FRANKFORT, Ky.–Commonwealth Credit Union here is among three organizations that have asked to exit from the Kentucky Retirement System, which is attempting to deal with $16.6-billion in unfunded pension liabilities due to a lack of state funding.
According to Kentucky.com, the KRS Board of Trustees on Thursday approved withdrawal applications from Commonwealth Credit Union, as well as Kentucky Employers’ Mutual Insurance and the Council of State Governments, both headquartered in Lexington.
“This is hardly surprising. The handwriting is on the wall that this pension plan is bleeding red ink, and it is unsustainable,” Jim Carroll, a member of an advocacy group called Kentucky Government Retirees, told Kentucky.com.
Before they may leave, all of the participating companies will have to pay KRS the expected cost of future pension and retiree insurance payments for their roughly 1,600 past and present employees. KRS officials put a “very rough estimate” of that sum at $75 million to $79 million combined for all three employers, but they said a final tab won’t be ready until fall, Kentucky.com reported.
Kentucky.com quoted Karen Harbin, president of Commonwealth Credit Union, as saying the CU was “grateful for the benefits” KRS provided. But the credit union is growing its membership beyond the original base of state government employees, so it no longer will be eligible to participate in KRS, Harbin said.
Kentucky.com reported that the primary state pension fund at KRS has just 17% of the assets it’s expected to need for future benefits, a number that’s expected to worsen.