension reform bill that will place new teachers in a hybrid pension plan that incorporates aspects of a defined contribution (DC) and a defined benefit (DB) plan.

Under House Bill 258, new teachers are required to contribute more to their retirement plans than current teachers do, and they will have to work for 30 years instead of 27 to earn their maximum benefits. The new rules will become effective at the beginning of 2022.

The bill had been passed by large majority of both chambers of the legislature earlier this year, with the House passing it by a vote of 68 to 28 and the Senate passing it by a count of 63 to 34. Because the state’s Republicans have a supermajority in both the House and Senate, they didn’t have much difficulty in overriding the veto, which was one of 24 vetoes passed down by Beshear, a Democrat, that were overridden in one day.

Author(s): Michael Katz

Publication Date: 1 April 2021

Publication Site: ai-CIO

Bottom Line: Changes could be coming to the pension system for Kentucky’s teachers

Mary Pat Campbell
Bottom Line: Changes could be coming to the pension system for Kentucky’s teachers

Excerpt:

Legislation to change the pension plan for future teachers in Kentucky moves to the full Senate in the final days of the 2021 session.

House Bill 258, sponsored by Rep. Ed Massey, would create a new tier in the Kentucky Teachers’ Retirement System (KTRS) for any newly hired teachers in the state that would be partially defined benefit plan like the existing pension plan and part defined contribution plan, more like a 401(k).

The bill serves as a retirement plan as well as social security replacement plan, as teachers in Kentucky do not pay into social security and do not receive the benefit in retirement. The new system would provide a supplemental plan with two percent paid in by both the employee and the state, which is portable to allow an employee to take those benefits with them should they leave the teaching profession, unlike the existing KTRS pension plan.

Author(s): Jacqueline Pitts

Publication Date: 15 March 2021

Publication Site: Lane Report

Kentucky Legislature Considers Changes to Teacher Retirement Plan

Mary Pat Campbell
Kentucky Legislature Considers Changes to Teacher Retirement Plan

Excerpt:

The Kentucky House recently passed a state bill that would place newly-hired Kentucky teachers into a new “hybrid” retirement plan design. The new hybrid plan would blend a “foundational” defined benefit pension plan with a “supplemental” defined contribution plan as a means of de-risking the Kentucky Teachers’ Retirement System, which is only 58.4 percent funded today.

The legislation, which is now before the Senate’s State and Local Government Committee, ultimately seeks to control future employee, retiree and taxpayer costs. The Teachers’ Retirement System of Kentucky already has nearly $15 billion in unfunded liabilities.

An actuarial analysis of the bill, House Bill 258, projects that it would save Kentucky $3.57 billion over 30 years. While the legislation is not a panacea, if enacted, it would be a positive step in the right direction for Kentucky’s overall public pension challenges, which rank among the most difficult in the nation.

Author(s): Alix Ollivier

Publication Date: 19 February 2021

Publication Site: Reason

Kentucky House passes bill creating hybrid pension plan for future teachers

Mary Pat Campbell

Link: https://www.wdrb.com/in-depth/kentucky-house-passes-bill-creating-hybrid-pension-plan-for-future-teachers/article_6f67bd66-671f-11eb-b8c4-7b02927c8a98.html

Excerpt:

A bill creating a new pension tier for future teachers that will require them to pay more toward their retirement and work longer before they can earn full benefits passed the House Thursday.

House Bill 258, sponsored by Rep. C. Ed Massey, moved to the House floor on a 14-4 vote and cleared the lower chamber hours later on a 68-28 vote. The measure, if passed, would put teachers and others covered by the Kentucky Teachers Retirement System hired after Jan. 1, 2022, into a new hybrid pension plan that includes foundational and supplemental benefits.

Massey, R-Hebron, said the proposal would keep future hires from joining “an already burdened and overtaxed” defined-benefit pension system at KTRS, which actuaries expect will have unfunded pension liabilities totaling $14.8 billion and have 58.4% of the money needed to cover pension costs for current retirees and workers by fiscal year 2023.

Author(s): Kevin Wheatley

Publication Date: 4 February 2021

Publication Site: WDRB

Public Pension Roundup: Reform And Regression

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/02/19/public-pension-roundup-reform-and–regression/

Excerpt:

Now, generally speaking, when an employer switches from a traditional pension to a defined contribution plan, this means a significant drop in plan benefits for employees. In Florida, that’s not the case — at least nominally not so: the employer contribution rate is the same for either type of plan, and varies only by employment class. (Of course, this doesn’t take into account any additional contributions needed to remedy funded status.) In addition, regular readers will know that I insist whenever the opportunity arises that state and local employees should participate in Social Security just as much as the rest of us do; as it happens, that is already the case for public employees in Florida. In addition, unlike the 8 year vesting of the traditional pension plan, the employer contributions to the defined contribution plan vest after only a year of service.

Author(s): Elizabeth Bauer

Publication Date: 19 February 2021

Publication Site: Forbes

Lawmakers vote to revamp Kentucky Teachers pension plan

Mary Pat Campbell

Link: https://www.pionline.com/pension-funds/lawmakers-vote-revamp-kentucky-teachers-pension-plan

Excerpt:

The Kentucky House of Representatives voted to approve a bill that would move participants in the Kentucky Teachers’ Retirement System, Frankfort, to a hybrid plan.

The House voted 68-28 in favor of the bill, which creates a tier for teachers hired after Jan. 1, 2022.

Rep. C. Ed Massey sponsored the bill because the $21.6 billion pension fund “has a huge unfunded legacy,” he said in a telephone interview.

Author(s): ROB KOZLOWSKI

Publication Date: 8 February 2021

Publication Site: Pensions & Investments