Frankfort, Ky. – On Wednesday, Senate Bill 104 passed unanimously out of the Kentucky State Senate. The bill, sponsored by Senator Chris McDaniel (R-Taylor Mill), remedies a loophole in the historic pension legislation of 2013 and prohibits state government employees from inadvertently inflating income in their final five years of employment, which would increase their pension.
Spiking occurs when an employee increases their credible compensation more than 10% in a fiscal year during the last five years prior to retirement. When a spike occurs, the final employer, upon retirement, is responsible for the full cost of the resulting increase in retirement benefits.
Senate Bill 2, passed in 2013, created provisions that reduced a significant amount of abusive pension spiking. One of the oversights of the 2013 pension legislation was it still afforded instances where pensions could inadvertently spike due to occasions such as sick leave without pay, workers’ compensation, paid maternity leave and leave under the Family Medical Leave Act (FMLA). The burden was passed to state agencies and ultimately to taxpayers.
SB 104 also seeks to provide relief for employees who fear that they could be penalized for legitimate increases in their compensation, including any leave without pay. Additionally, the bill will require employers to report leave time, in a push towards greater transparency.
“This legislation ensures that Kentucky taxpayers no longer have to pay for abuses in the public retirement systems that result in artificially inflated pension benefits,” said Senator McDaniel. “Just as importantly, the legislation provides for stability and predictability in benefits for employees who have to take leave for medical emergencies and other legitimate reasons.”
Senate Bill 104 will be sent to the House of Representatives for consideration.
Questions about the bill and requests for interviews should be sent to Kathleen Seneff at kathleen@grit-creative.com or at (859) 967-6620. Stay up to date by following @KYLeagueCities on Twitter or going to the website, localpensioncontrol.com.