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AN ACT relating to retirement. 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 HB 76/EN
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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 HB 76/EN
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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 HB 76/EN
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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 HB 76/EN
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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 HB 76/EN
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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 HB 76/EN
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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 HB 76/EN
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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 HB 76/EN
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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 is amended to read as follows: 21
(1) (a) The board of trustees shall designate as actuary a competent person who shall 22
be a fellow of the Conference of Consulting Actuaries or a member of the 23
American Academy of Actuaries. He or she shall be the technical adviser of 24
the board on matters regarding the operation of the funds of the system and 25
shall perform such other duties as are required in connection therewith. 26
(b) 1. At least once in each two (2) year period, the board shall cause an 27 UNOFFICIAL COPY 22 RS HB 76/EN
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actuarial investigation to be made of all of the economic experience 1
under the retirement system, including but not limited to the inflation 2
rate, investment return, and payroll growth assumptions, relative to 3
the economic assumptions and funding methods previously adopted by 4
the board. 5
2. At least once in each five (5) year period, the actuary shall make an 6
actuarial investigation into all of the demographic actuarial 7
assumptions[ and funding methods] used, including but not limited to 8
mortality tables, withdrawal rates, and retirement rate assumptions, 9
[investment rate of return, and service and compensation of the members 10
and beneficiaries of the retirement system,] relative to the demographic 11
actuarial assumptions [and funding methods ]previously adopted by the 12
board. 13
3. Each[The] actuarial investigation shall include at a minimum a 14
summary of the changes in actuarial assumptions and funding methods 15
recommended in the investigation and the projected impact of the 16
recommended changes on funding levels, unfunded liabilities, and 17
actuarially recommended contribution rates for employers over a thirty 18
(30) year period. 19
(c) At least annually the actuary shall make an actuarial valuation of the 20
retirement system. The valuation shall include: 21
1. A description of the actuarial assumptions used, and the assumptions 22
shall be reasonably related to the experience of the system and represent 23
the actuary's best estimate of anticipated experience; 24
2. A description of any funding methods utilized or required by state law in 25
the development of the actuarial valuation results; 26
3. A description of any changes in actuarial assumptions and methods from 27 UNOFFICIAL COPY 22 RS HB 76/EN
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the previous year's actuarial valuation; 1
4. The actuarially recommended contribution rate for employers for the 2
upcoming budget periods; 3
5. A thirty (30) year projection of the funding levels, unfunded liabilities, 4
and actuarially recommended contribution rates for employers based 5
upon the actuarial assumptions, funding methods, and experience of the 6
system as of the valuation date; and 7
6. A sensitivity analysis that evaluates the impact of changes in system 8
assumptions, including but not limited to the investment return 9
assumption, payroll growth assumption, and medical inflation rates, on 10
employer contribution rates, funding levels, and unfunded liabilities. 11
(d) On the basis of the results of the valuations, the board of trustees shall make 12
necessary changes in the retirement system within the provisions of law and 13
shall establish the contributions payable by employers and the state specified 14
in KRS 161.550, including changes prescribed by KRS 161.633, 161.634, 15
161.635, and 161.636, as applicable. 16
(e) For any change in actuarial assumptions, funding methods, retiree health 17
insurance premiums and subsidies, or any other decisions made by the board 18
that impact system liabilities and actuarially recommended contribution rates 19
for employers and that are not made in conjunction with the actuarial 20
investigations[investigation] required by paragraph (b) of this subsection, an 21
actuarial analysis shall be completed showing the projected impact of the 22
changes on funding levels, unfunded liabilities, and actuarially recommended 23
contribution rates for employers over a thirty (30) year period. 24
(2) Actuarial factors and actuarial cost factor tables in use by the retirement system for 25
all purposes shall be determined by the actuary of the retirement system and 26
approved by the board of trustees by resolution and implemented without the 27 UNOFFICIAL COPY 22 RS HB 76/EN
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necessity of an administrative regulation. 1
(3) A copy of each [five (5) year ]actuarial investigation, actuarial analysis, and 2
valuation required by subsection (1) of this section shall be forwarded electronically 3
to the Legislative Research Commission no later than ten (10) days after receipt by 4
the board, and the Legislative Research Commission shall distribute the information 5
received to the committee staff and co-chairs of any committee that has jurisdiction 6
over the Teachers' Retirement System. The actuarial valuation required by 7
subsection (1)(c) of this section shall be submitted no later than November 15 8
following the close of the fiscal year. 9
Section 5. KRS 61.552 is amended to read as follows: 10
(1) Called to Active Duty Military Service. An employee of an employer participating 11
in the system who is called to active military duty in the Armed Forces of the 12
United States shall be credited in accordance with 38 U.S.C. sec. 4318 with service 13
credit, creditable compensation, and in the case of employees participating in the 14
hybrid cash balance plan, employee contributions, employer credits, and interest 15
credits, for a period of active military duty of up to six (6) years, provided: 16
(a) The employee was called to active military duty in the Armed Forces of the 17
United States: 18
1. After he or she began participating in the system and provided the 19
employee was on leave of absence from the employer and did not 20
withdraw his or her accumulated account balance; or 21
2. Prior to the date he or she began participating in the system and 22
terminated employment with his or her employer; 23
(b) The employee entered active military service within three (3) months of his or 24
her last day of paid employment; 25
(c) His or her discharge military service was terminated in a manner other than as 26
described in 38 U.S.C. sec. 4304; and 27 UNOFFICIAL COPY 22 RS HB 76/EN
