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AN ACT relating to retirement benefits for state and county employees in 1
hazardous positions. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
SECTION 1. A NEW SECTION OF KRS 16.505 TO 16.652 IS CREATED TO 4
READ AS FOLLOWS: 5
Notwithstanding any provision of KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 6
to 78.852 to the contrary: 7
(1) Effective January 1, 2025, a member participating in the State Police Retirement 8
System, in a hazardous position in the Kentucky Employees Retirement System, 9
or in a hazardous position in the County Employees Retirement System, who 10
began participating on or after January 1, 2014, but prior to January 1, 2025, in 11
the hybrid cash balance plan as provided by Section 4 or 6 of this Act, shall, in 12
lieu of the benefits of the hybrid cash balance plan that he or she would otherwise 13
be eligible to receive from the systems, receive the benefits and rights provided to 14
members in a hazardous position who began participating in the systems 15
immediately prior to January 1, 2014, unless the member makes an election 16
under subsection (3) of this section; 17
(2) For each member participating in a hazardous position whose rights and benefits 18
change as a result of subsection (1) of this section, unless the member makes an 19
election under subsection (3) of this section: 20
(a) All service accrued on or after January 1, 2014, in the State Police 21
Retirement System, in a hazardous position in the Kentucky Employees 22
Retirement System, or in a hazardous position in the County Employees 23
Retirement System, shall be presumed as service credit earned immediately 24
prior to January 1, 2014, for purposes of determining benefits under KRS 25
16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852; 26
(b) The member's accumulated contributions shall remain in the member's 27 UNOFFICIAL COPY 24 RS BR 1130
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account; and 1
(c) The accumulated employer credit shall be transferred to the retirement 2
allowance account as provided by KRS 16.565, 61.580, and 78.650, as 3
applicable; 4
(3) (a) A member participating in the State Police Retirement System, in a 5
hazardous position in the Kentucky Employees Retirement System, or in a 6
hazardous position in the County Employees Retirement System, who began 7
participating on or after January 1, 2014, but prior to January 1, 2025, in 8
the hybrid cash balance plan as provided by Section 4 or 6 of this Act, may 9
make a one (1) time, irrevocable election to opt out of the change to his or 10
her rights and benefits under subsection (1) of this section. 11
(b) An election under this subsection shall be: 12
1. In writing and on a form prescribed by the Kentucky Public Pensions 13
Authority; 14
2. For a member participating on or after the effective date of this Act, 15
but prior to January 1, 2025, made by January 31, 2025; and 16
3. For a member who did not participate or participated in a 17
nonhazardous position on or after the effective date of this Act, but 18
prior to January 1, 2025, who subsequently accepts a position 19
participating in the State Police Retirement System, a hazardous 20
position in the Kentucky Employees Retirement System, or a 21
hazardous position in the County Employees Retirement System, made 22
within thirty (30) days of the member's date of employment; and 23
(4) This section shall not apply to: 24
(a) Retired members who are reemployed on or after September 1, 2008, and 25
who are not eligible to participate in the systems during reemployment; 26
(b) Members who, prior to the effective date of this Act, made an election under 27 UNOFFICIAL COPY 24 RS BR 1130
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Section 7 of this Act; or 1
(c) Any service credit earned on or after January 1, 2014, in a nonhazardous 2
position, except that nonhazardous service in the hybrid cash balance plan 3
of either the Kentucky Employees Retirement System or the County 4
Employees Retirement System shall be consolidated as provided by Section 5
19 of this Act with hazardous service credit resulting from subsection (1) of 6
this section in order to determine eligibility and benefits. 7
Section 2. KRS 16.576 is amended to read as follows: 8
(1) (a) Any member who begins participating before September 1, 2008, who has at 9
least five (5) years of service credit may retire at his or her normal retirement 10
date, or subsequent thereto, upon written notification to the system, setting 11
forth at what date the retirement is to become effective, if the effective date 12
shall be after his or her last day of service and subsequent to the filing of the 13
notice at the retirement office. 14
(b) Any member who begins participating on or after September 1, 2008, who has 15
at least five (5) years of service credited under KRS 16.543(1), 61.543(1), or 16
another state-administered retirement system may retire at his or her normal 17
retirement date, or subsequent thereto, upon written notification to the system, 18
setting forth what date the retirement is to become effective, if the effective 19
date shall be after his or her last day of service and subsequent to the filing of 20
the notice at the retirement office. 21
(2) The member shall have the right to elect to have his or her retirement allowance 22
payable under subsection (3), (4), or (6) of this section or any one (1) of the plans 23
set forth in KRS 61.635. 24
(3) (a) Effective August 1, 1990, a member of the Kentucky State Police Retirement 25
System may elect to receive an annual retirement allowance, payable monthly 26
during his or her lifetime, equal to two and five-tenths percent (2.5%) of final 27 UNOFFICIAL COPY 24 RS BR 1130
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compensation for each year of service credit. Effective August 1, 1988, a 1
member of the Kentucky Employees Retirement System covered by this 2
section may elect to receive an annual retirement allowance, payable monthly 3
during his or her lifetime, equal to two and forty-nine hundredths percent 4
(2.49%) of final compensation for each year of service credit. The annual 5
retirement allowance for a member covered by this section shall not exceed 6
the maximum benefit as set forth in the Internal Revenue Code. 7
(b) A member of the State Police Retirement System or a member of the 8
Kentucky Employees Retirement System covered by this section, whose 9
participation begins on or after September 1, 2008, but prior to January 1, 10
2014, or whose participation begins on or after January 1, 2025, or whose 11
participation is presumed under Section 1 of this Act to begin immediately 12
prior to January 1, 2014, shall receive an annual retirement allowance, 13
payable monthly during his or her lifetime, equal to: 14
1. One and three-tenths percent (1.3%) of final compensation for each year 15
of service credit if the employee has earned ten (10) or less years of 16
service at retirement; 17
2. One and one-half percent (1.5%) of final compensation for each year of 18
service credit if the employee has earned greater than ten (10) but no 19
more than twenty (20) years of service at retirement; 20
3. Two and one-quarter percent (2.25%) of final compensation for each 21
year of service credit if the employee has earned greater than twenty 22
(20) but less than twenty-five (25) years of service at retirement; or 23
4. Two and one-half percent (2.5%) of final compensation for each year of 24
service credit if the employee has earned twenty-five (25) or more years 25
of service at retirement. 26
(4) The member may elect to receive a monthly retirement allowance payable for ten 27 UNOFFICIAL COPY 24 RS BR 1130
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(10) years certain, actuarially equivalent to the retirement allowance payable under 1
subsection (3) of this section. If the member should become deceased prior to the 2
expiration of ten (10) years, his or her beneficiary, unless the beneficiary is the 3
member's estate, shall receive the remaining payments monthly for the duration of 4
the ten (10) years. If the member's estate is the beneficiary, the member's estate 5
shall receive a lump-sum payment which shall be the actuarial equivalent to the 6
remaining payments. The provisions of KRS 61.702 notwithstanding, the member 7
who retired on June 17, 1978, or thereafter, and his or her spouse and eligible 8
dependents shall continue to receive the insurance benefits to which they are 9
entitled pursuant to KRS 61.702 after the expiration of ten (10) years. Effective 10
with any insurance contract procured, or self-insurance plan instituted, after July 15, 11
1990, a member who retired prior to June 17, 1978, and his or her spouse and 12
eligible dependents shall receive insurance benefits pursuant to KRS 61.702 upon 13
payment by the member or beneficiary of the entire cost of the required insurance 14
premium. 15
(5) Notwithstanding any other provisions of this section, upon written notification to 16
the system, a member shall have the option to defer his or her election to receive 17
his or her retirement allowance. The retirement allowance payable under a deferred 18
option shall be increased to reflect the deferred receipt of benefits. 19
(6) In lieu of any other benefits due under KRS 16.505 to 16.652, a member who 20
begins participating before September 1, 2008, who has attained age fifty-five (55) 21
and who has attained at least one (1) month of service credit but no more than fifty-22
nine (59) months of service credit may elect to receive an annual retirement 23
allowance, payable monthly or less frequently as determined by the board, which 24
shall be determined by multiplying his or her accumulated contributions by two (2) 25
and converting this amount to an annual retirement allowance based on an annuity 26
rate adopted by the board which would pay the actuarial equivalent of twice his or 27 UNOFFICIAL COPY 24 RS BR 1130
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her accumulated contributions over the lifetime of the retired member. 1
(7) (a) Subsections (1) to (6) of this section shall not apply to: 2
1. Members who begin participating in the system on or after January 1, 3
2014, but prior to January 1, 2025, who make an election under 4
subsection (3) of Section 1 of this Act; or 5
2. Members who prior to the effective date of this Act made an election 6
under Section 7 of this Act. 7
(b) Members who:[ ] 8
1. Begin participating in the system on or after January 1, 2014, but prior 9
to January 1, 2025, who make an election under subsection (3) of 10
Section 1 of this Act; or 11
2. Prior to the effective date of this Act, made an election under Section 7 12
of this Act; 13
shall receive the retirement benefit calculation prescribed by KRS 16.583. 14
Section 3. KRS 16.577 is amended to read as follows: 15
(1) Upon retirement at early retirement date, a member may receive an annual 16
retirement allowance payable monthly during his or her lifetime which shall be 17
determined in the same manner as for retirement at his or her normal retirement 18
date, with years of service and final compensation being determined as of the date 19
of his or her actual retirement, but the amount of the retirement allowance so 20
determined shall be reduced at an amount determined by the board's actuary to 21
reflect the earlier commencement of benefits. 22
(2) For a member who begins participating before September 1, 2008, there shall be no 23
reduction in the retirement allowance if the member has twenty (20) or more years 24
of service credit, at least fifteen (15) of which are current service. 25
(3) For a member who begins participating on or after September 1, 2008, but prior to 26
January 1, 2014, or who begins participating on or after January 1, 2025, or who 27 UNOFFICIAL COPY 24 RS BR 1130
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is presumed under Section 1 of this Act to begin participating immediately prior 1
to January 1, 2014, there shall be no reduction in the retirement allowance if the 2
member has twenty-five (25) or more years of service credited under KRS 3
16.543(1), 61.543(1), or another state-administered retirement system. 4
(4) (a) Subsections (1) to (3) of this section shall not apply to: 5
1. Members who begin participating in the system on or after January 1, 6
2014, but prior to January 1, 2025, who make an election under 7
subsection (3) of Section 1 of this Act; or 8
2. Members who prior to the effective date of this Act made an election 9
