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 [