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(d) He or she returns to work with an employer participating in the system within 1
two (2) years after completion of the period of active military duty, or upon 2
the subsequent termination of any total disability which existed at the 3
expiration of the two (2) years after discharge. 4
For periods of active military duty that meet the requirements of this subsection, the 5
employer shall pay the employer contributions payable under KRS 61.565, 61.702, 6
78.5536, and 78.635. 7
(2) (a) Omitted Service. Any person who is entitled to service credit for employment 8
which was not reported by the employer in accordance with KRS 16.543, 9
61.543, or 78.615 may obtain credit for the service subject to the provisions of 10
this subsection. 11
(b) Provided the person pays for the omitted service with within six (6) months of 12
notification by the system, the cost of the service shall be equal to the 13
employee contributions that would have been paid if the person had been 14
correctly reported in accordance with KRS 16.543, 61.543, or 78.615. 15
(c) Any employee participating in one (1) of the state-administered retirement 16
systems entitled to service credit under paragraph (a) of this subsection who 17
has not repaid the employee contributions due within six (6) months of 18
notification by the system may purchase the credit after the six (6) months by 19
paying to the system the employee contributions plus interest at the actuarially 20
assumed rate from the date of initial notification under paragraph (b) of this 21
subsection. 22
(d) Omitted service purchased under this subsection shall: 23
1. Be considered service credited under KRS 16.543(1), 61.543(1), or 24
78.615(1) for purposes of determining eligibility for retirement benefits 25
under KRS 78.510 to 78.852; and 26
2. Not be credited to the member's account until the employer contributions 27 UNOFFICIAL COPY 22 RS HB 76/EN
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due and any interest or penalties on the delinquent employer 1
contributions for the period of omitted service are received by the 2
system. 3
(e) Employees who begin participating on or after January 1, 2014, in the hybrid 4
cash balance plan provided by KRS 16.583 or 61.597 or 78.5512 or 78.5516 5
shall, upon payment of the employee and employer contributions due under 6
this subsection, have their accumulated account balance increased by the 7
employee contributions, employer pay credits, and interest credits that would 8
have been credited to their member's account if the contributions had been 9
paid on time. 10
(f) Contributions payable by the employer under this subsection for omitted 11
service shall be considered delinquent from the date the employee should have 12
been reported and received service credit in accordance with KRS 16.543, 13
61.543, and 78.615. 14
(3) (a) Recontribution of a Refund. Any employee participating in one (1) of the 15
state-administered retirement systems who has been refunded his or her 16
accumulated account balance under the provisions of KRS 61.625, thereby 17
losing service credit in the system, may regain the credit by paying to the 18
system the amount or amounts refunded by the system with interest at a rate 19
determined by the board. Service purchased under this subsection on or after 20
January 1, 2014, shall not be used to determine the member's participation 21
date in the systems. 22
(b) Recontribution of a refund purchased under this subsection shall not be used 23
in determining a retirement allowance until the member has accrued at least 24
six (6) months of service credit in a state-administered retirement system, 25
excluding the service purchased under this subsection. If the member does not 26
accrue at least six (6) months of service credit in a state-administered 27 UNOFFICIAL COPY 22 RS HB 76/EN
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retirement system, excluding service purchased under this subsection, then the 1
payment plus interest as provided in KRS 16.560, 61.575, or 78.640 shall be 2
refunded upon retirement, death, or written request following termination of 3
employment. The service requirement shall be waived if the member dies or 4
becomes disabled as provided for by KRS 16.582, 61.600, 61.621, 78.5522, or 5
78.5524. 6
(4) (a) Summer Months. Any employee participating in one (1) of the state-7
administered retirement systems who is or has been employed by a school 8
board or community action agency participating in the County Employees 9
Retirement System or a state-operated school under KRS Chapter 167 or an 10
institution of higher learning participating in the Kentucky Employees 11
Retirement System, who receives service credit for less than twelve (12) 12
months each year, may purchase the additional months of service credit 13
needed to total one (1) year of service credit, except the amount purchased for 14
any specific year shall not exceed three (3) months. 15
(b) The cost of the summer months service credit shall be determined by the 16
formula established by subsection (10) of this section and may be purchased 17
by the employee, or the employer on behalf of the employee, or the cost may 18
be paid by both the employer and employee in which case the employer and 19
employee shall each pay fifty percent (50%) of the cost. Service credit shall 20
not be credited to the member's account until both the employer's and 21
employee's payment are received by the system. 22
(c) If the employee has purchased service credit under this subsection based on 23
months reported by the employer for the fiscal year, and an audit of the 24
employee's account reduces the number of months of service credit for which 25
the employee is eligible to no fewer than nine (9) months, the employee shall 26
retain credit for the months purchased unless the employee is ineligible for 27 UNOFFICIAL COPY 22 RS HB 76/EN
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any service in the fiscal year. The employee shall be eligible to purchase the 1
additional months under this subsection to total one (1) year. 2
(d) This subsection shall not apply to members who began participating in the 3
County Employees Retirement System on or after January 1, 2014. 4
(5) Vested Service Purchases. Any employee who began participating in the County 5
Employees Retirement System, the Kentucky Employees Retirement System, or the 6
State Police Retirement System prior to January 1, 2014, who is vested may 7
purchase service credit for: 8
(a) Past service. "Past service" means periods of employment: 9
1. Between July 1, 1956, in the case of the Kentucky Employees 10
Retirement System, or July 1, 1958, in the case of the County 11
Employees Retirement System, and the effective date of participation by 12
the employer; 13
2. Where the employee did not participate in the system due to the 14
employee not electing to participate as provided in KRS 61.525(2) or 15
78.540(1); and 16
3. With a public agency that did not participate in the Kentucky Employees 17
Retirement System but would have been eligible to participate under 18
KRS 61.520 or a political subdivision that did not participate in the 19
County Employees Retirement System but would have been eligible to 20
participate under KRS 78.530, provided the public agency or political 21
subdivision has merged with or been taken over by a participating 22