under Section 7 of this Act. 10
(b) Members who:[ ] 11
1. Begin participating in the system on or after January 1, 2014, but prior 12
to January 1, 2025, who make an election under subsection (3) of 13
Section 1 of this Act; or 14
2. Prior to the effective date of this Act, made an election under Section 7 15
of this Act; 16
shall receive the retirement benefit calculation prescribed by KRS 16.583. 17
Section 4. KRS 16.583 is amended to read as follows: 18
(1) A member of the State Police Retirement System, a member of the Kentucky 19
Employees Retirement System in a hazardous duty position covered by this section, 20
whose participation begins on or after January 1, 2014, but prior to January 1, 21
2025, who makes an election under subsection (3) of Section 1 of this Act, or a 22
member who prior to the effective date of this Act made an election under Section 23
7 of this Act[or a member making an election pursuant to KRS 61.5955], shall 24
receive the retirement benefits provided by this section in lieu of the retirement 25
benefits provided under KRS 16.576 and 16.577. The retirement benefit provided 26
by this section shall be known as the hybrid cash balance plan and shall operate as 27 UNOFFICIAL COPY 24 RS BR 1130
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another benefit tier within the State Police Retirement System and the Kentucky 1
Employees Retirement System. 2
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the 3
member's accumulated account balance, which shall include: 4
(a) Contributions made by the member as provided by KRS 16.505 to 16.652 and 5
61.510 to 61.705, except for employee contributions prescribed by KRS 6
61.702(3)(b); 7
(b) 1. An employer pay credit of seven and one-half percent (7.5%) of the 8
creditable compensation earned by the employee for each month the 9
employee is contributing to the hybrid cash balance plan provided by 10
this section; and 11
2. For members of the State Police Retirement System covered by this 12
section, an employer pay credit for the value of accumulated sick leave 13
as determined and limited by KRS 16.584; and 14
(c) Interest credits added annually to the member's accumulated account balance 15
as provided by this section. 16
(3) (a) Member contributions and employer pay credits as provided by subsection 17
(2)(a) and (b)1. of this section shall be credited to the member's account 18
monthly as contributions are reported and posted to the system in accordance 19
with KRS 61.675. 20
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be 21
credited to the member's account annually on June 30 of each fiscal year, as 22
determined by subsection (4) of this section. 23
(c) Employer pay credits for accumulated sick leave shall be credited to the 24
member's account as determined by KRS 16.584. 25
(4) (a) On June 30 of each fiscal year, the system shall determine if the member 26
contributed to the hybrid cash balance plan during the fiscal year. 27 UNOFFICIAL COPY 24 RS BR 1130
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(b) If the member contributed to the hybrid cash balance plan during the fiscal 1
year, the interest credit added to the member's account for that fiscal year 2
shall be determined by multiplying the member's accumulated account 3
balance on June 30 of the preceding fiscal year by a percentage increase equal 4
to: 5
1. Four percent (4%); plus 6
2. Seventy-five percent (75%) of the system's geometric average net 7
investment return in excess of a four percent (4%) rate of return. 8
(c) If the member did not contribute to the hybrid cash balance plan during the 9
fiscal year, the interest credit added to the member's account for that fiscal 10
year shall be determined by multiplying the member's accumulated account 11
balance on June 30 of the preceding fiscal year by four percent (4%). 12
(d) For purposes of this subsection, "system's geometric average net investment 13
return": 14
1. Means the annual average geometric investment return, net of 15
administrative and investment fees and expenses, over the last five (5) 16
fiscal years as of the date the interest is credited to the member's 17
account; and 18
2. Shall be expressed as a percentage and based upon the system in which 19
the member has an account. 20
(e) No employer pay credits or interest credits shall be provided to a member who 21
has taken a refund of contributions as provided by KRS 61.625 or who has 22
retired and annuitized his or her accumulated account balance as prescribed 23
by this section. 24
(5) (a) Upon termination of employment, a member who has less than five (5) years 25
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 26
elects to take a refund of his or her accumulated account balance as provided 27 UNOFFICIAL COPY 24 RS BR 1130
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by KRS 61.625, shall forfeit the accumulated employer credit, and shall only 1
receive a refund of his or her accumulated contributions. 2
(b) Upon termination of employment, a member who has five (5) or more years 3
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 4
elects to take a refund of his or her accumulated account balance as provided 5
by KRS 61.625, shall receive a full refund of his or her accumulated account 6
balance. 7
(6) A member participating in the hybrid cash balance plan provided by this section 8
may retire: 9
(a) At his or her normal retirement date, provided he or she has earned five (5) or 10
more years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), 11
or another state-administered retirement system; or 12
(b) At any age, provided he or she has earned twenty-five (25) or more years of 13
service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another 14
state-administered retirement system. 15
(7) A member eligible to retire under subsection (6) of this section may elect to: 16
(a) Receive a monthly retirement allowance payable for life by having his or her 17
accumulated account balance annuitized by the retirement systems in 18
accordance with the actuarial assumptions and actuarial methods adopted by 19
the board and in effect on the member's retirement date; 20
(b) Receive the actuarial equivalent of his or her retirement allowance calculated 21
under paragraph (a) of this subsection payable under one (1) of the options set 22
forth in KRS 61.635, except for the option provided by KRS 61.635(11); or 23
(c) Take a refund of his or her account balance as provided by KRS 61.625. 24
(8) The provisions of this section shall not apply to: 25
(a) Members who began participating in the Kentucky Employees Retirement 26
System, the County Employees Retirement System, or the State Police 27 UNOFFICIAL COPY 24 RS BR 1130
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Retirement System prior to January 1, 2014; 1
(b) Members who are presumed under Section 1 of this Act to have begun 2
participating in the State Police Retirement System, in a hazardous position 3
in the Kentucky Employees Retirement System, or in a hazardous position 4
in the County Employees Retirement System immediately prior to January 5
1, 2014, and have not made an election under subsection (3) of Section 1 of 6
this Act; or 7
(c) Members who begin participating in the State Police Retirement System, in 8
a hazardous position in the Kentucky Employees Retirement System, or in a 9
hazardous position in the County Employees Retirement System on or after 10
January 1, 2025[, except for those members who make an election pursuant 11
to KRS 61.5955]. 12
Section 5. KRS 78.5514 is amended to read as follows: 13
(1) The provisions of this section shall only apply to members of the County 14
Employees Retirement System[ who began participating in the system prior to 15
January 1, 2014,] who have service in a hazardous position, except for those 16
members who make an election under subsection (3) of Section 1 of this Act or 17
those members who prior to the effective date of this Act made an election under 18
Section 7 of this Act. 19
(2) (a) A member who began participating prior to September 1, 2008, is eligible for 20
a retirement allowance determined under subsection (4)(a) of this section for 21
his or her service if: 22
1. The member has attained normal retirement age and has five (5) or more 23
years of service, at least one (1) of which is current service; 24
2. The member has twenty (20) or more years of service, at least fifteen 25
(15) of which are current service; or 26
3. The member has attained age fifty (50) and has fifteen (15) or more 27 UNOFFICIAL COPY 24 RS BR 1130
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years of service. 1
(b) In lieu of any other benefits due under 78.510 to 78.852, a member who began 2
participating prior to September 1, 2008, who has attained normal retirement 3
age and who has obtained at least one (1) month of service credit but no more 4
than fifty-nine (59) months of service may elect to receive an annual 5
retirement allowance payable monthly or less frequently, as determined by the 6
board, which shall be determined by multiplying his or her accumulated 7
contributions by two (2) and converting this amount to an annual retirement 8
allowance based on an annuity rate adopted by the board which would pay the 9
actuarial equivalent of twice his or her accumulated contributions over the 10
lifetime of the retired member. 11
(3) A member who began participating on or after September 1, 2008, but prior to 12
January 1, 2014, or who began participating on or after January 1, 2025, or who 13
is presumed under Section 1 of this Act to have begun participating immediately 14
prior to January 1, 2014, is eligible for a retirement allowance determined under 15
subsection (4)(b) of this section for his or her service if: 16
(a) The member has attained normal retirement age and has five (5) years of 17
service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another 18
state-administered retirement system; 19
(b) The member has twenty-five (25) or more years of service credited under 20
KRS 16.543(1), 61.543(1), or 78.615(1), or another state-administered 21
retirement system; or 22
(c) The member has attained age fifty (50) and has fifteen (15) years of service 23
credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another state-24
administered retirement system. 25
(4) (a) A member of the system covered by this section who began participating prior 26
to September 1, 2008, may elect to receive an annual retirement allowance, 27 UNOFFICIAL COPY 24 RS BR 1130
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payable monthly during his or her lifetime, equal to two and five-tenths 1
percent (2.5%) of final compensation for each year of service credit. 2
(b) A member of the system covered by this section, who begins participating in 3
the system on or after September 1, 2008, but prior to January 1, 2014, or who 4
begins participating on or after January 1, 2025, or who is presumed under 5
Section 1 of this Act to begin participating in the system immediately prior 6
to January 1, 2014, shall be eligible to receive an annual retirement 7
allowance, payable monthly during his or her lifetime, equal to: 8
1. One and three-tenths percent (1.3%) of final compensation for each year 9
of service credit if the employee has earned ten (10) or less years of 10
service at retirement; 11
2. One and one-half percent (1.5%) of final compensation for each year of 12
service credit if the employee has earned greater than ten (10) but no 13
more than twenty (20) years of service at retirement; 14
3. Two and one-quarter percent (2.25%) of final compensation for each 15
year of service credit if the employee has earned greater than twenty 16
(20) but less than twenty-five (25) years of service at retirement; or 17
4. Two and one-half percent (2.5%) of final compensation for each year of 18
service credit if the employee has earned twenty-five (25) or more years 19
of service at retirement. 20
(c) The annual retirement allowance determined under this subsection shall: 21
1. Not be reduced for a member retiring under the provisions specified by 22
subsections (2)(a)1., (2)(a)2., (3)(a), and (3)(b) of this section; and 23
2. Be reduced for a member retiring under the provisions specified by 24
subsections (2)(a)3. and (3)(c) of this section by an amount determined 25
by the board's actuary to reflect the earlier commencement of benefits. 26
Section 6. KRS 78.5516 is amended to read as follows: 27 UNOFFICIAL COPY 24 RS BR 1130
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(1) A member of the County Employees Retirement System in a hazardous position 1
