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Bevin Issues Executive Order on Pension Spiking, Takes Aim at Beshear Appointee

Governor Matt Bevin signed an executive order on Thursday that prohibits former legislators appointed to executive or judicial branch positions from double- or triple-dipping their pension payout.

The practice is known as "pension spiking".

Members of the Kentucky General Assembly who began participation in the Legislators’ Retirement Plan prior to January 1, 2014, are entitled to a defined benefit pension, a news release explained. The final pension payout for this plan is calculated using a formula based on the individual’s years of service in the legislature, multiplied by the average salary for the three highest years of salary (known as the “high three”), and then multiplied by a percentage called a benefit factor.

In 2005, the General Assembly passed HB 299, criticized as “the Greed Bill,” which allows the part-time legislators to spike their legislative pension using their highest three years of salary, even if that salary was earned in another government position.

The process allowed some former legislators, who earned five-figure salaries as legislators, to earn six-figure retirement payments when calculating in other positions to which they were appointed.

Bevin, a Republican who lost his re-election bid in November, relinquishes the keys to the Governor's Mansion to  Democrat Andy Beshear on December 10, mandated that former legislators who joined his administration to begin collecting their legislative pensions before their executive branch employment began.

“Across Kentucky, there are thousands of hardworking public employees and retirees who expect to receive what they’ve paid into the retirement system,” said Bevin, in a news release. “Our pension system is already the worst funded in the nation, and it is both actuarially unsound and fundamentally unfair that a select group of individuals can enrich their own pensions and receive millions of dollars more in benefits than they have paid in.  We ended this practice in our administration, and it is in the best interest of the taxpayers, public employees, and the long-term health of the pension system that it is ended once and for all.”

The passage of Senate Bill 3 in 2017 required that the pensions of all current and former legislators be subject to open records requests for the first time. As a result, the public learned that some former legislators earned pensions in excess of $100,000 per year because of pension spiking.

SB 151, passed by the General Assembly in 2018, ended the practice of pension spiking, but it was never allowed to become law because the Kentucky Supreme Court struck it down based on procedural issues.

In his office's new release announcing the executive order on Thursday, Bevin took aim at House Minority Leader Rocky Adkins (D-Sandy Hook), who was announced by Governor-elect Beshear as a senior adviser in the new administration.

“It is outrageous that legislators like Rocky Adkins, who voted for the Greed Bill in 2005 and against SB 151 to end pension spiking, are now attempting to enrich their own pensions by accepting high-paying positions in the Beshear Administration,” said Bevin. “I’m asking Leader Adkins to retire from the General Assembly prior to his appointment in the executive branch so that his higher salary is not included in his final pension calculation. Additionally, I’m asking the Governor-elect to follow the executive order issued today and prohibit any and all pension spiking in his administration. Kentucky taxpayers deserve this level of respect from the officials they elect.”

-Staff report

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