AARP Kentucky urges you to contact your state Representative and Senator - this week. Tell them "No" to any last-minute deal that could cut benefits for Kentucky retirees or near-retirees. Call 1-800-372-7181 - or - Send a letter now to your state Senator and Representative.
An Open Letter to Members of the Kentucky General Assembly:
RE: Senate Bill 2 – Pension Reform
AARP Kentucky has strong concerns regarding pension legislation introduced this session. As you discuss a compromise in the closing days of the 2013 General Assembly, AARP urges you consider the full impact these reforms will have on those who have paid in their full share to the system on time and every time.
AARP is committed to ensuring workers retain access to defined benefit plans. Moving to a hybrid scheme is a fundamental shift in our state’s public retirement paradigm. Senate Bill 2, as passed by the Senate, not only provides an inferior benefit—but costs more to run.
The basic principle underlying AARP’s state level public pension efforts is to ensure the continued viability of public pension funds while safeguarding the financial security of current and near-retirees, who have little opportunity to pivot their retirement strategy. This includes continued access to defined benefit plans as well as inflationary protection through the provision of cost-of-living adjustments (COLA). These principles fit within AARP’s national policy agenda, which asserts that we all have a right to be self-reliant and live with dignity in retirement.
Eliminating or limiting defined benefit plans is detrimental not just to individual retirees, but to state and local economies, particularly our rural economies. Defined benefit plans are economic stabilizers, giving back to the community in good and bad economic times. According to the National Institute of Retirement Security, public pension benefits support roughly 30,000 jobs annually in Kentucky.
Defined benefit plans are a good investment for the state—for each dollar Kentucky taxpayers invest in defined benefit plans, the state receives $4.64 in economic output. We cannot afford to forfeit the economic growth and stability that these plans provide, especially when studies show that these plans offer a better retirement at nearly half the cost of a defined contribution account.
COLAs are also an essential component of a state retirement system. Like defined benefit plans, they provide a stabilizing force in an uncertain economy. The consequences of cutting COLAs are stark not only for retirees, but also for the State’s balance sheet. If retiree income remains static while the cost of basic essentials rises, the state could see a dramatic increase in the cost of many social safety net programs.
Thank you for your consideration and we welcome any questions you may have.
Respectfully,James T. Kimbrough Ron Bridges State President State Director AARP Kentucky AARP Kentucky