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AN ACT relating to actuarial investigations. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 21.440 is amended to read as follows: 3
(1) (a) The investment committee for the judicial retirement fund shall at least once 4
in every two (2) year period procure an actuarial valuation of the judicial 5
retirement fund. The valuation shall, at a minimum, include: 6
1. A description of the actuarial assumptions used in the actuarial 7
valuation, which shall be reasonably related to the experience of the 8
fund and represent the actuary's best estimate of anticipated experience; 9
2. A description of any funding methods utilized or required by state law in 10
the development of the actuarial valuation results; 11
3. A description of any changes in actuarial assumptions and methods from 12
the previous year's actuarial valuation; 13
4. The actuarially recommended contribution rate for employers for the 14
upcoming budget periods; 15
5. A thirty (30) year projection of the funding levels, unfunded liabilities, 16
and actuarially recommended contribution rates for employers based 17
upon the actuarial assumptions, funding methods, and experience of the 18
system as of the valuation date; [and] 19
6. A sensitivity analysis that evaluates the impact of changes in plan 20
assumptions, including but not limited to the investment return 21
assumption, payroll growth assumption, and medical inflation 22
assumptions, on employer contribution rates, funding levels, and 23
unfunded liabilities; and 24
7. An actuarial investigation to be made of all of the economic 25
experience under the plans, including but not limited to the inflation 26
rate and investment return assumptions, relative to the economic 27 UNOFFICIAL COPY 22 RS BR 341
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assumptions and funding methods previously adopted by the board. 1
The actuarial investigation shall include at a minimum a summary of 2
the changes in actuarial assumptions and funding methods 3
recommended in the investigation and the projected impact of the 4
recommended changes on funding levels, unfunded liabilities, and 5
actuarially recommended contribution rates for employers over a 6
thirty (30) year period. 7
(b) At least once in each five (5) year period, the board of trustees of the Judicial 8
Form Retirement System shall cause an actuarial investigation to be made of 9
all the relevant demographic experience under the retirement plan, including 10
but not limited to mortality tables, withdrawal rates, and retirement rate 11
assumptions, relative to the demographic actuarial assumptions[ and funding 12
methods] previously adopted by the board. The actuarial investigation shall 13
include at a minimum a summary of the changes in actuarial assumptions[ and 14
funding methods] recommended in the investigation and the projected impact 15
of the recommended changes on funding levels, unfunded liabilities, and 16
actuarially recommended contribution rates for employers over a thirty (30) 17
year period. 18
(c) Pursuant to the investigation, the board shall from time to time revise the 19
actuarial tables previously adopted by the board and shall thereupon revise the 20
bases of the rates of contributions required under KRS 21.345 to 21.580. 21
(d) For any change in actuarial assumptions, funding methods, retiree health 22
insurance premiums and subsidies, or any other decisions made by the board 23
that impact system liabilities and actuarially recommended contribution rates 24
for employers and that are not made in conjunction with the actuarial 25
investigations[investigation] required by paragraphs (a)7. and[paragraph] (b) 26
of this subsection, an actuarial analysis shall be completed showing the 27 UNOFFICIAL COPY 22 RS BR 341
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projected impact of the changes on funding levels, unfunded liabilities, and 1
actuarially recommended contribution rates for employers over a thirty (30) 2
year period. 3
(e) A copy of the valuation, each[the five (5) year] actuarial investigation, and 4
any analysis required by this subsection shall be forwarded electronically to 5
the Legislative Research Commission within ten (10) days of receipt by the 6
committee, and the Legislative Research Commission shall distribute the 7
information received to the committee staff and co-chairs of any committee 8
that has jurisdiction over the Judicial Form Retirement System. The actuarial 9
valuation required by paragraph (a) of this subsection shall be submitted no 10
later than November 15 following the close of the fiscal year. 11
(f) All the investigations and valuations shall be certified to the board by an 12
actuary who shall be a fellow of the Conference of Consulting Actuaries or a 13
member of the American Academy of Actuaries. 14
(2) (a) The board of trustees of the Judicial Form Retirement System shall annually 15
procure an audit of the system and each of the funds therein. The audit shall 16
be conducted in accordance with generally accepted auditing standards. 17
Except as provided by paragraph (b) of this subsection, the board may select 18
an independent certified public accountant or the Auditor of Public Accounts 19
to perform the audit. If the audit is performed by an independent certified 20
public accountant, the Auditor of Public Accounts shall not be required to 21
perform an audit pursuant to KRS 43.050(2)(a), but may perform an audit at 22
his discretion. The board shall make copies of the audit required by this 23
section available for examination by any member or beneficiary in the office 24
of the manager of the system and in such other places as may be necessary to 25