covered by this section[,] who begins participating in the system on or after January 2
1, 2014, but prior to January 1, 2025, who makes an election under subsection (3) 3
of Section 1 of this Act or a member who prior to the effective date of this Act 4
made an election under Section 7 of this Act,[ or a member who makes an election 5
pursuant to KRS 61.5955,] shall receive the retirement benefits provided by this 6
section in lieu of the retirement benefits provided under KRS 78.5514. The 7
retirement benefit provided by this section shall be known as the hybrid cash 8
balance plan and shall operate as another benefit tier within the County Employees 9
Retirement System. 10
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the 11
member's accumulated account balance, which shall include: 12
(a) Contributions made by the member as provided by KRS 78.510 to 78.852, 13
except for employee contributions prescribed by KRS 78.5536(3)(b); 14
(b) An employer pay credit of seven and one-half percent (7.5%) of the creditable 15
compensation earned by the employee for each month the employee is 16
contributing to the hybrid cash balance plan provided by this section; and 17
(c) Interest credits added annually to the member's accumulated account balance 18
as provided by this section. 19
(3) (a) Member contributions and employer pay credits as provided by subsection 20
(2)(a) and (b) of this section shall be credited to the member's account 21
monthly as contributions are reported and posted to the system in accordance 22
with KRS 78.625. 23
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be 24
credited to the member's account annually on June 30 of each fiscal year, as 25
determined by subsection (4) of this section. 26
(4) (a) On June 30 of each fiscal year, the system shall determine if the member 27 UNOFFICIAL COPY 24 RS BR 1130
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contributed to the hybrid cash balance plan or the Kentucky Retirement 1
Systems during the fiscal year. 2
(b) If the member contributed to the hybrid cash balance plan or the Kentucky 3
Retirement Systems during the fiscal year, the interest credit added to the 4
member's account for that fiscal year shall be determined by multiplying the 5
member's accumulated account balance on June 30 of the preceding fiscal 6
year by a percentage increase equal to: 7
1. Four percent (4%); plus 8
2. Seventy-five percent (75%) of the system's geometric average net 9
investment return in excess of a four percent (4%) rate of return. 10
(c) If the member did not contribute to the hybrid cash balance plan or the 11
Kentucky Retirement Systems during the fiscal year, the interest credit added 12
to the member's account for that fiscal year shall be determined by 13
multiplying the member's accumulated account balance on June 30 of the 14
preceding fiscal year by four percent (4%). 15
(d) For purposes of this subsection, "system's geometric average net investment 16
return": 17
1. Means the annual average geometric investment return, net of 18
administrative and investment fees and expenses, over the last five (5) 19
fiscal years as of the date the interest is credited to the member's 20
account; and 21
2. Shall be expressed as a percentage and based upon the system in which 22
the member has an account. 23
(e) No employer pay credits or interest credits shall be provided to a member who 24
has taken a refund of contributions as provided by KRS 61.625 or who has 25
retired and annuitized his or her accumulated account balance as prescribed 26
by this section. 27 UNOFFICIAL COPY 24 RS BR 1130
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(5) (a) Upon termination of employment, a member who has less than five (5) years 1
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 2
elects to take a refund of his or her accumulated account balance as provided 3
by KRS 61.625, shall forfeit the accumulated employer credit, and shall only 4
receive a refund of his or her accumulated contributions. 5
(b) Upon termination of employment, a member who has five (5) or more years 6
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 7
elects to take a refund of his or her accumulated account balance as provided 8
by KRS 61.625, shall receive a full refund of his or her accumulated account 9
balance. 10
(6) A member participating in the hybrid cash balance plan provided by this section 11
may retire: 12
(a) At his or her normal retirement date, provided he or she has earned five (5) or 13
more years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), 14
or another state-administered retirement system; or 15
(b) At any age, provided he or she has earned twenty-five (25) or more years of 16
service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another 17
state-administered retirement system. 18
(7) A member eligible to retire under subsection (6) of this section may elect to: 19
(a) Receive a monthly retirement allowance payable for life by having his or her 20
accumulated account balance annuitized by the system in accordance with the 21
actuarial assumptions and actuarial methods adopted by the board and in 22
effect on the member's retirement date; 23
(b) Receive the actuarial equivalent of his or her retirement allowance calculated 24
under paragraph (a) of this subsection payable under one (1) of the options set 25
forth in KRS 61.635, except for the option provided by KRS 61.635(11); or 26
(c) Take a refund of his or her account balance as provided by KRS 61.625. 27 UNOFFICIAL COPY 24 RS BR 1130
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(8) The provisions of this section shall not apply to: 1
(a) Members who began participating in the Kentucky Employees Retirement 2
System, County Employees Retirement System, or the State Police 3
Retirement System prior to January 1, 2014; 4
(b) Members who are presumed under Section 1 of this Act to have begun 5
participating in the State Police Retirement System, in a hazardous position 6
in the Kentucky Employees Retirement System, or in a hazardous position 7
in the County Employees Retirement System immediately prior to January 8
1, 2014, and have not made an election under subsection (3) of Section 1 of 9
this Act; or 10
(c) Members who begin participating in the State Police Retirement System, in 11
a hazardous position in the Kentucky Employees Retirement System, or in a 12
hazardous position in the County Employees Retirement System on or after 13
January 1, 2025[, except as provided by KRS 61.5955]. 14
Section 7. KRS 61.5955 is amended to read as follows: 15
As of the effective date of this Act, notwithstanding any provision of KRS 16.505 to 16
16.652, 61.510 to 61.705, and 78.510 to 78.852 to the contrary: 17
(1) Subject to the provisions of this section, a[any] member who began participating in 18
a nonhazardous position in the Kentucky Employees Retirement System[,] or the 19
County Employees Retirement System[, or the State Police Retirement System] on 20
or after September 1, 2008, but prior to January 1, 2014, may in lieu of the benefits 21
he or she is currently eligible to receive from the systems, elect to receive the 22
benefits and rights provided to members who began participating in the systems on 23
or after January 1, 2014, including participating in the hybrid cash balance plan 24
created pursuant to KRS 61.597 or 78.5512[ for members in nonhazardous duty 25
positions or pursuant to KRS 16.583 or 78.5516 for members in hazardous duty 26
positions], as applicable; 27 UNOFFICIAL COPY 24 RS BR 1130
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(2) The election provided by this section shall be made in writing and on a form 1
prescribed by the Kentucky Public Pensions Authority and shall apply to all service 2
or accounts in the Kentucky Retirement Systems or the County Employees 3
Retirement System; 4
(3) For each member who makes an election provided by this section: 5
(a) Any service credit the member has accrued prior to January 1, 2014, shall be 6
considered as service credit earned on or after January 1, 2014, for purposes 7
of determining benefits under KRS 16.505 to 16.652, 61.510 to 61.705, and 8
78.510 to 78.852; 9
(b) On the member's effective election date, the value of the member's 10
accumulated contributions, less any interest, shall be deposited into the 11
member's hybrid cash balance account as provided by KRS 16.583, 61.597, 12
78.5512, or 78.5516, as applicable, and considered part of the member's 13
accumulated account balance; 14
(c) On the member's effective election date, an employer pay credit as provided 15
by KRS [16.583, ]61.597[,] or 78.5512,[ or 78.5516,] as applicable, shall be 16
added to the member's accumulated account balance for each month the 17
member contributed to the Kentucky Employees Retirement System[,] or the 18
County Employees Retirement System[, or the State Police Retirement 19
System] prior to his or her effective election date; and 20
(d) Interest credits as provided by KRS [16.583, ]61.597[,] or 78.5512,[ or 21
78.5516,] as applicable, shall only be applied for periods occurring on or after 22
the member's effective election date; 23
(4) Before accepting an election provided by this section, the Kentucky Public Pensions 24
Authority shall provide the member with information detailing the potential results 25
of the member's election; 26
(5) An election made pursuant to this section shall be irrevocable; 27 UNOFFICIAL COPY 24 RS BR 1130
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(6) (a) A member of the Kentucky Employees Retirement System[,] or the County 1
Employees Retirement System[, or the State Police Retirement System] shall 2
not be eligible to make an election prescribed by this section until the 3
Kentucky Retirement Systems receives a favorable private letter ruling from 4
the Internal Revenue Service regarding this section. 5
(b) If the Internal Revenue Service denies the request for a private letter ruling as 6
provided by paragraph (a) of this subsection, this section shall be void. 7
(c) The Kentucky Public Pensions Authority may promulgate administrative 8
regulations under KRS Chapter 13A in order to carry out this section; and 9
(7) This section shall not apply to: 10
(a) Retirees who were reemployed on or after September 1, 2008, and who are 11
not eligible to participate in the systems during reemployment; or 12
(b) Service that a member may have in the State Police Retirement System, in a 13
hazardous position in the Kentucky Employees Retirement System, or in a 14
hazardous position in the County Employees Retirement System, unless the 15
member made an election under this section prior to the effective date of 16
this Act. 17
Section 8. KRS 16.505 is amended to read as follows: 18
As used in KRS 16.505 to 16.652, unless the context otherwise requires: 19
(1) "System" means the State Police Retirement System created by KRS 16.505 to 20
16.652; 21
(2) "Board" means the board of trustees of the Kentucky Retirement Systems; 22
(3) "Employer" or "State Police" means the Department of Kentucky State Police, or its 23
successor; 24
(4) "Current service" means the number of years and completed months of employment 25
as an employee subsequent to July 1, 1958, for which creditable compensation was 26
paid by the employer and employee contributions deducted except as otherwise 27 UNOFFICIAL COPY 24 RS BR 1130
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provided; 1
(5) "Prior service" means the number of years and completed months of employment as 2
an employee prior to July 1, 1958, for which creditable compensation was paid to 3
the employee by the Commonwealth. Twelve (12) months of current service in the 4
system are required to validate prior service; 5
(6) "Service" means the total of current service and prior service; 6
(7) "Accumulated contributions" at any time means the sum of all amounts deducted 7
from the compensation of a member and credited to his or her individual account in 8
the member's account, including employee contributions picked up after August 1, 9
1982, pursuant to KRS 16.545(4), together with interest credited on such amounts 10
as provided in KRS 16.505 to 16.652, and any other amounts the member shall 11
have contributed, including interest credited. For members who begin participating 12
on or after September 1, 2008, "accumulated contributions" shall not include 13
employee contributions that are deposited into accounts established pursuant to 26 14
U.S.C. sec. 401(h) within the funds established in KRS 16.510 and 61.515, as 15
prescribed by KRS 61.702(3)(b); 16
