LOUISVILLE (WHAS11) -- Financial advisors following Governor Bevin’s pension announcement say it’s time to pay attention to the possible impact.
Bevin said nothing will change for current retirees. Hazard duty employees, like first responders, will see the same plan as well. But future state professionals, like teachers, won't have the same options they had before and that's why the experts say they need to pay attention now
The plan Bevin presented in Frankfort Wednesday is only an outline but makes one thing clear. If passed, future teachers and other state employees won’t see the same pension plan they did before.
"If you go into a government plan, typically you think pensions are going to be provided for you and that's what it’s always been. New employees are going to have to realize it’s up to them to put money into this plan and make sure they're going to have a retirement plan when they retire,” Alan Mercurio, President and Founder of Mercurio Wealth Advisors, said.
Under the new plan, current employees will only pay into the former pension plan for 27 years, and then they move to the new format, which allows them to decide on their contributions along the way. Future employees will start on the new plan which functions much like public sector's 401K.
Mercurio said, "We're not going to have the government putting something in, like they have in the past. So it’s going to be up to us, it’s going to be on our shoulders again and I think that overall that’s a better plan because now you're more in control and you can decide to put more in or maybe less in if you don't feel you can afford it."
Financial Advisor Alan Mercurio said the plan is a sign of the times as many states have already moved over to a similar system.
He believes it’s a move that could help bring Kentucky out of the billions of dollars of debt.
"I think he's dealing with it in a pretty good fashion for those involved in the plan. Is it the best fix? Probably not. But I don't think you could come up with a better fix than what he's got," Mercurio said.
It’s important to remember nothing is final until Bevin calls a special session for lawmakers to discuss the tough questions, like how do they pay for this and then vote to pass it.
But Mercurio said now is the time for those current and future employees to be talking to their financial advisors about what the best plan is for them.