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Kentucky State Pension Fund Investment Returns Flat For January

Returns on investment for one of Kentucky’s ailing pension funds were flat for the month of January, according to Kentucky Retirement Systems, which manages the pensions for most state employees.

“It’s clearly been a challenge to the start of the fiscal year,” said David Peden, chief investment officer for Kentucky Retirement Systems.

On Monday, Peden reported that investment returns were down about 1 percent for the fiscal year, which began July 1, 2014. Overall, investments have improved slightly since the end of the first quarter, when they were down 1.4 percent. He did indicate that February's outlook was sunnier.

The pension system only has about 21 percent of the money it needs to make future payments to retirees.

On Monday the Public Pension Oversight Board heard an overview of 16 pieces of legislation that have been proposed this session to help fix the ailing pension system.

The proposed bills range from plans to add funding for the system to a bill that calls for more transparency in KRS’s investments.

House Speaker Greg Stumbo, a Democrat from Prestonsburg, has proposed $3.3 billion bonding effort to shore up a separate retirement fund, the Kentucky Teachers Retirement System, which has 51 percent of the money it needs for future payments.

Sen. Joe Bowen, a Republican from Owensboro who co-chairs the oversight board, said sending more funding from the legislature isn’t going to fix the problem.

“As you can see that’s not the problem,” Bowen said. “A flat market for 13 years is the primary reason that the system is in the shape that it’s in.”

Bowen has proposed a bill that would limit general fund debt to 6 percent of general fund revenue. On Monday, Bowen said that Stumbo’s bill borrows far above the current debt ratio of 8.1 percent.

“If that proposal will make it through, it’ll blow mine out of the water,” Bowen said.

Stumbo has indicated his bill will be heard on the House floor early Monday evening.

Ryland Barton is the Managing Editor for Collaboratives. Email Ryland at rbarton@lpm.org.