make the audit available to all members and beneficiaries. A copy of the audit 26
shall be sent to the Legislative Research Commission within ten (10) days of 27 UNOFFICIAL COPY 22 RS BR 341
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receipt by the committee. 1
(b) Once every five (5) years, the Auditor of Public Accounts shall perform the 2
audit described by this subsection, and the system shall reimburse the Auditor 3
of Public Accounts for all costs of the audit. The Auditor of Public Accounts 4
shall determine which fiscal year during the five (5) year period the audit 5
prescribed by this paragraph will be completed. 6
Section 2. KRS 61.670 is amended to read as follows: 7
(1) (a) As soon as practicable after its organization, the board shall adopt the 8
actuarial tables necessary for the administration of the system and for the 9
annual determination of actuarial assets and liabilities of the system. 10
(b) The board shall cause an actuarial valuation to be made annually. The 11
valuation shall at a minimum include: 12
1. A description of the actuarial assumptions used in the actuarial 13
valuation, which shall be reasonably related to the experience of the 14
system and represent the actuary's best estimate of anticipated 15
experience; 16
2. A description of any funding methods utilized or required by state law in 17
the development of the actuarial valuation results; 18
3. A description of any changes in actuarial assumptions and methods from 19
the previous year's actuarial valuation; 20
4. The actuarially recommended contribution rate for employers for the 21
upcoming budget periods; 22
5. A thirty (30) year projection of the funding levels, unfunded liabilities, 23
and actuarially recommended contribution rates for employers based 24
upon the actuarial assumptions, funding methods, and experience of the 25
system as of the valuation date; and 26
6. A sensitivity analysis that evaluates the impact of changes in system 27 UNOFFICIAL COPY 22 RS BR 341
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assumptions, including but not limited to the investment return 1
assumption, payroll growth assumption, and medical inflation rates, on 2
employer contribution rates, funding levels, and unfunded liabilities. 3
(c) 1. At least once in each two (2) year period, the board shall cause an 4
actuarial investigation to be made of all of the economic experience 5
under the retirement system, including but not limited to the inflation 6
rate, investment return, and payroll growth assumptions, relative to 7
the economic assumptions and funding methods previously adopted by 8
the board. 9
2. At least once in each five (5) year period, the board shall cause an 10
actuarial investigation to be made of all the demographic experience 11
under the retirement system, including but not limited to mortality 12
tables, withdrawal rates, and retirement rate assumptions, relative to 13
the demographic actuarial assumptions[ and funding methods] 14
previously adopted by the board. 15
3. Each[The] actuarial investigation shall include at a minimum a 16
summary of the changes in actuarial assumptions and funding methods 17
recommended in the investigation and the projected impact of the 18
recommended changes on funding levels, unfunded liabilities, and 19
actuarially recommended contribution rates for employers over a thirty 20
(30) year period. 21
(d) Pursuant to the actuarial investigations[investigation] the board shall, from 22
time to time, revise the actuarial tables previously adopted by the board and 23
shall thereupon revise the bases of the rates of contributions required under 24
KRS 61.510 to 61.692 and KRS 16.505 to 16.652. 25
(e) For any change in actuarial assumptions, funding methods, retiree health 26
insurance premiums and subsidies, or any other decisions made by the board 27 UNOFFICIAL COPY 22 RS BR 341
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that impact system liabilities and actuarially recommended contribution rates 1
for employers and that are not made in conjunction with the actuarial 2
investigations[investigation] required by paragraph (c) of this subsection, an 3
actuarial analysis shall be completed showing the projected impact of the 4
changes on funding levels, unfunded liabilities, and actuarially recommended 5
contribution rates for employers over a thirty (30) year period. 6
(f) All actuarial investigations, analyses, and valuations shall be certified to the 7
board by an actuary who shall be a fellow of the Conference of Consulting 8
Actuaries or a member of the American Academy of Actuaries. 9
(2) A copy of each [five (5) year ]actuarial investigation, actuarial analysis, and annual 10
valuation required by subsection (1) of this section shall be forwarded electronically 11
to the Legislative Research Commission no later than ten (10) days after receipt by 12
the board, and the Legislative Research Commission shall distribute the information 13
received to the committee staff and co-chairs of any committee that has jurisdiction 14
over the Kentucky Retirement Systems. The actuarial valuation required by 15
subsection (1)(b) of this section shall be submitted no later than November 15 16
following the close of the fiscal year. 17
(3) The Legislative Research Commission may employ an actuary with the same 18
qualifications as the actuary employed by the board, and the board shall, free of 19
charge, provide the actuary employed by the Commission with the same data 20
provided to its own actuary, and any supplementary data he or she may require. The 21
actuary employed by the Commission shall review the assumptions, determinations 22
and recommendations of the board actuary, and legislative proposals related to the 23
