Kentucky Governor Bevin Seizes Control of Pension Board Through Executive Order

Kentucky Governor Matt Bevin, a former hedge fund partner at Waycross Partners, issues an executive order abolishing the existing Kentucky Retirement Systems board of trustees and creating a new board that gives him authority to appoint 10 of 17 board members. The restructuring comes two months after Bevin removed KRS chairman Thomas K. Elliott through a separate executive order, with state troopers threatening Elliott with arrest when he attempted to participate in a board meeting.

The board takeover occurs as Kentucky faces the worst-funded pension system in America, with only 37.4 percent funding and the Kentucky Employees Retirement System for non-hazardous employees at just 17 percent funded. Former KRS trustee Christopher Tobe, author of “Kentucky Fried Pensions,” describes KRS as “a contender both for the title of the most corrupt and the most incompetent public pension fund in the U.S.” The pension crisis stems from years of chronic underfunding by state lawmakers combined with over $100 million in annual investment fees paid to hedge funds and private equity firms, with the fund maintaining 34 percent allocation to alternative investments versus the 22 percent industry average.

Democratic Attorney General Andy Beshear immediately challenges the executive orders as “unprecedented,” arguing that “Lawmakers mandated that these boards be independent.” The restructuring exemplifies regulatory capture through direct political seizure: a governor with hedge fund industry background forcibly assumes control of a pension board overseeing billions in investments, replacing independent oversight with appointees loyal to his administration. Though the Kentucky Legislature later ratifies most of Bevin’s order in early 2017, the forced takeover demonstrates how institutional safeguards can be dismantled through raw executive power when pension assets become targets for financial extraction. The crisis deepens as Bevin signs an executive order requiring transparency measures that are then routinely ignored, creating the appearance of reform while maintaining opacity benefiting Wall Street fee extraction.