Kentucky Pension Speaks Out Against Bill That Would Hand Governance Decisions to Senate

Last month, Pension360 covered a Kentucky bill that would give the state Senate the power to confirm certain high-ranking pension officials.

Just as controversially, the bill would require full disclosure of all investment fees and contracts – even those associated with PE and hedge fund investments.

The bill has already flown through the Senate. It currently sits in the House.

Kentucky Retirement Systems (KRS) executive director William Thielen spoke to CIO about his opposition to the bill, which he argues would politicize the hiring process and harm investment performance.

From CIO:

“Several provisions will make the systems less efficient, less competitive, and will result in the expenditure of additional funds,” Thielen argued.

The Senate would have final approval over executive director and board member appointments, and state government a significant role in KRS’s hiring process, including the last word on staffing and promotion decisions.

“We’ve got our issues here and it’s hard enough attracting applicants,” Thielen said, referencing KRS’s status as one of the worst-funded pensions in the country.

Thielen, who announced his intention to retire last year, has already had to stay on longer than planned due to a lack of qualified applicants for his position. Requiring Senate confirmation of executive director appointments would make finding a replacement that much more difficult, and more politicized, Thielen said.

[…]

Provisions regarding fee and holding transparency do also worry Thielen—but only because industry fee disclosure practices are not currently at the level that the bill would require.

“We are putting everything we have out there,” Thielen said, explaining that KRS already discloses fees by asset classes and reports returns as net of fees. “We just don’t want to be put in a position where we’re violating the requirement because we can’t get the information.”

Read the full story here.

KRS is among the worst-funded public pension system in the United States.

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