The Kentucky Retirement Systems billed Hopkins County more than $51,000 last month for so-called pension spiking, or artificially raising employees’ wages to increase their benefits, but county officials are disputing the matter.
Hopkins County Attorney Byron Hobgood said the Kentucky Retirement System bill is for a retiree who lost wages during a long medical leave and then received a pay increase the following year when he returned to work.
Hobgood said the legislation against pension spiking shouldn’t apply to this situation.
“The evil that it was designed to prevent was where, for example, you have a person that was a state employee and that for whatever reasons they were able to inflate artificially, not because of a promotion that was bona fide or a career advancement,” he said. “They’re doing the same job at the place but yet their salary goes up a whole lot in the last 5 years so that they could get a larger pension.”
Hopkins County Treasurer Cindy Jones disputed the KRS bill but current law doesn’t allow citing unpaid medical leave and the subsequent pay increase as exceptions from pension spiking.
“They sent us a form to fill out but there was no place on there to put anything like that. The only thing that they will accept some sort of incentive payment or change in job,” she said. “So there’s no place on that form to explain. So what they told my assistant when she called up there was that you need to talk to your legislature. This is the law. There’s nothing we can do about it.”
Jones said she brought the issue up at a Department of Local Government meeting with officials from Ohio, McLean, Webster and other counties. She said they did not express concern over the issue because they had not been in a situation yet where they received a large bill from KRS that they thought was unfounded.
The law passed in 2013 requires the employee’s last state employer to pay the added benefit based on any annual increases during the worker’s last five years that are more than 10 percent. It gives exceptions to bona fide promotions but not for overtime and bonuses.