employer; 23
(b) State university service, provided the university does not participate in a state-24
administered retirement system and the university service being purchased 25
was in a nonteaching position that did not participate in a defined benefit 26
retirement program; 27 UNOFFICIAL COPY 22 RS HB 76/EN
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(c) 1. Up to ten (10) years of out-of-state service. "Out-of-state" means service 1
credited to a state or local government-administered public defined 2
benefit plan in another state that is not a defined benefit plan for 3
teachers. 4
2. Up to ten (10) years of out-of-state hazardous service. "Out-of-state 5
hazardous service" means service in a regular full-time position that was 6
credited to a defined benefit retirement plan administered by a state or 7
local government in another state, if the service could be certified as 8
hazardous pursuant to KRS 61.592 or 78.5520, as applicable. The 9
employee may purchase out-of-state hazardous service under this 10
subparagraph provided the employee is vested to receive benefits from 11
the State Police Retirement System or hazardous duty benefits from the 12
Kentucky Employees Retirement System or the County Employees 13
Retirement System. 14
The employee must purchase out-of-state service or out-of-state hazardous 15
service in the system in which he or she is vested based solely upon the 16
service in that system; 17
(d) Active military duty, which means periods of active military duty in the 18
Armed Forces of the United States, provided: 19
1. The employee's military service was terminated in a manner other than 20
as described in 38 U.S.C. sec. 4304; and 21
2. The service has not been credited as free military service under 22
subsection (1) of this section; 23
(e) National Guard service. An employee may purchase one (1) month of service 24
for each six (6) months of service in the National Guard or the military 25
reserves of the United States. The service shall be treated as service earned 26
prior to participation in the system; 27 UNOFFICIAL COPY 22 RS HB 76/EN
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(f) Federal service. "Federal service" means service with the United States 1
government, that is not service in the Armed Forces; 2
(g) Seasonal, emergency, interim, probationary, or temporary employment or part-3
time employment as provided by KRS 61.510(21) or 78.510(21) averaging 4
one hundred (100) or more hours of work per month on a calendar or fiscal 5
year basis. If the average number of hours of work is less than one hundred 6
(100) per month, the member may purchase credit for only those months he or 7
she receives creditable compensation for one hundred (100) hours of work; 8
(h) Part-time employment in a noncertified position at a school board prior to the 9
1990-91 school year which averaged eighty (80) or more hours of work per 10
month on a calendar or fiscal year basis. If the average number of hours of 11
work is less than eighty (80) per month, the noncertified employee of a school 12
board shall be allowed to purchase credit only for those months he or she 13
receives creditable compensation for eighty (80) hours of work; 14
(i) Any period of: 15
1. Authorized maternity leave without pay or sick leave without pay; 16
2. Unpaid leave authorized under the federal Family and Medical Leave 17
Act; 18
3. Approved educational leave; and 19
4. Agency-approved leave to work for a work-related labor organization if 20
the agency subsequently participated in the County Employees 21
Retirement System, but only if the board receives a favorable private 22
letter ruling from the United States Internal Revenue Service or a 23
favorable opinion letter from the United States Department of Labor; 24
(j) Non-participating employer service, which means periods of employment with 25
the following types of agencies provided the agency does not participate in a 26
state-administered retirement system: 27 UNOFFICIAL COPY 22 RS HB 76/EN
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1. A regional community services program for mental health organized and 1
operated under the provisions of KRS 210.370 to 210.480; 2
2. A community action agency created under KRS 273.405 to 273.453. The 3
service provided by this subparagraph shall be purchased in the County 4
Employees Retirement System; 5
3. An area development district created pursuant to KRS 147A.050; or 6
4. A business development corporation created pursuant to KRS 155.001 7
to 155.230, provided the system receives a favorable private letter ruling 8
from the United States Internal Revenue Service or a favorable opinion 9
letter from the United States Department of Labor; 10
(k) Urban-county government service, which means employment in an urban-11
county government position that would qualify for hazardous duty coverage 12
under KRS 61.592 or 78.5520. The provisions of this paragraph shall only be 13
applicable to vested members participating in the State Police Retirement 14
System or in a hazardous position in the Kentucky Employees Retirement 15
System or the County Employees Retirement System; 16
(l) Periods of service as assistants to officers and employees of the General 17
Assembly for persons who were unable to acquire service under KRS 18
61.510(20) for service performed after January 1, 1960; 19
(m) Service as a volunteer in the Kentucky Peace Corps, created by KRS 154.1-20
720; and 21
(n) Employment with a vocational technical school in a noncertified part-time 22
position averaging eighty (80) or more hours per month, determined by using 23
the number of months actually worked within a calendar or fiscal year. The 24
service provided by this paragraph shall be purchased in the Kentucky 25
Employees Retirement System. 26
(6) Non-qualified service. Provided the employee's participation date in the system is 27 UNOFFICIAL COPY 22 RS HB 76/EN
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prior to July 15, 2002, and provided the employee has total service in all state-1
administered retirement systems of at least one hundred eighty (180) months of 2
service credit, the employee may purchase a combined maximum total of five (5) 3
years of service credit, known as non-qualified service, which is not otherwise 4
purchasable under any of the provisions of KRS 16.505 to 16.652, 61.510 to 5
61.705, or 78.510 to 78.852. The service purchased under this paragraph shall not 6
be used in determining a retirement allowance until the member has accrued at least 7
two hundred forty (240) months of service, excluding service purchased under this 8
subsection. If the member does not accrue at least two hundred forty (240) months 9
of service, excluding service purchased under this subsection, upon retirement, 10
death, or written request following termination, the payment, plus interest as 11
provided in KRS 16.560, 61.575, or 78.640, as applicable, shall be refunded. 12
(7) For purposes of service purchased under subsections (2) to (6) of this section: 13
(a) Except for subsection (6) of this section, the service must qualify as regular 14
full-time as provided by KRS 61.510 and 78.510; 15
(b) No service credit may be purchased for periods already credited to the system 16
or another public defined benefit retirement fund, including non-qualified 17
service purchased in another state-administered retirement system; 18
