Gov. Beshear Proposes State Pension Board Changes
Nov. 20, 2008
FRANKFORT — Gov. Steve Beshear recommended on Thursday adding more people with investment experience to the boards governing the state’s pension systems and regulation tweaks that would allow the state to diversify its investment portfolios.
The move came after an independent report found that the state’s pension systems — the Kentucky Teachers’ Retirement System and the Kentucky Retirement System — had lost $5 billion over the past 10 years because the pensions did not diversify its investments. The systems relied too heavily on investments in U.S. stock, said the report by Hammond Associates, a Missouri consulting firm.
The state has been working to fix its ailing pension funds. The Kentucky retirement system — which includes most state and county employees — has more than 300,000 employees. The state teachers pension system covers roughly 115,000 employees. The pensions face a potential $28 billion shortfall or unfunded liability. That means that both systems have money to cover current retirees but could fall short in future decades.
Beshear made a series of recommendations to help diversify portfolio investments including:
Adding four investment experts to the investment committee for each of the two pension boards
Requiring all public pension board members to receive education on investment practices
Reviewing regulations that may limit where the pension system can invest its money
The systems will undergo a study to determine the best allocation of the pension system’s money immediately, according to a release from the governor’s office.
Beshear also announced the appointment Wednesday of Henry Clay Owen, a retired long-term treasurer of the University of Kentucky.