The ex-CIO of the $22 billion Kentucky Public Pensions Authority is suing his former employer, accusing the agency of allowing a real estate firm to filch money from a KPPA subsidiary, then retaliating against him for pointing it out. Steven Herbert contends in his suit that he was fired when he tried to bring the purported theft to light.
Herbert joined the retirement system in January 2021. He claims in his legal action that, had he known about the alleged theft, he would not have accepted the position.
The Kentucky pension system is known for longstanding low funding ratios within its various pension programs. All of these programs are considered to be in “critical status” due to funded levels lower than 65%. At the end of the fiscal year 2021, KERS Hazardous was the best funded among the state’s pensions, with a ratio of 60.4%. KERS Nonhazardous posted a miniscule ratio of 16.8%. CERS Nonhazardous’ funded ratio was 51.8%, while CERS Hazardous had a funded ratio of 46.7%.
When Herbert left the pension system in May 2022, he was replaced by his former deputy, Steve Willer, marking KPPA’s seventh investment head in 15 years. Herbert was fired in a May 31 termination letter from executive director David Eager, KPPA’s executive director, and the complaint states the termination was “without cause.”
The alleged fraud concerns Kentucky Retirement System’s Perimeter Park West, a real estate entity created by the pension agency to buy its Frankfort offices. Herbert initially...
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