(c) Except as provided by paragraph (a)2.a. of subsection (9) of this section, the 19
employee payment for service purchases shall not be picked up, as described 20
in KRS 16.545(4), 61.560(4), or 78.610(4), by the employer; 21
(d) Except for service purchased under subsection (2) or (3) of this section, 22
service purchases made pursuant to this section may be purchased by the 23
entire amount of service available or by increments. Service purchases made 24
pursuant to subsections (2) and (3) of this section shall only be purchased by 25
the entire amount of service available; and 26
(e) Service purchases as provided by subsections (5)(b), (5)(d) to (f), (5)(j)1., and 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
(6) of this section may be purchased in any system in which the member has 1
service credit. 2
(8) (a) Employer purchase of past service. Any employer participating in the system 3
may purchase service credit, between July 1, 1956, in the case of the Kentucky 4
Employees Retirement System, or July 1, 1958, in the case of the County 5
Employees Retirement System, and the participation date of the employer, for 6
present employees of the county or department who have elected coverage 7
under KRS 61.525(2) or 78.540(1), provided the employee began participating 8
in the system prior to January 1, 2014. 9
(b) A Kentucky Employees Retirement System employer shall pay the cost of the 10
service credit within the fiscal year the election is made to purchase the 11
service credit. A County Employees Retirement System employer may 12
purchase the service, with interest at the rate actuarially assumed by the board, 13
over a period not to exceed ten (10) years. 14
(c) If an employer elects to purchase service under the provisions of this 15
subsection, any present employee who would be eligible to receive service 16
credit under the provisions of this subsection and has purchased service credit 17
under subsection (5)(a) of this section shall have his or her payment for the 18
service credit refunded with interest at the rate paid under KRS 61.575 or 19
78.640; and 20
(d) Any payments made by an employer under this subsection shall be deposited 21
to the retirement allowance account of the system and these funds shall not be 22
considered accumulated contributions of the individual members. 23
(9) (a) An employee participating in the system may purchase service credit under 24
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 78.510 to 25
78.852 for which he or she is eligible to purchase, or as otherwise required by 26
38 U.S.C. ch. 43, by: 27 UNOFFICIAL COPY 22 RS HB 76/EN
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1. Making a lump-sum payment on a before-tax basis as provided in 1
subparagraph 3. of this paragraph, or on an after-tax basis if the 2
employee is purchasing service credit under subsection (1) or (3) of this 3
section, service available pursuant to 38 U.S.C. ch. 43 not otherwise 4
provided for in this section, or grandfathered service as defined in 5
paragraph (b) of this subsection; 6
2. Entering into an agreement to purchase service credit through an 7
installment purchase of service agreement with the systems as provided 8
by paragraph (c) of this subsection: 9
a. On a before-tax basis in which the service is purchased pursuant to 10
the employer pick-up provisions in 26 U.S.C. sec. 414(h)(2); or 11
b. On an after-tax basis if the employee is purchasing service credit 12
under subsection (1) or (3) of this section, service available 13
pursuant to 38 U.S.C. ch. 43 not otherwise provided for in this 14
section, or grandfathered service as defined in paragraph (b) of this 15
subsection; or 16
3. Transferring funds to the system through a direct trustee-to-trustee 17
transfer as permitted under the applicable sections of the Internal 18
Revenue Code and any regulations or rulings issued thereunder, through 19
a direct rollover as contemplated by and permitted under 26 U.S.C. sec. 20
401(a)(31) and any regulations or rulings issued thereunder, or through a 21
rollover of funds pursuant to and permitted under the rules specified in 22
26 U.S.C. secs. 402(c) and 408(d)(3). The system shall accept the 23
transfer or rollover to the extent permitted under the rules specified in 24
the applicable provisions of the Internal Revenue Code and any 25
regulations and rulings issued thereunder. 26
(b) For purposes of this subsection, "grandfathered service" means service 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
purchases for which a member, whose membership date in the system is prior 1
to July 1, 1999, is eligible to purchase under KRS 16.505 to 16.652, 61.510 to 2
61.705, or 78.510 to 78.852, that were available for all members of the system 3
to purchase on August 5, 1997. 4
(c) 1. For service purchased under a before-tax or after-tax installment 5
purchase of service agreement as provided by paragraph (a)2. of this 6
subsection, the cost of the service shall be computed in the same manner 7
as for a lump-sum payment which shall be the principal, except that 8
interest compounded annually at the actuarial rate in effect at the time 9
the member elects to make the purchase shall be added for the period 10
that the installments are to be made. 11
2. Multiple service purchases may be combined under a single installment 12
agreement, except that no employee may make more than one (1) 13
installment purchase at the same time. 14
3. For after-tax installment purchase of service agreements, the employee 15
may elect to stop the installment payments by notifying the system; may 16
have the installment purchase recalculated to add one (1) or more 17
additional service purchases; or may pay by lump sum the remaining 18
principal or a portion of the remaining principal. 19
4. Before-tax installment purchase of service agreements shall be 20
irrevocable, and the employee shall not be able to stop installment 21
payments or to pay off the remaining balance of the purchase of service 22
agreement, except upon termination of employment or death. 23
5. One (1) year of installment payments shall be made for each one 24
thousand dollars ($1,000) or any part thereof of the total cost, except that 25
the total period allowed for installments shall not be less than one (1) 26
year and shall not exceed five (5) years. 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
6. The employee shall pay the installments by payroll deduction for after-1
tax purchase of service agreements, and the employer shall pick up 2
installments for before-tax purchase of service agreements. Upon 3
notification by the system, the employer shall report the installment 4
payments monthly continuously over each twelve (12) month period at 5
the same time as, but separate from, regular employee contributions on 6
the forms or by the computer format specified by the board. 7
7. The system shall determine how much of the total cost represents 8
payment for one (1) month of the service to be purchased and shall 9
credit one (1) month of service to the member's account each time this 10
amount has been paid. The first service credited shall represent the first 11
calendar month of the service to be purchased and each succeeding 12
month of service credit shall represent the succeeding months of that 13
service. 14
8. If the employee utilizing an installment purchase of service agreement 15
