A Citizen's Guide to Kentucky's Pension Crisis | Page 12
Recent system changes
Kentucky has made changes to its public pension systems in recent years. The
following summarizes these changes by year of enactment by the Kentucky
General Assembly:
2003
Limits on health insurance benefits for retirees in KRS
PENSION TERMS
DEFINED
CASH BALANCE OR HYBRID PLAN
2008
For new state employees: increase in employee contribution;
impose Rule of 87 (age at retirement plus years of service must
A retirement plan that combines the fea-
equal at least 87); impose minimum retirement age of 57; use high
tures of a plan that sets a certain benefit
five- instead of high three-year salary to calculate benefits; accrued
level and one that sets a certain contribu-
overtime cannot count toward years of service; 15 years of service
tion level. Employees receive an individual
retirement account (IRA) that both the
required to be eligible for health insurance. For new teachers: in-
employer and employee pay into. The em-
crease employee contribution; early retirement changed from age
ployer guarantees a minimum return. When
55 with five years of service to age 55 with 10 years of service; 15
actual returns exceed the guaranteed rate,
the extra money is shared between the em-
years of service required to be eligible for health insurance
ployer and employee. Retirement benefits
are based on the amount of money in an
employee’s IRA when he or she retires.
PUBLIC PENSION OVERSIGHT
2010
“Shared Responsibility” plan implemented for providing funding for health insurance for retired teachers by requiring active
BOARD
teachers to contribute an additional 3.75% of salary by 2015 to
Also known as PPOB, this state board
pay for health insurance
assists the General Assembly with its
review, analysis and oversight of the
administration, benefits, investments, fund-
2013
ing, laws, administrative regulations and
Major reform of Kentucky Retirement Systems (which includes
legislation relating to the public retirement
state and local government employees) included: payment of
systems in Kentucky. The board consists of
13 members, including six members of the
full actuarially required contribution by legislature; suspension
General
of cost of living adjustments for current retirees unless prefund-
Assembly, the State Budget Director, the
ed; limits placed on the “spiking” of pensions (where raises are
Auditor of Public Accounts, the Attorney
General and four financial experts (two
given to employees immediately before retiring to boost retire-
appointed by the Governor and two by the
ment benefits); a HYBRID DEFINED CONTRIBUTION PLAN for new
General Assembly).
employees hired after January 1, 2014, with a 401K-style acco [