Slowly but surely it is becoming increasingly clear to public workers in states with massively underfunded pensions that they've been lied to for the past several decades as their states can't possibly afford to pay for the retirement they've all been promised. As a local radio station in Bowling Green points out today, fears over potential pension changes in Kentucky have resulted in a surge of early retirements as workers move to lock in payouts before any potential cuts go into effect.
More state workers retired last month than the year before amid concerns that the legislature and Gov. Matt Bevin will make changes to state retirement plans.
David Smith, executive director for the Kentucky Association of State Employees, said state workers have been retiring after consultants hired by the state recommended drastic changes to the pension systems.
"There are folks that are saying you know what, I don't care, I'm going to lock in my retirement now and get out while I can and fight it as a retiree if they go and change the retiree benefits," he said.
The Lexington Herald-Leader reports that there was a 20 percent jump in state worker retirements last month.
"Who are they going to replace them with if they truly offer up what they're proposing or what was proposed? Who is going to want to work for state government? I wouldn't," Smith said.
As we pointed out last week, Kentucky's public pensions face a daunting funding hole of $33-$84 billion, depending on your discount rate assumptions, according to a recent analysis conducted by PFM Group.
The problem is that the aggregate underfunded liability of pensions in states like Kentucky have become so incredibly large that massive increases in annual contributions, courtesy of taxpayers, can't possibly offset liability growth and annual payouts. All the while, the funding for these ever increasing annual contributions comes out of budgets for things like public schools even though the incremental funding has no shot of fixing a system that is hopelessly "too big to bail."