February 23, 2010

Let's cut to the chase. When you retire, you expect your retirement money to be there, Right? Of course.

Right now there are about 265,000 Kansans in the Kansas Public Employees Retirement System (KPERS). They're teachers, state employees, most city's and county's employees including Sedgwick County, but not Wichita employees.

Those employees as well as the rest of us contribute to their retirement. But an ugly truth has arisen from a study by The Pew Center On The States on the state's trillion dollar funding gap in state's retirement systems.

"Over the last decade far too many states have not responsibly managed the bill for their worker's retirement," Managing Director Susan Urahn said.

It's catching the attention of KPERS and lawmakers because the Pew report finds Kansas has less than 60% of the necessary assets on hand.

"We've been aggressive over the last several years trying to address the funding gap, the liability we have with the KPERS system," Urahn said

Here are some options for closing the gap:

- Increasing employer contributions
- Increasing employee contributions
- Changing the statutory multiplier for future service so new hires work longer and retire later.
- Creating a new mandatory 401 (k) plan for future employees.

Reasons for the gap include the big drop in the stock market in 2008 which hit pension investments.

"But the primary cause is state's inability to save for the future and manage the cost of their public sector retirement benefits," Urahn said

If states like Kansas don't narrow the funding gap, the bill will keep rising.

"It's like someone who keeps using a credit card and they're only paying the minimum each month. So you're making payments but they're not quite enough each month. And so that balance continues to add," Urahn said.