Kentucky Public Employee Retirements Spike Amid Fears of Pension Cuts

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Government Worker Retirements Surge to Preempt Pension Cuts

Kentucky’s ongoing pension crisis has given birth to a new problem: many public sector employees are beginning to retire early, in fear that they may lose pension benefits later if they continue working now. This has the state government worried that there will be a mass exodus of workers from its public offices.

Retirements in Kentucky’s public sector jumped 20% in August 2017, compared to the same month a year ago.

State workers fear that Governor Matt Bevin will make good on his promise to cut pensions in order to cover off the government’s unfunded pension liabilities. Kentucky’s public pension programs are currently the worst-funded retirement plans in the United States. According to some estimates, the state is short some $64.0 billion that is required to pay for its pension liabilities to state retirees.

To solve the fiscal crisis, Bevin is proposing that the state trims its monthly pension checks to retirees, and moves current employees to 401(k)-style pension plans.


Current state employees are enrolled in defined benefit pension plans. Shifting them to 401(k)-like defined contribution pension plans will relieve the state of some of the burden of growing pension liabilities. It will also lower the eventual retirement benefits paid to current employees.

To lock in their pensions with the current defined benefit plans, many state employees are choosing to retire before the shift to the new plan is made.

David Smith, executive director of the Kentucky Association of State Employees, explained the workers’ exodus: “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.”

The Republicans under Bevin are reluctant to increase taxes as a way to raise revenue and balance their budget. With tax increases off the table, the only option they are left with is to cut spending, which includes slashing the funds allocated to various state agencies, programs, and employee benefit plans.

Public sector unions in the state are planning to meet with local representatives in an attempt to convince them to stop the governor from making the cuts.


Proposed Pension Changes Bring Fears Of State Worker Exodus,” The Public Radio Service of Western Kentucky University, September 5, 2017.

Bevin launches pension crisis information website,” Courier-Journal, August 17, 2017.