A pension study commission said last week it would consider a wide range of options for closing Kansas’ pension liabilities, including pension bonds and a shift to a 401(k)-style retirement plan for new state workers.
The Kansas Public Employee Retirement System has an unfunded liability gap of almost $8.3 billion through 2033.
Solutions being considered include increasing the state’s contribution and issuing up to $5 billion of pension bonds.
Kansas issued $500 million of pension bonds in 2004, but the long-term unfunded liabilities grew due to investment losses over the past three years.
The 2011 Legislature increased the state’s annual contribution to KPERS. The additional funding will begin with $14 million in July 2013 and will grow to $113 million in July 2018.
The commission will present recommendations to the 2012 Legislature.
“I do want to make sure we cover how we pay for this unfunded liability,” said commission member Frederick Poccia.
Gov. Sam Brownback is backing a defined contribution plan for new employees, but public employee groups are against the change.
The current defined benefit plan provides a pension based on employee’s salary and years of service rather than the system’s investment earnings.