(8) "Creditable compensation": 17
(a) Except as provided by paragraph (b) or (c) of this subsection, means all salary 18
and wages, including payments for compensatory time, paid to the employee 19
as a result of services performed for the employer or for time during which the 20
member is on paid leave, which are includable on the member's federal form 21
W-2 wage and tax statement under the heading "wages, tips, other 22
compensation," including employee contributions picked up after August 1, 23
1982, pursuant to KRS 16.545(4); 24
(b) Includes: 25
1. Lump-sum bonuses, severance pay, or employer-provided payments for 26
purchase of service credit, which shall be averaged over the employee's 27 UNOFFICIAL COPY 24 RS BR 1130
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total service with the system in which it is recorded if it is equal to or 1
greater than one thousand dollars ($1,000); 2
2. 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
3. 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
4. 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; and 26
3. Any salary or wages paid to an employee for services as a Kentucky 27 UNOFFICIAL COPY 24 RS BR 1130
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State Police school resource officer as defined by KRS 158.441; 1
(9) "Final compensation" means: 2
(a) For a member who begins participating before September 1, 2008, the 3
creditable compensation of a member during the three (3) fiscal years he or 4
she was paid at the highest average monthly rate divided by the number of 5
months of service credit during the three (3) year period, multiplied by twelve 6
(12); the three (3) years may be fractional and need not be consecutive. If the 7
number of months of service credit during the three (3) year period is less than 8
twenty-four (24), one (1) or more additional fiscal years shall be used; or 9
(b) For a member who begins participating on or after September 1, 2008, but 10
prior to January 1, 2014, or a member who begins participating on or after 11
January 1, 2025, or a member who is presumed under Section 1 of this Act 12
to begin participating immediately prior to January 1, 2014, the creditable 13
compensation of the member during the three (3) complete fiscal years he or 14
she was paid at the highest average monthly rate divided by three (3). Each 15
fiscal year used to determine final compensation must contain twelve (12) 16
months of service credit. If the member does not have three (3) complete 17
fiscal years that each contain twelve (12) months of service credit, then one 18
(1) or more additional fiscal years, which may contain less than twelve (12) 19
months of service credit, shall be added until the number of months in the 20
final compensation calculation is at least thirty-six (36) months; 21
(10) "Final rate of pay" means the actual rate upon which earnings of a member were 22
calculated during the twelve (12) month period immediately preceding the 23
member's effective retirement date, including employee contributions picked up 24
after August 1, 1982, pursuant to KRS 16.545(4). The rate shall be certified to the 25
system by the employer and the following equivalents shall be used to convert the 26
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 27 UNOFFICIAL COPY 24 RS BR 1130
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workdays, one thousand nine hundred fifty (1,950) hours for seven and one-half (7-1
1/2) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve 2
(12) months, or one (1) year; 3
(11) "Retired member" means any former member receiving a retirement allowance or 4
any former member who has filed the necessary documents for retirement benefits 5
and is no longer contributing to the retirement system; 6
(12) "Retirement allowance" means the retirement payments to which a retired member 7
is entitled; 8
(13) "Actuarial equivalent" means a benefit of equal value when computed upon the 9
basis of actuarial tables adopted by the board. In cases of disability retirement, the 10
options authorized by KRS 61.635 shall be computed by adding ten (10) years to 11
the age of the member, unless the member has chosen the Social Security 12
adjustment option as provided for in KRS 61.635(8), in which case the member's 13
actual age shall be used. For members who began participating in the system prior 14
to January 1, 2014, or who begin participating in the system on or after January 15
1, 2025, or who are presumed under Section 1 of this Act to begin participating in 16
the system immediately prior to January 1, 2014, no disability retirement option 17
shall be less than the same option computed under early retirement; 18
(14) "Authorized leave of absence" means any time during which a person is absent 19
from employment but retained in the status of an employee in accordance with the 20
personnel policy of the Department of Kentucky State Police; 21
(15) "Normal retirement date" means: 22
(a) For a member who begins participating before September 1, 2008, the first 23
day of the month following a member's fifty-fifth birthday, except that for 24
members over age fifty-five (55) on July 1, 1958, it shall mean January 1, 25
1959; or 26
(b) For a member who begins participating on or after September 1, 2008, the 27 UNOFFICIAL COPY 24 RS BR 1130
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first day of the month following a member's sixtieth birthday; 1
(16) "Disability retirement date" means the first day of the month following the last day 2
of paid employment; 3
(17) "Dependent child" means a child in the womb and a natural or legally adopted child 4
of the member who has neither attained age eighteen (18) nor married or who is an 5
unmarried full-time student who has not attained age twenty-two (22). Solely in the 6
cases where a member dies as a direct result of an act in line of duty as defined in 7
this section, dies as a result of a duty-related injury as defined in KRS 61.621, 8
becomes totally and permanently disabled as a direct result of an act in line of duty 9
as defined in this section, or becomes disabled as a result of a duty-related injury as 10
defined in KRS 61.621 and is eligible for the benefits provided by KRS 11
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 12
child of the member, regardless of the child's age, if the child has been determined 13
to be eligible for federal Social Security disability benefits or is being claimed as a 14
qualifying child for tax purposes due to the child's total and permanent disability; 15
(18) "Optional allowance" means an actuarially equivalent benefit elected by the 16
member in lieu of all other benefits provided by KRS 16.505 to 16.652; 17
(19) "Act in line of duty" means: 18
(a) A single act occurring or a single thing done, which, as determined by the 19
board, was required in the performance of the duties specified in KRS 16.060; 20
(b) For employees in hazardous positions under KRS 61.592, a single act 21
occurring which was required in the performance of the principal duties of the 22
position as defined by the job description; or 23
(c) For employees participating in the State Police Retirement System and for 24
employees who are in hazardous positions under KRS 61.592, a single act of 25
violence committed against the employee that is found to be related to his or 26
her job duties, whether or not it occurs at his or her job site; 27 UNOFFICIAL COPY 24 RS BR 1130
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(20) "Early retirement date" means: 1
(a) For a member who begins participating before September 1, 2008, the 2
retirement date declared by a member who is not less than fifty (50) years of 3
age and has fifteen (15) years of service; or 4
(b) For a member who begins participating on or after September 1, 2008, but 5
prior to January 1, 2014, or a member who begins participating on or after 6
January 1, 2025, or a member who is presumed under Section 1 of this Act 7
to begin participating immediately prior to January 1, 2014, the retirement 8
date declared by a member who is not less than fifty (50) years of age and has 9
fifteen (15) years of service credited under KRS 16.543(1) or 61.543(1) or 10
another state-administered retirement system; 11
(21) "Member" means any officer included in the membership of the system as provided 12
under KRS 16.520 whose membership has not been terminated under KRS 61.535; 13
(22) "Regular full-time officers" means the occupants of positions as set forth in KRS 14
16.010; 15
(23) "Hazardous disability" as used in KRS 16.505 to 16.652 means a disability which 16
results in an employee's total incapacity to continue as an employee in a hazardous 17
position, but the employee is not necessarily deemed to be totally and permanently 18
disabled to engage in other occupations for remuneration or profit; 19
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 20
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 21
pay. The rate shall be certified by the employer; 22
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 23
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 24
in the event of the member's death. As used in KRS 61.702, "beneficiary" does not 25
mean an estate, trust, or trustee; 26
(26) "Recipient" means the retired member, the person or persons designated as 27 UNOFFICIAL COPY 24 RS BR 1130
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beneficiary by the member and drawing a retirement allowance as a result of the 1
member's death, or a dependent child drawing a retirement allowance. An alternate 2
payee of a qualified domestic relations order shall not be considered a recipient, 3
except for purposes of KRS 61.623; 4
(27) "Person" means a natural person; 5
(28) "Retirement office" means the Kentucky Public Pensions Authority office building 6
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 7
Authority; 8
(29) "Vested" for purposes of determining eligibility for purchasing service credit under 9
KRS 61.552 means the employee has at least forty-eight (48) months of service if 10
age sixty-five (65) or older or at least sixty (60) months of service if under the age 11
of sixty-five (65). For purposes of this subsection, "service" means service in the 12
systems administered by the Kentucky Retirement Systems and County Employees 13
Retirement Systems; 14
(30) "Last day of paid employment" means the last date employer and employee 15
contributions are required to be reported in accordance with KRS 16.543 or 61.543 16
to the retirement office in order for the employee to receive current service credit 17
for the month. Last day of paid employment does not mean a date the employee 18
receives payment for accrued leave, whether by lump sum or otherwise, if that date 19
occurs twenty-four (24) or more months after previous contributions; 20
(31) "Objective medical evidence" means reports of examinations or treatments; medical 21
signs which are anatomical, physiological, or psychological abnormalities that can 22
be observed; psychiatric signs which are medically demonstrable phenomena 23
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 24
or contact with reality; or laboratory findings which are anatomical, physiological, 25
or psychological phenomena that can be shown by medically acceptable laboratory 26
diagnostic techniques, including but not limited to chemical tests, 27 UNOFFICIAL COPY 24 RS BR 1130
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electrocardiograms, electroencephalograms, X-rays, and psychological tests; 1
(32) "Fiscal year" of the system means the twelve (12) months from July 1 through the 2
following June 30, which shall also be the plan year. The "fiscal year" shall be the 3
limitation year used to determine contribution and benefit limits established by 26 4
U.S.C. sec. 415; 5
(33) "Participating" means an employee is currently earning service credit in the system 6
as provided in KRS 16.543; 7
(34) "Month" means a calendar month; 8
(35) "Membership date" means the date upon which the member began participating in 9
the system as provided by KRS 16.543; 10
(36) "Participant" means a member, as defined by subsection (21) of this section, or a 11
retired member, as defined by subsection (11) of this section; 12
(37) "Qualified domestic relations order" means any judgment, decree, or order, 13
including approval of a property settlement agreement, that: 14
(a) Is issued by a court or administrative agency; and 15
(b) Relates to the provision of child support, alimony payments, or marital 16
property rights to an alternate payee; 17