dies, retires, does not continue employment in a position required to 16
participate in the system, or elects to stop an after-tax installment 17
purchase of service agreement, the member, or in the case of death, the 18
beneficiary, shall have sixty (60) days to pay the remaining principal or a 19
portion of the remaining principal of the installment purchase of service 20
agreement by lump sum, subject to the restrictions of paragraph (a)1. of 21
this subsection, or by transfer of funds under paragraph (a)3. of this 22
subsection, except that payment by the member shall be filed with the 23
system prior to the member's effective retirement date. If the member or 24
beneficiary does not pay the remaining cost, the system shall refund to 25
the member or the beneficiary the payment, payments, or portion of a 26
payment that does not represent a full month of service purchased, 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
except as provided by subsection (6) of this section. 1
9. If the employer does not report installment payments on an employee for 2
sixty (60) days for an after-tax installment purchase of service 3
agreement, except in the case of employees on military leave or sick 4
leave without pay, the installment purchase shall cease and the system 5
shall refund to the employee the payment, payments, or portion of a 6
payment that does not represent a full month of service purchased. 7
10. Installment payments of employees on military leave or sick leave 8
without pay shall be suspended during the period of leave and shall 9
resume without recalculation upon the employee's return from leave. 10
11. If payments have ceased under subparagraph 8. or 9. of this paragraph 11
and the member later becomes a participating employee in the County 12
Employees Retirement System, Kentucky Employees Retirement 13
System, or State Police Retirement System, the employee may complete 14
the adjusted original installment purchase by lump sum or installment 15
payments, subject to the restrictions of this subsection. If the employee 16
elects to renew the installment purchase, the cost of the remaining 17
service shall be recalculated in accordance with subsection (10) of this 18
section. 19
(d) Member payments, including interest, properly received pursuant to this 20
subsection, shall be deposited to the member's account and considered as 21
accumulated contributions of the individual member. 22
(10) (a) The cost of purchasing service credit under any provision of this section, 23
except as provided by subsections (1) to (3) of this section, shall be 24
determined by multiplying the higher of the employee's current rate of pay, 25
final rate of pay, or final compensation as of the end of the month in which the 26
purchase is made times the actuarial factor times the number of years of 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
service being purchased. The actuarial factor used to determine the cost of 1
purchasing service credit shall assume the earliest date the member may retire 2
without a reduction in benefits and the cost-of-living adjustments provided to 3
members upon retirement. 4
(b) Service purchased on or after August 1, 2004, under the provisions of KRS 5
16.505 to 16.652, 61.510 to 61.705, or 78.510 to 78.852, except for service 6
purchased under subsections (1) to (3) of this section or service purchased as 7
described by paragraph (d) of this subsection, shall not be used to determine 8
eligibility for or the amount of the monthly insurance contribution under KRS 9
61.702 or 78.5536. 10
(c) For a member whose participation begins on or after August 1, 2004, service 11
purchased under the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 12
78.510 to 78.852, except for service purchased under subsections (1) to (3) of 13
this section or service purchased as described by paragraph (d) of this 14
subsection: 15
1. Shall not be used to determine eligibility for a retirement allowance 16
under disability retirement, early retirement, normal retirement, or upon 17
death of the member under any of the provisions of KRS 16.505 to 18
16.652, 61.510 to 61.705, or 78.510 to 78.852; and 19
2. Shall only be used to determine the amount of the retirement allowance 20
of a member who is eligible for a retirement allowance under disability, 21
early retirement, normal retirement, or upon death of the member under 22
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 23
78.510 to 78.852, based on service earned as a participating employee. 24
(d) Paragraphs (b) and (c) of this subsection shall not apply to a member who 25
was bound by an educational contract as a conditional employee to the state 26
of Kentucky prior to December 31, 2003, regardless of participation date or 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
membership date in the system. Educational leave, seasonal service, or any 1
other qualified service purchased by a member with this classification under 2
this section shall be used to determine eligibility for benefits, membership 3
dates or participation dates, and the amount of benefit for: 4
1. A retirement allowance under disability retirement, early retirement, 5
normal retirement, or death under any of the provisions of KRS 6
16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852; and 7
2. The monthly insurance contribution under KRS 61.702 or 78.5536. 8
Section 6. KRS 61.510 is amended to read as follows: 9
As used in KRS 61.510 to 61.705, unless the context otherwise requires: 10
(1) "System" means the Kentucky Employees Retirement System created by KRS 11
61.510 to 61.705; 12
(2) "Board" means the board of trustees of the system as provided in KRS 61.645; 13
(3) "Department" means any state department or board or agency participating in the 14
system in accordance with appropriate executive order, as provided in KRS 61.520. 15
For purposes of KRS 61.510 to 61.705, the members, officers, and employees of the 16
General Assembly and any other body, entity, or instrumentality designated by 17
executive order by the Governor, shall be deemed to be a department, 18
notwithstanding whether said body, entity, or instrumentality is an integral part of 19
state government; 20
(4) "Examiner" means the medical examiners as provided in KRS 61.665; 21
(5) "Employee" means the members, officers, and employees of the General Assembly 22
and every regular full-time, appointed or elective officer or employee of a 23
participating department, including the Department of Military Affairs. The term 24
does not include persons engaged as independent contractors, seasonal, emergency, 25
temporary, interim, and part-time workers. In case of any doubt, the board shall 26
determine if a person is an employee within the meaning of KRS 61.510 to 61.705; 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
(6) "Employer" means a department or any authority of a department having the power 1
to appoint or select an employee in the department, including the Senate and the 2
House of Representatives, or any other entity, the employees of which are eligible 3
for membership in the system pursuant to KRS 61.525; 4
(7) "State" means the Commonwealth of Kentucky; 5
(8) "Member" means any employee who is included in the membership of the system or 6
any former employee whose membership has not been terminated under KRS 7
61.535; 8
(9) "Service" means the total of current service and prior service as defined in this 9
