County Employee Retirement System
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The County Employees Retirement System (CERS) was established July 1, 1958 by the General Assembly. CERS is a part of Kentucky Retirement Systems. Employees who work in a regular full time position for a participating agency must be enrolled in the retirement system at the beginning of their employment. A regular full-time position is defined by state statute as a position that average 100 hours of work per month over a fiscal or calendar year, excluding the classifications of temporary, seasonal, and interim.
For school board employees participating in the CERS non-hazardous plan, a regular fulltime position is defined as a position that requires the employee to averages 80 hours of work per month over the actual days worked during the school year.
No actuarial valuation of CERS was conducted until June 30, 1960 because the statutes did not authorize retirements from the system prior to July 1, 1960. When the first actuarial valuation was completed on June 30, 1960, there were 68 counties participating in CERS.
The cost of insurance for the retired member may be partially or fully paid by KRS depending upon the member’s years of service, the insurance carrier selected and the level of coverage chosen.
Monthly retirement allowances are increased July 1 each year by the percentage increase in the average consumer price index (CPI-U) for all urban consumers for the most recent calendar year not to exceed 5%. The State Legislature may reduce, suspend or eliminate Cost of Living Adjustments (COLAs) in the future.
CERS Highlights: Non Hazardous
Membership
These numbers are as of June 30, 2007.
Active Members 84,920
Inactive Members 53,901
Retired Members and Beneficiaries 35,564
Active Membership
Average Age 45.9
Average Years of Service 8.1
Average Annual Salary $24,457
Retired Membership
Average Age 68.0
Average Annual Benefit $10,212
Number Added 3,244
Number Removed 782
Retirement Eligibility
| Age | Years of Service | Allowance Reduction |
| 65 | 4 | None |
| Any | 27 | None |
| 55 | 5 | 5% per year for five years before age 64 or 27 years of service. 4% for each year thereafter |
| Any | 25 | 5% per year for five years before 65 or 27 years of service |
Net Plan Assets
Pension Fund: $5,812,936,000
Insurance Fund: $1,084,043,000
Total: $6,896,979,000
Contributions
Employees: 5%
Employers: Pension: 7.76%
Insurance: 12.75%
Rate Effective July 1, 2008
CERS Highlights: Hazardous
Membership
Active Members 10,063
Inactive Members 2,224
Retired Members and Beneficiaries 5,159
Active Membership
Average Age 38.6
Average Years of Service 8.1
Average Annual Salary $45,613
Retired Membership
Average Age 58.6
Average Annual Benefit $24,259
Number Added 500
Number Removed 53
Retirement Eligibility
| Age | Years of Service | Allowance Reduction |
| 55 | 5 | None |
| Any | 20 | None |
| 50 | 15 | 5.5% per year for five years before age 55 or 20 years of service |
Net Plan Assets
Pension Fund: $1,754,935,000
Insurance Fund: $ 570,156,000
Total: $2,325,091,000
Contributions
Employees: 8 %
Employers: Pension: 15.04 %
Insurance: 27.62 %
Total: 42.66 %
Funding Schedule
The Plan's funding ratio is the ratio of a plan's assets to liabilities. Funding ratios of 87% are considered well funded. The average funding ratio nationally for public pension plans stands at 85%. As of June 30, 2009 CERS pension plan was 70.6% funded. This means that for every dollar in liabilities that the plan has incurred, there are only $0.70 worth of assets to cover liabilities.
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From the charts above, the CERS pension funds was 80%+ funded up to 2007, and since then unfunded liabilities have continued to rise significantly reaching up to 116.4% of payroll. The fall in funding ratios for 2008 and 2009 is attributed to the 2008 financial crisis and poor investment performance. Insurance funds (figure 2) funding ratios have remained significantly low over the years as unfunded liabilities as a percentage of payroll continue to rise.
Contribution Schedules
The Charts below show contribution rates for CERS for both Non-Hazardous and Hazardous Plans since 2001. This contribution rate is the ratio of the actual funds contributed to the system to the amount of the annual required contribution (ARC). Employee contribution are deducted from payroll, it is therefore logical to conclude that where contributions have not covered 100% of ARC, it is the employers who have defaulted on their contributions. Contribution rates for both plans have been impressive except in 2008 and 2009 where they fell short.
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See Also
- Kentucky Retirement Systems
- State Police Retirement System
- Kentucky Teacher’s Retirement Systems
- Defined Benefit v. Defined Contribution
