WKYT Investigates | Cost-of-living adjustments for Ky. retirees
Many retirees last received a COLA in 2011. Is one even possible right now?
PARKERS LAKE, Ky. (WKYT) - Looking back, Retha Thackston has a lot she remembers liking about her job.
“We had return guests that would come back year after year after year,” she said. “I’m blind and was almost blind when I worked there, but there was voices that I actually recognized. They’d come and talk to you like you were a friend.”
Thackston retired early for health reasons. She now lives with her sister in McCreary County.
“We get by the best we can,” she told WKYT’s Garrett Wymer.
Yet for all that has changed over the years, for the past 11 years, the pension check that comes every month has stayed the same - even as costs continued to climb.
“But for the grace of God - and my wonderful sister,” she said - “I could be out on the street.”
The only authority to grant a cost of living adjustment lies with the General Assembly. But some retirees believe they’re paying the price for lawmakers’ past fiscal mismanagement of their pensions, and don’t understand why the legislature has not granted an increase as prices skyrocket.
Two years later, lawmakers made some changes with the passage of Senate Bill 2.
“Senate Bill 2 in 2013 put a provision in that said, essentially, two things,” explained David Eager, executive director of the KPPA. “If you’re going to do a cost-of-living adjustment, the plan has to be 100 percent funded - and we’re a long way from that and we probably won’t be there until late 2040s, the way things are right now - or they can pre-fund it.”
That, too, comes with a high price tag.
[MORE | WKYT Investigates ]
Actuaries estimate pre-funding a permanent one-time 1.5% adjustment for all retirees would cost $352 million, Eager said, while pre-funding an indefinite 1.5% annual increase would cost $6 billion.
Experts say that adding to the pension plans’ liabilities by not paying ahead of time for benefit increases is part of what created the state’s pension crisis in the first place, along with lawmakers under-funding the plans. (Unfunded COLAs added close to $1.5 billion in unfunded liabilities to the pension systems from 2008 to 2012, according to numbers provided by the KPPA.)
Now, though, Eager believes they are on the right track.
“Beginning of 2013, the legislature’s done several things to help us get these plans better funded,” he said, “and anything that added to the liability without prefunding is going to be detrimental.”
Eager said they are chipping away at a shortfall of $25 billion. He says it will likely take until 2049 to get to 100%.
“I don’t think I’ll need to worry about it,” said Retha Thackston.
She knows that a solution still 27 years away is unlikely to help her. She also realizes that, with the steep price tag, more immediate help likely is not feasible.
But it does not make paying that pile of bills any easier.
“I still feel like we’re being left behind,” she said. “And we’re being left behind by someone - the state - that promised us better when we were giving our best.”
Social Security recipients received a 5.9% cost-of-living adjustment for 2022, but that still fell well behind the rate of inflation. They could see a big bump next year, though. Analysts say the official hike could be close to 10% when it is announced in mid-October.
Copyright 2022 WKYT. All rights reserved.