section; 10
(10) "Current service" means the number of years and months of employment as an 11
employee, on and after July 1, 1956, except that for members, officers, and 12
employees of the General Assembly this date shall be January 1, 1960, for which 13
creditable compensation is paid and employee contributions deducted, except as 14
otherwise provided, and each member, officer, and employee of the General 15
Assembly shall be credited with a month of current service for each month he 16
serves in the position; 17
(11) "Prior service" means the number of years and completed months, expressed as a 18
fraction of a year, of employment as an employee, prior to July 1, 1956, for which 19
creditable compensation was paid; except that for members, officers, and employees 20
of the General Assembly, this date shall be January 1, 1960. An employee shall be 21
credited with one (1) month of prior service only in those months he received 22
compensation for at least one hundred (100) hours of work; provided, however, that 23
each member, officer, and employee of the General Assembly shall be credited with 24
a month of prior service for each month he served in the position prior to January 1, 25
1960. Twelve (12) months of current service in the system are required to validate 26
prior service; 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
(12) "Accumulated contributions" at any time means the sum of all amounts deducted 1
from the compensation of a member and credited to his individual account in the 2
members' account, including employee contributions picked up after August 1, 3
1982, pursuant to KRS 61.560(4), together with interest credited, on such amounts 4
and any other amounts the member shall have contributed thereto, including interest 5
credited thereon. For members who begin participating on or after September 1, 6
2008, "accumulated contributions" shall not include employee contributions that are 7
deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the 8
funds established in KRS 16.510 and 61.515, as prescribed by KRS 61.702(3)(b); 9
(13) "Creditable compensation": 10
(a) Means all salary, wages, tips to the extent the tips are reported for income tax 11
purposes, and fees, including payments for compensatory time, paid to the 12
employee as a result of services performed for the employer or for time during 13
which the member is on paid leave, which are includable on the member's 14
federal form W-2 wage and tax statement under the heading "wages, tips, 15
other compensation," including employee contributions picked up after 16
August 1, 1982, pursuant to KRS 61.560(4). For members of the General 17
Assembly, it shall mean all amounts which are includable on the member's 18
federal form W-2 wage and tax statement under the heading "wages, tips, 19
other compensation," including employee contributions picked up after 20
August 1, 1982, pursuant to KRS 6.505(4) or 61.560(4); 21
(b) Includes: 22
1. Lump-sum bonuses, severance pay, or employer-provided payments for 23
purchase of service credit, which shall be averaged over the employee's 24
total service with the system in which it is recorded if it is equal to or 25
greater than one thousand dollars ($1,000); 26
2. Cases where compensation includes maintenance and other perquisites, 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
but the board shall fix the value of that part of the compensation not paid 1
in money; 2
3. Lump-sum payments for creditable compensation paid as a result of an 3
order of a court of competent jurisdiction, the Personnel Board, or the 4
Commission on Human Rights, or for any creditable compensation paid 5
in anticipation of settlement of an action before a court of competent 6
jurisdiction, the Personnel Board, or the Commission on Human Rights, 7
including notices of violations of state or federal wage and hour statutes 8
or violations of state or federal discrimination statutes, which shall be 9
credited to the fiscal year during which the wages were earned or should 10
have been paid by the employer. This subparagraph shall also include 11
lump-sum payments for reinstated wages pursuant to KRS 61.569, 12
which shall be credited to the period during which the wages were 13
earned or should have been paid by the employer; 14
4. Amounts which are not includable in the member's gross income by 15
virtue of the member having taken a voluntary salary reduction provided 16
for under applicable provisions of the Internal Revenue Code; and 17
5. Elective amounts for qualified transportation fringes paid or made 18
available on or after January 1, 2001, for calendar years on or after 19
January 1, 2001, that are not includable in the gross income of the 20
employee by reason of 26 U.S.C. sec. 132(f)(4); and 21
(c) Excludes: 22
1. Living allowances, expense reimbursements, lump-sum payments for 23
accrued vacation leave, and other items determined by the board; 24
2. For employees who begin participating on or after September 1, 2008, 25
lump-sum payments for compensatory time; 26
3. For employees who begin participating on or after August 1, 2016, 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
nominal fees paid for services as a volunteer; and 1
4. Any salary or wages paid to an employee for services as a Kentucky 2
State Police school resource officer as defined by KRS 158.441; 3
(14) "Final compensation" of a member means: 4
(a) For a member who begins participating before September 1, 2008, who is 5
employed in a nonhazardous position, the creditable compensation of the 6
member during the five (5) fiscal years he or she was paid at the highest 7
average monthly rate divided by the number of months of service credit during 8
that five (5) year period multiplied by twelve (12). The five (5) years may be 9
fractional and need not be consecutive. If the number of months of service 10
credit during the five (5) year period is less than forty-eight (48), one (1) or 11
more additional fiscal years shall be used; 12
(b) For a member who is employed in a nonhazardous position, whose effective 13
retirement date is between August 1, 2001, and January 1, 2009, and whose 14
total service credit is at least twenty-seven (27) years and whose age and years 15
of service total at least seventy-five (75), final compensation means the 16
creditable compensation of the member during the three (3) fiscal years the 17
member was paid at the highest average monthly rate divided by the number 18
of months of service credit during that three (3) years period multiplied by 19
twelve (12). The three (3) years may be fractional and need not be 20
consecutive. If the number of months of service credit during the three (3) 21
year period is less than twenty-four (24), one (1) or more additional fiscal 22
years shall be used. Notwithstanding the provision of KRS 61.565, the 23
funding for this paragraph shall be provided from existing funds of the 24
retirement allowance; 25
(c) For a member who begins participating before September 1, 2008, who is 26
employed in a hazardous position, as provided in KRS 61.592, the creditable 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
compensation of the member during the three (3) fiscal years he or she was 1
paid at the highest average monthly rate divided by the number of months of 2
service credit during that three (3) year period multiplied by twelve (12). The 3
