Kentucky statue (KY ST 61.692) provides statutory protection and rights for retiree pension benefits as follows:
61.692 Benefits not to be reduced or impaired -- Exception. It is hereby declared that in consideration of the contributions by the members and in further consideration of benefits received by the state from the member's employment, KRS 61.510 to 61.705 shall, except as provided in KRS 6.696 effective September 16, 1993, constitute an inviolable contract of the Commonwealth, and the benefits provided therein shall, except as provided in KRS 6.696, not be subject to reduction or impairment by alteration, amendment, or repeal.
With the inviolable contract, no changes can be made in pension benefits for existing participants in the KRS or KTRS. Changes can only be made for future employees (pursuant to HB 1, 2008). The only exception to the rule applies to future annual COLA increases for KRS retirees.
HB 1 included a funding schedule that requires that funding increase annually until the annual required contributions (ARC) is 100% funded by 2024 -2025. Every year the full ARC is not funded, the ARC can be expected to grow. For KERS non-hazardous, the scheduled funding could produce and ARC of $1.2 billion by 2024/25 compared with about $180 million currently. This will require in excess of $60 million in additional new funding each year for the next 16 years.
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