(38) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 18
participant, who is designated to be paid retirement benefits in a qualified domestic 19
relations order; 20
(39) "Accumulated employer credit" means the employer pay credit deposited to the 21
member's account and interest credited on such amounts as provided by KRS 22
16.583; 23
(40) "Accumulated account balance" means: 24
(a) For members who began participating in the system prior to January 1, 2014, 25
the member's accumulated contributions; or 26
(b) For members who began participating in the system on or after January 1, 27 UNOFFICIAL COPY 24 RS BR 1130
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2014, but prior to January 1, 2025, in the hybrid cash balance plan as 1
provided by KRS 16.583, who make an election under subsection (3) of 2
Section 1 of this Act, and for those members who prior to the effective date 3
of this Act made an election under Section 7 of this Act, the combined sum 4
of the member's accumulated contributions and the member's accumulated 5
employer[ pay] credit; and 6
(41) "Monthly average pay" means: 7
(a) In the case of a member who dies as a direct result of an act in line of duty as 8
defined in this section or who dies as a result of a duty-related injury as 9
defined in KRS 61.621, the higher of the member's monthly final rate of pay 10
or the average monthly creditable compensation earned by the deceased 11
member during his or her last twelve (12) months of employment; or 12
(b) In the case where a member becomes totally and permanently disabled as a 13
direct result of an act in line of duty as defined in this section or becomes 14
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 15
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 16
member's monthly final rate of pay or the average monthly creditable 17
compensation earned by the disabled member during his or her last twelve 18
(12) months of employment prior to the date the act in line of duty or duty-19
related injury occurred. 20
Section 9. KRS 16.560 is amended to read as follows: 21
(1) The member account shall be the account to which: 22
(a) All members' contributions, or contributions picked up by the employer after 23
August 1, 1982, and interest allowances as provided in KRS 16.505 to 16.652 24
shall be credited, except as provided by KRS 61.702(2)(b); and 25
(b) For members who begin participating in the system on or after January 1, 26
2014, but prior to January 1, 2025, who make an election under subsection 27 UNOFFICIAL COPY 24 RS BR 1130
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(3) of Section 1 of this Act, and for those members who prior to the effective 1
date of this Act made an election under Section 7 of this Act, the employer 2
pay credit and interest credited on such amounts as provided by KRS 16.583 3
shall be credited. 4
Only funds from this account shall be used to return accumulated contributions or 5
accumulated account balances of a member when required by reason of any 6
provision of KRS 16.505 to 16.652. Prior to the member's retirement, death, or 7
refund in accordance with KRS 61.625, no funds shall be made available from the 8
member's account. 9
(2) Each member's contribution or contribution picked up by the employer shall be 10
credited to the individual account of the contributing member, except as provided 11
by KRS 61.702(2)(b). 12
(3) (a) Each member shall have his or her individual account credited with interest 13
on June 30 of each fiscal year. 14
(b) For members who begin participating before September 1, 2008, interest shall 15
be credited to their individual account at a rate determined by the board but 16
not less than two and one-half percent (2.5%) per annum on the accumulated 17
account balance of the member on June 30 of the preceding fiscal year. 18
(c) For members who begin participating on or after September 1, 2008, but prior 19
to January 1, 2014, or who begin participating on or after January 1, 2025, 20
or who are presumed under Section 1 of this Act to begin participating 21
immediately prior to January 1, 2014, interest shall be credited to their 22
individual account at a rate of two and one-half percent (2.5%) per annum on 23
the accumulated account balance of the member on June 30 of the preceding 24
fiscal year. 25
(d) For members who begin participating on or after January 1, 2014, but prior to 26
January 1, 2025, who make an election under subsection (3) of Section 1 of 27 UNOFFICIAL COPY 24 RS BR 1130
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this Act, and those members who prior to the effective date of this Act made 1
an election under Section 7 of this Act to opt into[in] the hybrid cash balance 2
plan, interest shall be credited to their individual account in accordance with 3
KRS 16.583. 4
(e) The amounts of interest credited to a member's account under this subsection 5
and KRS 16.583 and the employer pay credit as provided by KRS 16.583 6
shall be transferred from the retirement allowance account. 7
(4) (a) Upon the retirement of a member who began participating in the system prior 8
to January 1, 2014, or a member who begins participating on or after 9
January 1, 2025, or a member who is presumed under Section 1 of this Act 10
to begin participating immediately prior to January 1, 2014, his or her 11
accumulated account balance shall be transferred from the member's account 12
to the retirement allowance account. 13
(b) Upon the retirement of a member who began participating in the system on or 14
after January 1, 2014, but prior to January 1, 2025, who makes an election 15
under subsection (3) of Section 1 of this Act, or who prior to the effective 16
date of this Act made an election under Section 7 of this Act, who elects to 17
annuitize his or her accumulated account balance as prescribed by KRS 18
16.583(7)(a) or (b), the member's accumulated account balance shall be 19
transferred to the retirement allowance account. 20
(5) Included as a part of such member's account shall be his or her accumulated 21
account balance in the Kentucky Employees Retirement System, if any, transferred 22
to this system. 23
Section 10. KRS 16.578 is amended to read as follows: 24
(1) If a member dies prior to the first day of the month in which the member would 25
have received his or her first retirement allowance, the member's beneficiary shall 26
be eligible for the benefits provided by this section if the member had on file a 27 UNOFFICIAL COPY 24 RS BR 1130
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written designation of a beneficiary with the retirement office as provided by KRS 1
61.542 and the member met the following conditions at the date of his or her death: 2
(a) The member was eligible to retire under KRS 16.576, 16.577, or 16.583(6); 3
(b) The member was in active employment or on authorized leave of absence 4
with five (5) or more years of service credit and died prior to his or her normal 5
retirement date; or 6
(c) The member was not in active employment or on authorized leave of absence 7
with twelve (12) or more years of service credit and died prior to his or her 8
normal retirement date. 9
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 10
a single person, then the beneficiary may elect to receive: 11
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 12
benefit that would have been paid had the member retired immediately prior 13
to his or her date of death and elected to receive benefits payable under the 14
survivorship one hundred percent (100%) option as provided in KRS 15
61.635(2); 16
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 17
Social Security adjustment option as provided in KRS 61.635(9) that is the 18
actuarial equivalent to the amount computed under paragraph (a) of this 19
subsection; 20
(c) A monthly benefit payable for a period of sixty (60) months that is the 21
actuarial equivalent to the amount computed under paragraph (a) of this 22
subsection; 23
(d) A monthly benefit payable for a period of one hundred twenty (120) months 24
that is the actuarial equivalent to the amount computed under paragraph (a) of 25
this subsection; 26
(e) If the member began participating in the system prior to January 1, 2014, or 27 UNOFFICIAL COPY 24 RS BR 1130
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began participating on or after January 1, 2025, or is presumed under 1
Section 1 of this Act to have begun participating immediately prior to 2
January 1, 2014, a monthly benefit payable for: 3
1. Sixty (60) months certain; 4
2. One hundred twenty (120) months certain; 5
3. The actuarial equivalent refund; or 6
4. The Social Security adjustment option; 7
that is equivalent to the benefit the member would have been entitled to 8
receive based on his or her years of service and final compensation at the date 9
of his or her death reduced by the survivorship fifty percent (50%) factor as 10
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 11
is the actuarial equivalent to the amount computed under paragraph (a) of this 12
subsection; or 13
(f) The higher of a refund of the member's accumulated account balance and 14
interest as described in KRS 61.625(1) or a one (1) time lump-sum payment 15
which shall be the actuarial equivalent of the amount payable under paragraph 16
(a) of this subsection for a period of sixty (60) months. 17
(3) If the beneficiary eligible for benefits as provided in subsection (1) of this section 18
are multiple beneficiaries or a trust, then the multiple beneficiaries by consensus or 19
the trustee may elect to receive the actuarial equivalent amounts payable under 20
subsection (2)(c), (d), (e), or (f) of this section using the assumption that the 21
beneficiary's age is the same as the member's age. 22
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 23
the member's estate, then the beneficiary shall receive the higher of a refund of the 24
member's accumulated account balance and interest as described in KRS 61.625(1) 25
or the one (1) time lump-sum payment payable under subsection (2)(f) of this 26
section, using the assumption that the beneficiary's age is the same as the member's 27 UNOFFICIAL COPY 24 RS BR 1130
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age. 1
(5) Payments of taxable distributions made pursuant to this section shall be subject to 2
state and federal tax as appropriate. 3
Section 11. KRS 16.582 is amended to read as follows: 4
(1) (a) Total and permanent disability means a disability which results in the 5
member's incapacity to engage in any occupation for remuneration or profit. 6
Loss by severance of both hands at or above the wrists, or both feet at or 7
above the ankles, or one (1) hand above the wrist and one (1) foot above the 8
ankle, or the complete, irrevocable loss of the sight of both eyes shall be 9
considered as total and permanent. 10
(b) Hazardous disability means a disability which results in the member's total 11
incapacity to continue as a regular full-time officer or as an employee in a 12
hazardous position, as defined in KRS 61.592, but which does not result in the 13
member's total and permanent incapacity to engage in other occupations for 14
remuneration or profit. 15
(c) In determining whether the disability meets the requirement of this section, 16
any reasonable accommodation provided by the employer as provided in 42 17
U.S.C. sec. 12111(9) and 29 C.F.R. pt. 1630 shall be considered. 18
(d) If the board determines that the total and permanent disability of a member 19
receiving a retirement allowance under this section has ceased, then the board 20
shall determine if the member has a hazardous disability. 21
(2) Any person may qualify to retire on disability, subject to the following: 22
(a) The person shall have sixty (60) months of service, twelve (12) of which shall 23
be current service credited under KRS 16.543(1), 61.543(1), or 78.615(1). The 24
service requirement shall be waived if the disability is a total and permanent 25
disability or a hazardous disability and is a direct result of an act in line of 26
duty; 27 UNOFFICIAL COPY 24 RS BR 1130
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(b) For a person whose membership date is prior to August 1, 2004, the person 1
shall not be eligible for an unreduced retirement allowance; 2
(c) The person's application shall be on file in the retirement office no later than 3
twenty-four (24) months after the person's last day of paid employment, as 4
defined in KRS 16.505, as a regular full-time officer or in a regular full-time 5
hazardous position under KRS 61.592; 6