three (3) years may be fractional and need not be consecutive. If the number of 4
months of service credit during the three (3) year period is less than twenty-5
four (24), one (1) or more additional fiscal years shall be used; 6
(d) For a member who begins participating on or after September 1, 2008, but 7
prior to January 1, 2014, who is employed in a nonhazardous position, the 8
creditable compensation of the member during the five (5) complete fiscal 9
years immediately preceding retirement divided by five (5). Each fiscal year 10
used to determine final compensation must contain twelve (12) months of 11
service credit. If the member does not have five (5) complete fiscal years that 12
each contain twelve (12) months of service credit, then one (1) or more 13
additional fiscal years, which may contain less than twelve (12) months of 14
service credit, shall be added until the number of months in the final 15
compensation calculation is at least sixty (60) months; or 16
(e) For a member who begins participating on or after September 1, 2008, but 17
prior to January 1, 2014, who is employed in a hazardous position as provided 18
in KRS 61.592, the creditable compensation of the member during the three 19
(3) complete fiscal years he or she was paid at the highest average monthly 20
rate divided by three (3). Each fiscal year used to determine final 21
compensation must contain twelve (12) months of service credit. If the 22
member does not have three (3) complete fiscal years that each contain twelve 23
(12) months of service credit, then one (1) or more additional fiscal years, 24
which may contain less than twelve (12) months of service credit, shall be 25
added until the number of months in the final compensation calculation is at 26
least thirty-six (36) months; 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 1
calculated during the twelve (12) month period immediately preceding the 2
member's effective retirement date, including employee contributions picked up 3
after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the 4
system by the employer and the following equivalents shall be used to convert the 5
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 6
workdays, nineteen hundred fifty (1,950) hours for seven and one-half (7-1/2) hour 7
workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months, 8
one (1) year; 9
(16) "Retirement allowance" means the retirement payments to which a member is 10
entitled; 11
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 12
basis of the actuarial tables that are adopted by the board. In cases of disability 13
retirement, the options authorized by KRS 61.635 shall be computed by adding ten 14
(10) years to the age of the member, unless the member has chosen the Social 15
Security adjustment option as provided for in KRS 61.635(8), in which case the 16
member's actual age shall be used. For members who began participating in the 17
system prior to January 1, 2014, no disability retirement option shall be less than the 18
same option computed under early retirement; 19
(18) "Normal retirement date" means the sixty-fifth birthday of a member, unless 20
otherwise provided in KRS 61.510 to 61.705; 21
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 22
following June 30, which shall also be the plan year. The "fiscal year" shall be the 23
limitation year used to determine contribution and benefit limits as established by 24
26 U.S.C. sec. 415; 25
(20) "Officers and employees of the General Assembly" means the occupants of those 26
positions enumerated in KRS 6.150. The term shall also apply to assistants who 27 UNOFFICIAL COPY 22 RS HB 76/EN
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were employed by the General Assembly for at least one (1) regular legislative 1
session prior to July 13, 2004, who elect to participate in the retirement system, and 2
who serve for at least six (6) regular legislative sessions. Assistants hired after July 3
13, 2004, shall be designated as interim employees; 4
(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean 5
all positions that average one hundred (100) or more hours per month determined by 6
using the number of months actually worked within a calendar or fiscal year, 7
including all positions except: 8
(a) Seasonal positions, which although temporary in duration, are positions which 9
coincide in duration with a particular season or seasons of the year and which 10
may recur regularly from year to year, the period of time shall not exceed nine 11
(9) months; 12
(b) Emergency positions which are positions which do not exceed thirty (30) 13
working days and are nonrenewable; 14
(c) Temporary positions which are positions of employment with a participating 15
department for a period of time not to exceed nine (9) months and are 16
nonrenewable; 17
(d) Part-time positions which are positions which may be permanent in duration, 18
but which require less than a calendar or fiscal year average of one hundred 19
(100) hours of work per month, determined by using the number of months 20
actually worked within a calendar or fiscal year, in the performance of duty; 21
and 22
(e) Interim positions which are positions established for a one-time or recurring 23
need not to exceed nine (9) months; 24
(22) "Vested" for purposes of determining eligibility for purchasing service credit under 25
KRS 61.552 means the employee has at least forty-eight (48) months of service if 26
age sixty-five (65) or older or at least sixty (60) months of service if under the age 27 UNOFFICIAL COPY 22 RS HB 76/EN
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of sixty-five (65). For purposes of this subsection, "service" means service in the 1
systems administered by the Kentucky Retirement Systems and County Employees 2
Retirement System; 3
(23) "Parted employer" means a department, portion of a department, board, or agency, 4
such as Outwood Hospital and School, which previously participated in the system, 5
but due to lease or other contractual arrangement is now operated by a publicly held 6
corporation or other similar organization, and therefore is no longer participating in 7
the system. The term "parted employer" shall not include a department, board, or 8
agency that ceased participation in the system pursuant to KRS 61.522; 9
(24) "Retired member" means any former member receiving a retirement allowance or 10
any former member who has filed the necessary documents for retirement benefits 11
and is no longer contributing to the retirement system; 12
(25) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 13
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 14
pay. The rate shall be certified by the employer; 15
(26) "Beneficiary" means the person or persons or estate or trust or trustee designated by 16
the member in accordance with KRS 61.542 or 61.705 to receive any available 17
benefits in the event of the member's death. As used in KRS 61.702, "beneficiary" 18
does not mean an estate, trust, or trustee; 19
(27) "Recipient" means the retired member or the person or persons designated as 20
beneficiary by the member and drawing a retirement allowance as a result of the 21
member's death or a dependent child drawing a retirement allowance. An alternate 22
payee of a qualified domestic relations order shall not be considered a recipient, 23
except for purposes of KRS 61.623; 24
