Kentucky Retirement Systems

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According to the Comprehensive Annual Financial Report (CAFR) - 2007 of the Kentucky Retirement Systems consists of three systems: the Kentucky Employee Retirement system (PERS); County Employee Retirement System (CERS) and the State Police Retirement System (SRPS). KERS was created in 1956 by the Kentucky General Assembly in order to supplement the benefits provided by Social Security. When the first actuarial valuation was completed June 30, 1957, there were 16,000 employees participating in KERS and assets of $2.8 million. SPRS and CERS were established in 1958. The first actuarial valuation of SPRS was conducted June 30, 1959. 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. On June 30, 1960, there were 68 counties and 2,617 employees participating in CERS, and SPRS included 415 uniformed state troopers.


As of June 30, 2007, there were more than 316,000 active, inactive and retired members in the combined systems and approximately $16.9 billion in assets. 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 as positions 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, a regular full-time position is defined as a position that requires the employee to average 80 hours of work per month over the actual days worked during the school year.

KRS received an increase in the employer contribution rate for the 2006-2007 and the 2007-2008 fiscal years. While this was the first increase in the KERS and SPRS employer rates since 2001, contributions remained far short of the actuarial recommended rates.


The retirement plans administered by KRS are qualified public defined benefit plans and were established under Section 401a of the Internal Revenue Code (IRC). Benefits are based on a formula, rather than on an account balance. The formula used to compute KRS benefits provides participating members with a guaranteed lifetime payment at retirement based on the number of years of service, your average salary and a multiplying factor.

Kentucky Retirement Systems benefits are funded through three sources: employee contributions deducted from an employee's compensation, employer contributions paid by each state and county agency participating in the retirement systems, and return on investments.

Kentucky Retirement Systems commenced self-funding of healthcare benefits for its Medicare eligible retirees on January 1, 2006. A self-funded plan is one in which Kentucky Retirement Systems assumes the financial risk for providing healthcare benefits to its retirees. The self-funded plan pays for claims out-of-pocket as they are presented instead of paying a pre-determined premium to an insurance carrier for a fully-insured plan. Kentucky Retirement Systems funds the risk directly from its assets. Kentucky Retirement Systems becomes directly responsible for administering benefits under the plan.

In 2006 KRS offered five new health plans to its Medicare eligible retirees. Three of those offerings were self-insured products and two were Anthem Medicare Advantage plans. Beginning in January 2007 the Anthem Medicare Advantage plans were no longer offered to retirees. This first year saw a 5% increase in generic drug utilization and an overall medical trend in single digits. KRS has supported the Center for Medicare and Medicaid Services’ (CMS) preventive screening initiatives for Medicare eligible retirees and participated in the Retiree Drug Subsidy (RDS) program also offered by CMS. The RDS program realized a $13.5 million reimbursement for KRS from CMS for providing pharmaceutical coverage to its retirees.

Kentucky Retirement Systems’ plan is defined by statute. Kentucky Retirement Systems selected Walgreen’s Health Initiatives and Fiserv Health (Wausau Benefits, Inc.) to administer the pharmaceutical and medical benefits for its retirees.


Non-hazardous employees who are eligible to participate in the retirement systems contribute 5% of creditable compensation. Employees eligible to participate in the retirement systems who are working in a hazardous duty position approved by the KRS Board of Trustees contribute 8% of total creditable compensation.

Note: Individual agencies must petition the KRS Board of Trustees to approve certain positions for hazardous duty coverage. The Board will determine if the position meets the definition of "hazardous" as provided by Kentucky Revised Statute 61.592.

The following employer rates effective July 1, 2006, were recommended and consequently adopted as a result of the actuarial valuation and actions of the 2006 Regular Session of the General Assembly:

Employer Rates for the 2006-2007 Fiscal Year

  • KERS (non-hazardous employers) 7.75%
  • KERS (hazardous employers) 22.00%
  • CERS (non-hazardous employers) 13.19%
  • CERS (hazardous employers) 28.21%
  • SPRS 25.50%

Note that: House Bill 380 passed during the 2006 Regular Session of the General Assembly reduced the employer contribution rate from the amount recommended by the Board and its' consulting actuary.


See Also

Kentucky Revised Statute 61.592