(d) The person shall receive a satisfactory determination pursuant to KRS 61.665; 7
and 8
(e) A person's disability application based on the same claim of incapacity shall 9
be accepted and reconsidered for disability if accompanied by new objective 10
medical evidence. The application shall be on file in the retirement office no 11
later than twenty-four (24) months after the person's last day of paid 12
employment as a regular full-time officer or in a regular full-time hazardous 13
position. 14
(3) Upon the examination of the objective medical evidence by licensed physicians 15
pursuant to KRS 61.665, it shall be determined that: 16
(a) The incapacity results from bodily injury, mental illness, or disease. For 17
purposes of this section, "injury" means any physical harm or damage to the 18
human organism other than disease or mental illness; 19
(b) The incapacity is deemed to be permanent; and 20
(c) The incapacity does not result directly or indirectly from: 21
1. Injury intentionally self-inflicted while sane or insane; or 22
2. Bodily injury, mental illness, disease, or condition which pre-existed 23
membership in the system or reemployment, whichever is most recent, 24
unless: 25
a. The disability results from bodily injury, mental illness, disease, or 26
a condition which has been substantially aggravated by an injury 27 UNOFFICIAL COPY 24 RS BR 1130
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or accident arising out of or in the course of employment; or 1
b. The person has at least sixteen (16) years' current or prior service 2
for employment with employers participating in the retirement 3
systems administered by the Kentucky Retirement Systems or the 4
County Employees Retirement System. 5
For purposes of this subparagraph, "reemployment" shall not mean a 6
change of employment between employers participating in the 7
retirement systems administered by the Kentucky Retirement Systems or 8
the County Employees Retirement System with no loss of service credit. 9
(4) (a) 1. An incapacity shall be deemed to be permanent for the purpose of 10
hazardous disability if it is expected to result in death or can be expected 11
to last for a continuous period of not less than twelve (12) months from 12
the person's last day of paid employment in a position as a regular full-13
time officer or a hazardous position. 14
2. The determination of a permanent incapacity for the purpose of 15
hazardous disability shall be based on the medical evidence contained in 16
the member's file and the member's residual functional capacity and 17
physical exertion requirements. 18
3. The determination of a total and permanent incapacity shall be based on 19
the medical evidence contained in the member's file and the member's 20
residual functional capacity. 21
(b) The person's residual functional capacity shall be the person's capacity for 22
work activity on a regular and continuing basis. The person's physical ability 23
shall be assessed in light of the severity of the person's physical, mental, and 24
other impairments. The person's ability to walk, stand, carry, push, pull, reach, 25
handle, and other physical functions shall be considered with regard to 26
physical impairments. The person's ability to understand, remember, and carry 27 UNOFFICIAL COPY 24 RS BR 1130
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out instructions and respond appropriately to supervision, coworkers, and 1
work pressures in a work setting shall be considered with regard to mental 2
impairments. Other impairments, including skin impairments, epilepsy, visual 3
sensory impairments, postural and manipulative limitations, and 4
environmental restrictions, shall be considered in conjunction with the 5
person's physical and mental impairments to determine residual functional 6
capacity. 7
(c) The person's physical exertion requirements shall be determined based on the 8
following standards: 9
1. Sedentary work shall be work that involves lifting no more than ten (10) 10
pounds at a time and occasionally lifting or carrying articles such as 11
large files, ledgers, and small tools. Although a sedentary job primarily 12
involves sitting, occasional walking and standing may also be required 13
in the performance of duties. 14
2. Light work shall be work that involves lifting no more than twenty (20) 15
pounds at a time with frequent lifting or carrying of objects weighing up 16
to ten (10) pounds. A job shall be in this category if lifting is 17
infrequently required but walking and standing are frequently required, 18
or if the job primarily requires sitting with pushing and pulling of arm or 19
leg controls. If the person has the ability to perform substantially all of 20
these activities, the person shall be deemed capable of light work. A 21
person deemed capable of light work shall be deemed capable of 22
sedentary work unless the person has additional limitations such as the 23
loss of fine dexterity or inability to sit for long periods. 24
3. Medium work shall be work that involves lifting no more than fifty (50) 25
pounds at a time with frequent lifting or carrying of objects weighing up 26
to twenty-five (25) pounds. If the person is deemed capable of medium 27 UNOFFICIAL COPY 24 RS BR 1130
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work, the person shall be deemed capable of light and sedentary work. 1
4. Heavy work shall be work that involves lifting no more than one 2
hundred (100) pounds at a time with frequent lifting or carrying of 3
objects weighing up to fifty (50) pounds. If the person is deemed 4
capable of heavy work, the person shall also be deemed capable of 5
medium, light, and sedentary work. 6
5. Very heavy work shall be work that involves lifting objects weighing 7
more than one hundred (100) pounds at a time with frequent lifting or 8
carrying of objects weighing fifty (50) or more pounds. If the person is 9
deemed capable of very heavy work, the person shall be deemed capable 10
of heavy, medium, light, and sedentary work. 11
(5) (a) For a member whose participation begins prior to August 1, 2004, the 12
disability retirement allowance shall be determined as provided in KRS 13
16.576, except if the member's total service credit on his or her last day of 14
paid employment in a regular full-time position is less than twenty (20) years, 15
service shall be added beginning with his or her last date of paid employment 16
and continuing to his or her fifty-fifth birthday. The maximum service credit 17
added shall not exceed the total service the member had on his or her last day 18
of paid employment, and the maximum service credit for calculating his or 19
her retirement allowance, including his or her total service and service added 20
under this section, shall not exceed twenty (20) years. 21
(b) For a member whose participation begins on or after August 1, 2004, but prior 22
to January 1, 2014, or whose participation begins on or after January 1, 23
2025, or whose participation is presumed under Section 1 of this Act to 24
begin immediately prior to January 1, 2014, the disability retirement 25
allowance shall be the higher of twenty-five percent (25%) of the member's 26
monthly final rate of pay or the retirement allowance determined in the same 27 UNOFFICIAL COPY 24 RS BR 1130
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manner as for retirement at his or her normal retirement date with years of 1
service and final compensation being determined as of the date of his or her 2
disability. 3
(c) For a member who begins participating on or after January 1, 2014, but prior 4
to January 1, 2025, in the hybrid cash balance plan as provided by KRS 5
16.583, who makes an election under subsection (3) of Section 1 of this Act, 6
or who prior to the effective date of this Act made an election under Section 7
7 of this Act, the disability retirement allowance shall be the higher of twenty-8
five percent (25%) of the member's monthly final rate of pay or the retirement 9
allowance determined in the same manner as for retirement at his or her 10
normal retirement date under KRS 16.583. 11
(6) If the member receives a satisfactory determination of hazardous disability pursuant 12
to KRS 61.665 and the disability is the direct result of an act in line of duty as 13
defined in KRS 16.505, the member's retirement allowance shall be calculated as 14
follows: 15
(a) For the disabled member, benefits as provided in subsection (5) of this section 16
except that the monthly retirement allowance payable shall not be less than 17
twenty-five percent (25%) of the member's monthly final rate of pay; and 18
(b) For each dependent child of the member on his or her disability retirement 19
date, who is alive at the time any particular payment is due, a monthly 20
payment equal to ten percent (10%) of the disabled member's monthly final 21
rate of pay; however, total maximum dependent children's benefit shall not 22
exceed forty percent (40%) of the member's monthly final rate of pay. The 23
payments shall be payable to each dependent child, or to a legally appointed 24
guardian or as directed by the system. 25
(7) If the member receives a satisfactory determination of total and permanent 26
disability pursuant to KRS 61.665 and the disability is the direct result of an act in 27 UNOFFICIAL COPY 24 RS BR 1130
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line of duty as defined in KRS 16.505, the member's retirement allowance shall be 1
calculated as follows: 2
(a) For the disabled member, the benefits as provided in subsection (5) of this 3
section except that the monthly retirement allowance payable shall not be less 4
than seventy-five percent (75%) of the member's monthly average pay; and 5
(b) For each dependent child of the member on his or her disability retirement 6
date, who is alive at the time any particular payment is due, a monthly 7
payment equal to ten percent (10%) of the disabled member's monthly 8
average pay, except that: 9
1. Member and dependent children payments under this subsection shall 10
not exceed one hundred percent (100%) of the member's monthly 11
average pay; and 12
2. Total maximum dependent children's benefits shall not exceed twenty-13
five percent (25%) of the member's monthly average pay while the 14
member is living and forty percent (40%) of the member's monthly 15
average pay after the member's death. The payments shall be payable to 16
each dependent child, or to a legally appointed guardian or as directed 17
by the system, and shall be divided equally among all dependent 18
children. 19
(8) No benefit provided in this section shall be reduced as a result of any change in the 20
extent of disability of any retired member who is the age of normal retirement or 21
older. 22
(9) If a regular full-time officer or hazardous position member has been approved for 23
benefits under a hazardous disability, the board shall, upon request of the member, 24
permit the member to receive the hazardous disability allowance while accruing 25
benefits in a nonhazardous position, subject to proper medical review of the 26
nonhazardous position's job description by the system's medical examiner. 27 UNOFFICIAL COPY 24 RS BR 1130
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(10) For a member of the State Police Retirement System, in lieu of the allowance 1
provided in subsection (5) to (7) of this section, the member may be retained on the 2
regular payroll and receive the compensation authorized by KRS 16.165, if he or 3
she is qualified. 4
Section 12. KRS 61.510 is amended to read as follows: 5
As used in KRS 61.510 to 61.705, unless the context otherwise requires: 6
(1) "System" means the Kentucky Employees Retirement System created by KRS 7
61.510 to 61.705; 8
(2) "Board" means the board of trustees of the system as provided in KRS 61.645; 9
(3) "Department" means any state department or board or agency participating in the 10
system in accordance with appropriate executive order, as provided in KRS 61.520. 11
For purposes of KRS 61.510 to 61.705, the members, officers, and employees of the 12
General Assembly and any other body, entity, or instrumentality designated by 13
executive order by the Governor, shall be deemed to be a department, 14
notwithstanding whether said body, entity, or instrumentality is an integral part of 15
state government; 16
(4) "Examiner" means the medical examiners as provided in KRS 61.665; 17
(5) "Employee" means the members, officers, and employees of the General Assembly 18
and every regular full-time, appointed or elective officer or employee of a 19