retirement systems, and report his or her findings to the Commission and to the 24
board. Except as provided by KRS 7A.240(5), the board shall pay fifty percent 25
(50%) of the cost of the Commission's actuary, and the Commission shall pay the 26
other fifty percent (50%). 27 UNOFFICIAL COPY 22 RS BR 341
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Section 3. KRS 78.784 is amended to read as follows: 1
(1) (a) As soon as practicable after its organization, the County Employees 2
Retirement System board shall adopt the actuarial tables, assumptions, and 3
methods necessary for the administration of the system and for the annual 4
determination of actuarial assets, actuarial liabilities, and recommended 5
employer contribution rates of the system as provided by KRS 61.702 and 6
78.635, for the pension and retiree health funds. 7
(b) The board shall cause an actuarial valuation to be made annually. The 8
valuation shall at a minimum include: 9
1. A description of the actuarial assumptions used in the actuarial 10
valuation, which shall be reasonably related to the experience of the 11
system and represent the actuary's best estimate of anticipated 12
experience; 13
2. A description of any funding methods utilized or required by state law in 14
the development of the actuarial valuation results; 15
3. A description of any changes in actuarial assumptions and methods from 16
the previous year's actuarial valuation; 17
4. The actuarially recommended contribution rate for employers for the 18
upcoming budget periods; 19
5. A thirty (30)[twenty (20)] year projection of the funding levels, 20
unfunded liabilities, and actuarially recommended contribution rates for 21
employers based upon the actuarial assumptions, funding methods, and 22
experience of the system as of the valuation date; and 23
6. A sensitivity analysis that evaluates the impact of changes in system 24
assumptions, including but not limited to the investment return 25
assumption, payroll growth assumption, and medical inflation rates, on 26
employer contribution rates, funding levels, and unfunded liabilities. 27 UNOFFICIAL COPY 22 RS BR 341
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(c) 1. At least once in each two (2) year period, the board shall cause an 1
actuarial investigation to be made of all of the economic experience 2
under the retirement system, including but not limited to the inflation 3
rate, investment return, and payroll growth assumptions, relative to 4
the economic assumptions and funding methods previously adopted by 5
the board. 6
2. At least once in each five (5) year period, the board shall cause an 7
actuarial investigation to be made of all the demographic experience 8
under the system, including but not limited to mortality tables, 9
withdrawal rates, and retirement rate assumptions, relative to the 10
demographic actuarial assumptions[ and funding methods] previously 11
adopted by the board. 12
3. Each[The] actuarial investigation shall include at a minimum a 13
summary of the changes in actuarial assumptions and funding methods 14
recommended in the investigation and the projected impact of the 15
recommended changes on funding levels, unfunded liabilities, and 16
actuarially recommended contribution rates for employers over a thirty 17
(30)[twenty (20)] year period. 18
(d) Pursuant to the actuarial investigations[investigation] the board shall, from 19
time to time, revise the actuarial tables previously adopted by the board and 20
shall thereupon revise the bases of the rates of employer contributions 21
required under KRS 78.510 to 78.852. 22
(e) For any change in actuarial assumptions, funding methods, retiree health 23
insurance premiums and subsidies, or any other decisions made by the board 24
that impact system liabilities and actuarially recommended contribution rates 25
for employers and that are not made in conjunction with the actuarial 26
investigations[investigation] required by paragraph (c) of this subsection, an 27 UNOFFICIAL COPY 22 RS BR 341
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actuarial analysis shall be completed showing the projected impact of the 1
changes on funding levels, unfunded liabilities, and actuarially recommended 2
contribution rates for employers over a thirty (30)[twenty (20)] year period. 3
(f) All actuarial investigations, analyses, and valuations shall be certified to the 4
board by an actuary who shall be a fellow of the Conference of Consulting 5
Actuaries or a member of the American Academy of Actuaries. 6
(2) A copy of each [five (5) year ]actuarial investigation, actuarial analysis, and annual 7
valuation required by subsection (1) of this section shall be forwarded electronically 8
to the Legislative Research Commission no later than ten (10) days after receipt by 9
the board, and the Legislative Research Commission shall distribute the information 10
received to the committee staff and co-chairs of any committee that has jurisdiction 11
over the County Employees Retirement System. The actuarial valuation required by 12
subsection (1)(b) of this section shall be submitted no later than November 15 13
following the close of the fiscal year. In addition, the County Employees Retirement 14
System shall submit a summary of the actuarial valuation to the Public Pension 15
Oversight Board by December 31 following completion of the actuarial valuation 16
which shall include the employer contribution rates to be payable by participating 17
employers in the upcoming fiscal year, key actuarial statistics and trends, any 18
changes in assumptions or methods since the last valuation, and other pertinent 19
actuarial data and information. 20
Section 4. KRS 161.400 (Effective January 1, 2022) is amended to read as 21
