Regarding the plan for KPERS — Kansas Public Employees Retirement System — reform offered by State Sen. Jeff King, R-Independence, some facts need to be made clear.
This plan actually would cost the state (taxpayers) $21 million more per year to fund than the current KPERS plan. Over 40 years, it could cost $11 billion to $13 billion more. The cost to the state with the defined benefit plan would be 1 percent in the future, while, under the King plan, the cost would continue to be between 4 percent and 5 percent. The gap between anticipated revenue and benefits is because of insufficient funding by the legislature during the past 17 years. While KPERS employees have increased their annual contributions from 4 percent to 6 percent, the legislature has reduced funding from 4 percent to 1 percent to 2 percent annually. In 2011, a bill was passed that called for the state to pay its actuarial rate that would eliminate the unfunded liability by the year 2035.
The actual return on KPERS investments through the past 10 years has been 7.03 percent, according to the latest financial report. For six of 10 years, returns ranged from a low of 12.1 percent to a high of 22.6 percent. In the great recession year of 2009, the returns were a negative 19.6 percent, which was considerably better than many 401(k) plans were doing.
The third point I would like to make is that the current KPERS cost per member per year is $44. This is the fourth-most cost-effective plan in the entire United States. All this information was given to legislators during the debate over new proposals. The current plan could probably benefit from some changes, but it is the most cost-efficient compared to the alternatives that have been presented.
— Janet Broers, Wellsville