participating department, including the Department of Military Affairs. The term 20
does not include persons engaged as independent contractors, seasonal, emergency, 21
temporary, interim, and part-time workers. In case of any doubt, the board shall 22
determine if a person is an employee within the meaning of KRS 61.510 to 61.705; 23
(6) "Employer" means a department or any authority of a department having the power 24
to appoint or select an employee in the department, including the Senate and the 25
House of Representatives, or any other entity, the employees of which are eligible 26
for membership in the system pursuant to KRS 61.525; 27 UNOFFICIAL COPY 24 RS BR 1130
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(7) "State" means the Commonwealth of Kentucky; 1
(8) "Member" means any employee who is included in the membership of the system 2
or any former employee whose membership has not been terminated under KRS 3
61.535; 4
(9) "Service" means the total of current service and prior service as defined in this 5
section; 6
(10) "Current service" means the number of years and months of employment as an 7
employee, on and after July 1, 1956, except that for members, officers, and 8
employees of the General Assembly this date shall be January 1, 1960, for which 9
creditable compensation is paid and employee contributions deducted, except as 10
otherwise provided, and each member, officer, and employee of the General 11
Assembly shall be credited with a month of current service for each month he or 12
she serves in the position; 13
(11) "Prior service" means the number of years and completed months, expressed as a 14
fraction of a year, of employment as an employee, prior to July 1, 1956, for which 15
creditable compensation was paid; except that for members, officers, and 16
employees of the General Assembly, this date shall be January 1, 1960. An 17
employee shall be credited with one (1) month of prior service only in those months 18
he received compensation for at least one hundred (100) hours of work; provided, 19
however, that each member, officer, and employee of the General Assembly shall 20
be credited with a month of prior service for each month he or she served in the 21
position prior to January 1, 1960. Twelve (12) months of current service in the 22
system are required to validate prior service; 23
(12) "Accumulated contributions" at any time means the sum of all amounts deducted 24
from the compensation of a member and credited to his or her individual account in 25
the members' account, including employee contributions picked up after August 1, 26
1982, pursuant to KRS 61.560(4), together with interest credited, on such amounts 27 UNOFFICIAL COPY 24 RS BR 1130
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and any other amounts the member shall have contributed thereto, including interest 1
credited thereon. For members who begin participating on or after September 1, 2
2008, "accumulated contributions" shall not include employee contributions that are 3
deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the 4
funds established in KRS 16.510 and 61.515, as prescribed by KRS 61.702(3)(b); 5
(13) "Creditable compensation": 6
(a) Means all salary, wages, tips to the extent the tips are reported for income tax 7
purposes, and fees, including payments for compensatory time, paid to the 8
employee as a result of services performed for the employer or for time during 9
which the member is on paid leave, which are includable on the member's 10
federal form W-2 wage and tax statement under the heading "wages, tips, 11
other compensation," including employee contributions picked up after 12
August 1, 1982, pursuant to KRS 61.560(4). For members of the General 13
Assembly, it shall mean all amounts 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 6.505(4) or 61.560(4); 17
(b) Includes: 18
1. Lump-sum bonuses, severance pay, or employer-provided payments for 19
purchase of service credit, which shall be averaged over the employee's 20
total service with the system in which it is recorded if it is equal to or 21
greater than one thousand dollars ($1,000); 22
2. Cases where compensation includes maintenance and other perquisites, 23
but the board shall fix the value of that part of the compensation not paid 24
in money; 25
3. Lump-sum payments for creditable compensation paid as a result of an 26
order of a court of competent jurisdiction, the Personnel Board, or the 27 UNOFFICIAL COPY 24 RS BR 1130
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Commission on Human Rights, or for any creditable compensation paid 1
in anticipation of settlement of an action before a court of competent 2
jurisdiction, the Personnel Board, or the Commission on Human Rights, 3
including notices of violations of state or federal wage and hour statutes 4
or violations of state or federal discrimination statutes, which shall be 5
credited to the fiscal year during which the wages were earned or should 6
have been paid by the employer. This subparagraph shall also include 7
lump-sum payments for reinstated wages pursuant to KRS 61.569, 8
which shall be credited to the period during which the wages were 9
earned or should have been paid by the employer; 10
4. Amounts which are not includable in the member's gross income by 11
virtue of the member having taken a voluntary salary reduction provided 12
for under applicable provisions of the Internal Revenue Code; and 13
5. Elective amounts for qualified transportation fringes paid or made 14
available on or after January 1, 2001, for calendar years on or after 15
January 1, 2001, that are not includable in the gross income of the 16
employee by reason of 26 U.S.C. sec. 132(f)(4); and 17
(c) Excludes: 18
1. Living allowances, expense reimbursements, lump-sum payments for 19
accrued vacation leave, and other items determined by the board; 20
2. For employees who begin participating on or after September 1, 2008, 21
lump-sum payments for compensatory time; 22
3. For employees who begin participating on or after August 1, 2016, 23
nominal fees paid for services as a volunteer; and 24
4. Any salary or wages paid to an employee for services as a Kentucky 25
State Police school resource officer as defined by KRS 158.441; 26
(14) "Final compensation" of a member means: 27 UNOFFICIAL COPY 24 RS BR 1130
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(a) For a member who begins participating before September 1, 2008, who is 1
employed in a nonhazardous position, the creditable compensation of the 2
member during the five (5) fiscal years he or she was paid at the highest 3
average monthly rate divided by the number of months of service credit 4
during that five (5) year period multiplied by twelve (12). The five (5) years 5
may be fractional and need not be consecutive. If the number of months of 6
service credit during the five (5) year period is less than forty-eight (48), one 7
(1) or more additional fiscal years shall be used; 8
(b) For a member who is employed in a nonhazardous position, whose effective 9
retirement date is between August 1, 2001, and January 1, 2009, and whose 10
total service credit is at least twenty-seven (27) years and whose age and years 11
of service total at least seventy-five (75), final compensation means the 12
creditable compensation of the member during the three (3) fiscal years the 13
member was paid at the highest average monthly rate divided by the number 14
of months of service credit during that three (3) years period multiplied by 15
twelve (12). The three (3) years may be fractional and need not be 16
consecutive. If the number of months of service credit during the three (3) 17
year period is less than twenty-four (24), one (1) or more additional fiscal 18
years shall be used. Notwithstanding the provision of KRS 61.565, the 19
funding for this paragraph shall be provided from existing funds of the 20
retirement allowance; 21
(c) For a member who begins participating before September 1, 2008, who is 22
employed in a hazardous position, as provided in KRS 61.592, the creditable 23
compensation of the member during the three (3) fiscal years he or she was 24
paid at the highest average monthly rate divided by the number of months of 25
service credit during that three (3) year period multiplied by twelve (12). The 26
three (3) years may be fractional and need not be consecutive. If the number 27 UNOFFICIAL COPY 24 RS BR 1130
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of months of service credit during the three (3) year period is less than twenty-1
four (24), one (1) or more additional fiscal years shall be used; 2
(d) For a member who begins participating on or after September 1, 2008, but 3
prior to January 1, 2014, who is employed in a nonhazardous position, the 4
creditable compensation of the member during the five (5) complete fiscal 5
years immediately preceding retirement divided by five (5). Each fiscal year 6
used to determine final compensation must contain twelve (12) months of 7
service credit. If the member does not have five (5) complete fiscal years that 8
each contain twelve (12) months of service credit, then one (1) or more 9
additional fiscal years, which may contain less than twelve (12) months of 10
service credit, shall be added until the number of months in the final 11
compensation calculation is at least sixty (60) months; or 12
(e) For a member who begins participating on or after September 1, 2008, but 13
prior to January 1, 2014, or a member who begins participating on or after 14
January 1, 2025, or a member who is presumed under Section 1 of this Act 15
to begin participating immediately prior to January 1, 2014, who is 16
employed in a hazardous position as provided in KRS 61.592, the creditable 17
compensation of the member during the three (3) complete fiscal years he or 18
she was paid at the highest average monthly rate divided by three (3). Each 19
fiscal year used to determine final compensation must contain twelve (12) 20
months of service credit. If the member does not have three (3) complete 21
fiscal years that each contain twelve (12) months of service credit, then one 22
(1) or more additional fiscal years, which may contain less than twelve (12) 23
months of service credit, shall be added until the number of months in the 24
final compensation calculation is at least thirty-six (36) months; 25
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 26
calculated during the twelve (12) month period immediately preceding the 27 UNOFFICIAL COPY 24 RS BR 1130
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member's effective retirement date, including employee contributions picked up 1
after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the 2
system by the employer and the following equivalents shall be used to convert the 3
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 4
workdays, nineteen hundred fifty (1,950) hours for seven and one-half (7-1/2) hour 5
workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months, 6
one (1) year; 7
(16) "Retirement allowance" means the retirement payments to which a member is 8
entitled; 9
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 10
basis of the actuarial tables that are adopted by the board. In cases of disability 11
retirement, the options authorized by KRS 61.635 shall be computed by adding ten 12
(10) years to the age of the member, unless the member has chosen the Social 13
Security adjustment option as provided for in KRS 61.635(8), in which case the 14
member's actual age shall be used. For members who began participating in the 15
system prior to January 1, 2014, or who begin participating in a hazardous 16
position in the system on or after January 1, 2025, or who are presumed under 17
Section 1 of this Act to begin participating in a hazardous position in the system 18
immediately prior to January 1, 2014, no disability retirement option shall be less 19
than the same option computed under early retirement; 20
(18) "Normal retirement date" means the sixty-fifth birthday of a member, unless 21
otherwise provided in KRS 61.510 to 61.705; 22
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 23
following June 30, which shall also be the plan year. The "fiscal year" shall be the 24
limitation year used to determine contribution and benefit limits as established by 25
26 U.S.C. sec. 415; 26
(20) "Officers and employees of the General Assembly" means the occupants of those 27 UNOFFICIAL COPY 24 RS BR 1130
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positions enumerated in KRS 6.150. The term shall also apply to assistants who 1
