Kentucky Chamber of Commerce Calls for State Audit of Retirement System
The Kentucky Chamber of Commerce on Thursday called for a full performance audit of the troubled pension system for state employees.
Chamber President Dave Adkisson asked state Auditor Adam Edelen to look into the Kentucky Retirement Systems. KRS has been rated one of the most underfunded pension plans in the U.S., with only about 45-percent of the assets needed to cover its retirement obligations.
Adkisson said a KRS audit should look into the amount of investment fees paid by the system, and how that compares to other states. An estimated 30 percent of KRS investments are held in hedge funds and private equity funds, which charge high fees and whose holdings KRS agrees not to reveal.
“We would want to find out what other states are doing, and the specific rationale by which certain fees would be disclosed either by asset class, or by individual agent," he said.
Nearly one-third of the $1 billion in KRS assets are tied up in holdings that the system keeps secret. Louisville state Rep. Jim Wayne hascalled for a change in state law that would make public all contract details involving KRS.
Adkisson said the state chamber is especially concerned about the burden placed on the actuary who advises the system.
“The assumptions they make lead to KRS recommendations, and a request for money that goes to the governor," he said. The governor has to utilize that information to build his budget that goes to the legislature, and all of this is predicated on the assumptions of one actuary.”