Aug. 22 (Bloomberg) — When Kentucky, with the country's second-lowest funded pension system, set out to bolster the plan last year, it sought recommendations from Pew Charitable Trusts, funded in part by Houston billionaire John Arnold.
Kentucky's worker retirement plan, squeezed by investment losses and shortchanged for years by the state, had just 30 percent of what it would need to pay the benefits due as employees retire in the years ahead. So the state's lawmakers decided to cut the benefits for newly hired workers, just as the Philadelphia-based Pew suggested.
Arnold, 40, a former hedge-fund manager and Enron Corp. commodities trader, has inserted the Houston-based Laura and John Arnold Foundation into political fights over how to deal with the rising cost of state and local government pensions. A Democrat who says he has raised money for President Barack Obama, Arnold sees such benefits as unsustainable.
"Many public pensions are poorly designed, allowing elected officials to underfund benefits and shift massive market risk onto state and local governments," Arnold wrote in response to e-mailed questions. "The problem is only getting worse. Governments have a history of delaying tough decisions until an emergency."
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