(28) "Level percentage of payroll amortization method" means a method of determining 25
the annual amortization payment on the unfunded actuarial accrued liability as 26
expressed as a percentage of payroll over a set period of years but that may be 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method, 1
the percentage of payroll shall be projected to remain constant for all years 2
remaining in the set period of time and the unfunded actuarially accrued liability 3
shall be projected to be fully amortized at the conclusion of the set period of years; 4
(29) "Increment" means twelve (12) months of service credit which are purchased. The 5
twelve (12) months need not be consecutive. The final increment may be less than 6
twelve (12) months; 7
(30) "Person" means a natural person; 8
(31) "Retirement office" means the Kentucky Public Pensions Authority's office building 9
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 10
Authority; 11
(32) "Last day of paid employment" means the last date employer and employee 12
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 13
78.615 to the retirement office in order for the employee to receive current service 14
credit for the month. Last day of paid employment does not mean a date the 15
employee receives payment for accrued leave, whether by lump sum or otherwise, if 16
that date occurs twenty-four (24) or more months after previous contributions; 17
(33) "Objective medical evidence" means reports of examinations or treatments; medical 18
signs which are anatomical, physiological, or psychological abnormalities that can 19
be observed; psychiatric signs which are medically demonstrable phenomena 20
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 21
or contact with reality; or laboratory findings which are anatomical, physiological, 22
or psychological phenomena that can be shown by medically acceptable laboratory 23
diagnostic techniques, including but not limited to chemical tests, 24
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 25
(34) "Participating" means an employee is currently earning service credit in the system 26
as provided in KRS 61.543; 27 UNOFFICIAL COPY 22 RS HB 76/EN
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(35) "Month" means a calendar month; 1
(36) "Membership date" means: 2
(a) The date upon which the member began participating in the system as 3
provided in KRS 61.543; [or] 4
(b) For a member electing to participate in the system pursuant to KRS 5
196.167(4) who has not previously participated in the system or the Kentucky 6
Teachers' Retirement System, the date the member began participating in a 7
defined contribution plan that meets the requirements of 26 U.S.C. sec. 8
403(b); or 9
(c) For members bound by an educational contract as a conditional employee 10
to the state of Kentucky prior to December 31, 2003, the date on which the 11
educational contract became effective; 12
(37) "Participant" means a member, as defined by subsection (8) of this section, or a 13
retired member, as defined by subsection (24) of this section; 14
(38) "Qualified domestic relations order" means any judgment, decree, or order, 15
including approval of a property settlement agreement, that: 16
(a) Is issued by a court or administrative agency; and 17
(b) Relates to the provision of child support, alimony payments, or marital 18
property rights to an alternate payee; 19
(39) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 20
participant, who is designated to be paid retirement benefits in a qualified domestic 21
relations order; 22
(40) "Accumulated employer credit" mean the employer pay credit deposited to the 23
member's account and interest credited on such amounts as provided by KRS 24
16.583 and 61.597; 25
(41) "Accumulated account balance" means: 26
(a) For members who began participating in the system prior to January 1, 2014, 27 UNOFFICIAL COPY 22 RS HB 76/EN
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the member's accumulated contributions; or 1
(b) For members who began participating in the system on or after January 1, 2
2014, in the hybrid cash balance plan as provided by KRS 16.583 and 61.597, 3
the combined sum of the member's accumulated contributions and the 4
member's accumulated employer credit; 5
(42) "Volunteer" means an individual who: 6
(a) Freely and without pressure or coercion performs hours of service for an 7
employer participating in one (1) of the systems administered by Kentucky 8
Retirement Systems without receipt of compensation for services rendered, 9
except for reimbursement of actual expenses, payment of a nominal fee to 10
offset the costs of performing the voluntary services, or both; and 11
(b) If a retired member, does not become an employee, leased employee, or 12
independent contractor of the employer for which he or she is performing 13
volunteer services for a period of at least twelve (12) months following the 14
retired member's most recent retirement date; 15
(43) "Nominal fee" means compensation earned for services as a volunteer that does not 16
exceed five hundred dollars ($500) per month. Compensation earned for services as 17
a volunteer from more than one (1) participating employer during a month shall be 18
aggregated to determine whether the compensation exceeds the five hundred dollars 19
($500) per month maximum provided by this subsection; 20
(44) "Nonhazardous position" means a position that does not meet the requirements of 21
KRS 61.592 or has not been approved by the board as a hazardous position; 22
(45) "Monthly average pay" means: 23
(a) In the case of a member who dies as a direct result of an act in line of duty as 24
defined in KRS 16.505 or who dies as a result of a duty-related injury as 25
defined in KRS 61.621, the higher of the member's monthly final rate of pay 26
or the average monthly creditable compensation earned by the deceased 27 UNOFFICIAL COPY 22 RS HB 76/EN
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HB007620.100 - 341 - XXXX Engrossed
member during his or her last twelve (12) months of employment; or 1
(b) In the case where a member becomes totally and permanently disabled as a 2
direct result of an act in line of duty as defined in KRS 16.505 or becomes 3
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 4
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 5
member's monthly final rate of pay or the average monthly creditable 6
compensation earned by the disabled member during his or her last twelve 7
(12) months of employment prior to the date the act in line of duty or duty-8
related injury occurred; 9
(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 10
61.505; and 11
(47) "Executive director" means the executive director of the Kentucky Public Pensions 12
Authority. 13
Section 7. The first actuarial investigations of economic assumptions and 14
funding methods for the Legislators' Retirement Plan, Judicial Retirement Plan, Kentucky 15
Retirement Systems, the County Employees Retirement System, and the Teachers' 16
Retirement System, as provided by subsection (1)(a).7. of Section 1 of this Act, 17
subsection (1)(c)1. of Section 2 of this Act, subsection (1)(c)1. of Section 3 of this Act, 18
and subsection (1)(b)1. of Section 4 of this Act, respectively, shall take place prior to the 19
completion of the 2023 actuarial valuations for each system so that any changes in 20
economic assumptions shall be reflected in the 2023 actuarial valuations. 21