KEMI Wants Out of State Retirement System
Monday, February 22, 2016 | 1061 | 0 | 0 min read
Kentucky Employers Mutual Insurance is among three quasi-public state agencies that have asked to exit the Kentucky Retirement Systems, which faces $16.6 billion in unfunded liabilities, according to a report by the Lexington Herald-Leader.
The newspaper said that the applications by KEMI, the Council of State Governments and the Commonwealth Credit Union are the first filed under a new state law that allows agencies to depart from the retirement system.
KEMI President Jon Stewart told the Herald-Leader that the state-charted carrier wanted out of the retirement program because of its "sheer cost." He said KEMI was required to pay 38.77% of payroll into the retirement fund this year, and next year that will rise to 48.59%.
“I can remember when it was 5%,” Stewart told the newspaper. “We had to pay something like $6.5 million in 2015 in pension costs. We’re an insurance company; it just doesn’t make any sense for us anymore. These are costs we’re having to pass along to our customers.”
Stewart said that KEMI will replace state retirement benefits with a defined benefit plan for some employees and a defined contribution plan for others, depending on their length of service. He said new employees will receive a defined-contribution plan, commonly known as a 401(k).