|
 Kentucky's pension systems, $27 billion shy of being fully funded, are being hurt by the lack of steady contributions according to those who oversee the plans.
The Governor's Working Group on Public Pensions Investments Subcommittee heard from officials who handle the Kentucky Retirement Systems and the Kentucky Teachers' Retirement Systems. The message was that while investment returns can be improved, they are neither the cause nor the cure to the mess. Both managers blame under funded contributions for problems.
"It's a lot easier to make money when you have money to work with," said Adam Tosh, Chief Investments Officer with KRS. Nine of the last 15 years the General Assembly has failed to met its contribution levels.
There are 435,000 current and former state workers and teachers in Kentucky's various retirement systems. The contributions of the 119,000 people in the Kentucky Teachers' Retirement System, KTRS, are part of a redirecting of contributions to pay for rising cost of health care for retired teachers. A staggering $897 million has been diverted from being invested to pay for health insurance over the last ten years.
"Not having the cash flows in a period when you're trying to diversity your portfolio costs you more money," said KTRS Executive Director Gary Harbin. Harbin says it raises the cost and risk of the system's investments.
Tosh compares contributions to seeds, which, when planted grow like trees into revenue. Now is a ripe time to plant, but the state's retirement systems are short on seeds. "To be able to buy low in this type of environment, this is a pension fund's dream and if we had the resources I think we could put it to work," Tosh told the subcommittee. "We could take a nice nick out of the problem."
 |
Subscribe to this comment's feed