Kentucky’s pension funding levels have improved despite nearly two decades of challenges, retirement experts said. The state held around $35 billion in total cash and investments as of 2020, according to pension policy data compiled by Ballotpedia. A state's total holdings are an indicator of the health and stability of its pension systems.
The state hosts six different pension plans, covering county and state employees, law enforcement and public safety employees, judicial system workers, legislators and teachers.
Keith Brainard, research director for the National Association of State Retirement Directors, said in recent years, funding levels have significantly improved.
"That funding level a few years ago was below 15%, and it is now approaching 30% and is on a steady path forward," Brainard pointed out.
Decisions made by both the legislature and the Kentucky Retirement System board of trustees, coupled with poor investment returns during the 2008 recession, once left the state struggling to maintain the funding needed to pay public workers’ retirements.
Brainard noted while traditional public sector position usually pay less than private sector jobs, employees can expect to have higher job security and a strong retirement through a state pension. He stressed Kentucky continues to work toward that guarantee.
"A pension is a promise and the state of Kentucky is in a position to continue to be able to pay its promised retirement benefits," Brainard emphasized. "Not just to state employees, but also to schoolteachers and employees of local government, firefighters, police officers."
Kentucky is not the only state struggling to fund its pension system. According to a 2022 Pew Charitable Trusts report, the gap between state pensions’ assets and promised benefits for public workers was collectively more than $1 trillion.