follows: 22
(1) (a) The board of trustees shall designate as actuary a competent person who shall 23
be a fellow of the Conference of Consulting Actuaries or a member of the 24
American Academy of Actuaries. He or she shall be the technical adviser of 25
the board on matters regarding the operation of the funds of the system and 26
shall perform such other duties as are required in connection therewith. 27 UNOFFICIAL COPY 22 RS BR 341
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(b) 1. At least once in each two (2) year period, the board shall cause an 1
actuarial investigation to be made of all of the economic experience 2
under the retirement system, including but not limited to the inflation 3
rate, investment return, and payroll growth assumptions, relative to 4
the economic assumptions and funding methods previously adopted by 5
the board. 6
2. At least once in each five (5) year period, the actuary shall make an 7
actuarial investigation into all of the demographic actuarial 8
assumptions[ and funding methods] used, including but not limited to 9
mortality tables, withdrawal rates, and retirement rate assumptions, 10
[investment rate of return, and service and compensation of the members 11
and beneficiaries of the retirement system,] relative to the demographic 12
actuarial assumptions [and funding methods ]previously adopted by the 13
board. 14
3. Each[The] actuarial investigation shall include at a minimum a 15
summary of the changes in actuarial assumptions and funding methods 16
recommended in the investigation and the projected impact of the 17
recommended changes on funding levels, unfunded liabilities, and 18
actuarially recommended contribution rates for employers over a thirty 19
(30) year period. 20
(c) At least annually the actuary shall make an actuarial valuation of the 21
retirement system. The valuation shall include: 22
1. A description of the actuarial assumptions used, and the assumptions 23
shall be reasonably related to the experience of the system and represent 24
the actuary's best estimate of anticipated experience; 25
2. A description of any funding methods utilized or required by state law in 26
the development of the actuarial valuation results; 27 UNOFFICIAL COPY 22 RS BR 341
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3. A description of any changes in actuarial assumptions and methods from 1
the previous year's actuarial valuation; 2
4. The actuarially recommended contribution rate for employers for the 3
upcoming budget periods; 4
5. A thirty (30) year projection of the funding levels, unfunded liabilities, 5
and actuarially recommended contribution rates for employers based 6
upon the actuarial assumptions, funding methods, and experience of the 7
system as of the valuation date; and 8
6. A sensitivity analysis that evaluates the impact of changes in system 9
assumptions, including but not limited to the investment return 10
assumption, payroll growth assumption, and medical inflation rates, on 11
employer contribution rates, funding levels, and unfunded liabilities. 12
(d) On the basis of the results of the valuations, the board of trustees shall make 13
necessary changes in the retirement system within the provisions of law and 14
shall establish the contributions payable by employers and the state specified 15
in KRS 161.550, including changes prescribed by KRS 161.633, 161.634, 16
161.635, and 161.636, as applicable. 17
(e) For any change in actuarial assumptions, funding methods, retiree health 18
insurance premiums and subsidies, or any other decisions made by the board 19
that impact system liabilities and actuarially recommended contribution rates 20
for employers and that are not made in conjunction with the actuarial 21
investigations[investigation] required by paragraph (b) of this subsection, an 22
actuarial analysis shall be completed showing the projected impact of the 23
changes on funding levels, unfunded liabilities, and actuarially recommended 24
contribution rates for employers over a thirty (30) year period. 25
(2) Actuarial factors and actuarial cost factor tables in use by the retirement system for 26
all purposes shall be determined by the actuary of the retirement system and 27 UNOFFICIAL COPY 22 RS BR 341
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approved by the board of trustees by resolution and implemented without the 1
necessity of an administrative regulation. 2
(3) A copy of each [five (5) year ]actuarial investigation, actuarial analysis, and 3
valuation required by subsection (1) of this section shall be forwarded electronically 4
to the Legislative Research Commission no later than ten (10) days after receipt by 5
the board, and the Legislative Research Commission shall distribute the information 6
received to the committee staff and co-chairs of any committee that has jurisdiction 7
over the Teachers' Retirement System. The actuarial valuation required by 8
subsection (1)(c) of this section shall be submitted no later than November 15 9
following the close of the fiscal year. 10
Section 5. The first actuarial investigations of economic assumptions and 11
funding methods for the Legislators' Retirement Plan, Judicial Retirement Plan, Kentucky 12
Retirement Systems, the County Employees Retirement System, and the Teachers' 13
Retirement System, as provided by subsection (1)(a).7. of Section 1 of this Act, 14
subsection (1)(c)1. of Section 2 of this Act, subsection (1)(c)1. of Section 3 of this Act, 15
and subsection (1)(b)1. of Section 4 of this Act, respectively, shall take place prior to the 16
completion of the 2023 actuarial valuations for each system so that any changes in 17
economic assumptions shall be reflected in the 2023 actuarial valuations. 18