were employed by the General Assembly for at least one (1) regular legislative 2
session prior to July 13, 2004, who elect to participate in the retirement system, and 3
who serve for at least six (6) regular legislative sessions. Assistants hired after July 4
13, 2004, shall be designated as interim employees; 5
(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean 6
all positions that average one hundred (100) or more hours per month determined 7
by using the number of months actually worked within a calendar or fiscal year, 8
including all positions except: 9
(a) Seasonal positions, which although temporary in duration, are positions which 10
coincide in duration with a particular season or seasons of the year and which 11
may recur regularly from year to year, the period of time shall not exceed nine 12
(9) months; 13
(b) Emergency positions which are positions utilized by the employer during: 14
1. An emergency as determined by the employer for a period not 15
exceeding thirty (30) working days and are nonrenewable; or 16
2. A state of emergency declared by the President of the United States or 17
the Governor of the Commonwealth of Kentucky that are created or 18
filled specifically for addressing the employer's needs during and as a 19
result of the declared emergency; 20
(c) Temporary positions which are positions of employment with a participating 21
department for a period of time not to exceed nine (9) months and are 22
nonrenewable; 23
(d) Part-time positions which are positions which may be permanent in duration, 24
but which require less than a calendar or fiscal year average of one hundred 25
(100) hours of work per month, determined by using the number of months 26
actually worked within a calendar or fiscal year, in the performance of duty; 27 UNOFFICIAL COPY 24 RS BR 1130
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and 1
(e) Interim positions which are positions established for a one-time or recurring 2
need not to exceed nine (9) months; 3
(22) "Vested" for purposes of determining eligibility for purchasing service credit under 4
KRS 61.552 means the employee has at least forty-eight (48) months of service if 5
age sixty-five (65) or older or at least sixty (60) months of service if under the age 6
of sixty-five (65). For purposes of this subsection, "service" means service in the 7
systems administered by the Kentucky Retirement Systems and County Employees 8
Retirement System; 9
(23) "Parted employer" means a department, portion of a department, board, or agency, 10
such as Outwood Hospital and School, which previously participated in the system, 11
but due to lease or other contractual arrangement is now operated by a publicly held 12
corporation or other similar organization, and therefore is no longer participating in 13
the system. The term "parted employer" shall not include a department, board, or 14
agency that ceased participation in the system pursuant to KRS 61.522; 15
(24) "Retired member" means any former member receiving a retirement allowance or 16
any former member who has filed the necessary documents for retirement benefits 17
and is no longer contributing to the retirement system; 18
(25) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 19
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 20
pay. The rate shall be certified by the employer; 21
(26) "Beneficiary" means the person or persons or estate or trust or trustee designated by 22
the member in accordance with KRS 61.542 or 61.705 to receive any available 23
benefits in the event of the member's death. As used in KRS 61.702, "beneficiary" 24
does not mean an estate, trust, or trustee; 25
(27) "Recipient" means the retired member or the person or persons designated as 26
beneficiary by the member and drawing a retirement allowance as a result of the 27 UNOFFICIAL COPY 24 RS BR 1130
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member's death or a dependent child drawing a retirement allowance. An alternate 1
payee of a qualified domestic relations order shall not be considered a recipient, 2
except for purposes of KRS 61.623; 3
(28) "Level percentage of payroll amortization method" means a method of determining 4
the annual amortization payment on the unfunded actuarial accrued liability as 5
expressed as a percentage of payroll over a set period of years but that may be 6
converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method, 7
the percentage of payroll shall be projected to remain constant for all years 8
remaining in the set period of time and the unfunded actuarially accrued liability 9
shall be projected to be fully amortized at the conclusion of the set period of years; 10
(29) "Increment" means twelve (12) months of service credit which are purchased. The 11
twelve (12) months need not be consecutive. The final increment may be less than 12
twelve (12) months; 13
(30) "Person" means a natural person; 14
(31) "Retirement office" means the Kentucky Public Pensions Authority's office 15
building in Frankfort, unless otherwise designated by the Kentucky Public Pensions 16
Authority; 17
(32) "Last day of paid employment" means the last date employer and employee 18
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 19
78.615 to the retirement office in order for the employee to receive current service 20
credit for the month. Last day of paid employment does not mean a date the 21
employee receives payment for accrued leave, whether by lump sum or otherwise, 22
if that date occurs twenty-four (24) or more months after previous contributions; 23
(33) "Objective medical evidence" means reports of examinations or treatments; medical 24
signs which are anatomical, physiological, or psychological abnormalities that can 25
be observed; psychiatric signs which are medically demonstrable phenomena 26
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 27 UNOFFICIAL COPY 24 RS BR 1130
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or contact with reality; or laboratory findings which are anatomical, physiological, 1
or psychological phenomena that can be shown by medically acceptable laboratory 2
diagnostic techniques, including but not limited to chemical tests, 3
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 4
(34) "Participating" means an employee is currently earning service credit in the system 5
as provided in KRS 61.543; 6
(35) "Month" means a calendar month; 7
(36) "Membership date" means: 8
(a) The date upon which the member began participating in the system as 9
provided in KRS 61.543; 10
(b) For a member electing to participate in the system pursuant to KRS 11
196.167(4) or 311A.022(2) who has not previously participated in the system 12
or the Kentucky Teachers' Retirement System, the date the member began 13
participating in a defined contribution plan that meets the requirements of 26 14
U.S.C. sec. 403(b); or 15
(c) For members bound by an educational contract as a conditional employee to 16
the state of Kentucky prior to December 31, 2003, the date on which the 17
educational contract became effective; 18
(37) "Participant" means a member, as defined by subsection (8) of this section, or a 19
retired member, as defined by subsection (24) of this section; 20
(38) "Qualified domestic relations order" means any judgment, decree, or order, 21
including approval of a property settlement agreement, that: 22
(a) Is issued by a court or administrative agency; and 23
(b) Relates to the provision of child support, alimony payments, or marital 24
property rights to an alternate payee; 25
(39) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 26
participant, who is designated to be paid retirement benefits in a qualified domestic 27 UNOFFICIAL COPY 24 RS BR 1130
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relations order; 1
(40) "Accumulated employer credit" mean the employer pay credit deposited to the 2
member's account and interest credited on such amounts as provided by KRS 3
16.583 and 61.597; 4
(41) "Accumulated account balance" means: 5
(a) For members who began participating in the system prior to January 1, 2014, 6
the member's accumulated contributions; or 7
(b) For members who began participating in the system on or after January 1, 8
2014, in the hybrid cash balance plan as provided by KRS 16.583 and 61.597, 9
and for those members making an election under subsection (3) of Section 1 10
of this Act or Section 7 of this Act, the combined sum of the member's 11
accumulated contributions and the member's accumulated employer credit; 12
(42) "Volunteer" means an individual who: 13
(a) Freely and without pressure or coercion performs hours of service for an 14
employer participating in one (1) of the systems administered by Kentucky 15
Retirement Systems without receipt of compensation for services rendered, 16
except for reimbursement of actual expenses, payment of a nominal fee to 17
offset the costs of performing the voluntary services, or both; and 18
(b) If a retired member, does not become an employee, leased employee, or 19
independent contractor of the employer for which he or she is performing 20
volunteer services for a period of at least twelve (12) months following the 21
retired member's most recent retirement date; 22
(43) "Nominal fee" means compensation earned for services as a volunteer that does not 23
exceed five hundred dollars ($500) per month with each participating employer. 24
Compensation earned for services as a volunteer from more than one (1) 25
participating employer during a month shall not be aggregated to determine whether 26
the compensation exceeds the five hundred dollars ($500) per month maximum 27 UNOFFICIAL COPY 24 RS BR 1130
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provided by this subsection; 1
(44) "Nonhazardous position" means a position that does not meet the requirements of 2
KRS 61.592 or has not been approved by the board as a hazardous position; 3
(45) "Monthly average pay" means: 4
(a) In the case of a member who dies as a direct result of an act in line of duty as 5
defined in KRS 16.505 or who dies as a result of a duty-related injury as 6
defined in KRS 61.621, the higher of the member's monthly final rate of pay 7
or the average monthly creditable compensation earned by the deceased 8
member during his or her last twelve (12) months of employment; or 9
(b) In the case where a member becomes totally and permanently disabled as a 10
direct result of an act in line of duty as defined in KRS 16.505 or becomes 11
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 12
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 13
member's monthly final rate of pay or the average monthly creditable 14
compensation earned by the disabled member during his or her last twelve 15
(12) months of employment prior to the date the act in line of duty or duty-16
related injury occurred; 17
(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 18
61.505; 19
(47) "Executive director" means the executive director of the Kentucky Public Pensions 20
Authority; and 21
(48) "Instructional staff" means the employees of a state college or university 22
participating under KRS 61.520 who are: 23
(a) Faculty; 24
(b) Staff responsible for teaching; or 25
(c) Other individuals employed in an administrative position that is eligible for 26
participation in the Teachers' Insurance and Annuity Association (TIAA) of 27 UNOFFICIAL COPY 24 RS BR 1130
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the Teachers' Retirement System. 1
Section 13. KRS 61.546 is amended to read as follows: 2
(1) Except as otherwise provided by this section, any member of the Kentucky 3
Employees Retirement System or the State Police Retirement System whose 4
retirement date is July 14, 1984, or thereafter, shall receive credit for unused sick 5
leave accrued while contributing to the retirement system from which the retirement 6
benefit is to be paid in accordance with this section. 7
(2) (a) Upon the member's notification of retirement as prescribed in KRS 16.576 or 8
61.590, the employer shall certify the retiring member's unused, accumulated 9
sick leave balance to the system. 10
(b) The member's sick leave balance, expressed in days, shall be divided by the 11
average number of working days per month in the state service and rounded to 12
the nearest number of whole months. 13
(c) Except as provided by subsections (3) and (4) of this section, the member's 14
sick leave balance, expressed in months, shall upon retirement be added to his 15
or her service credit for the purpose of determining his or her annual 16
retirement allowance under KRS 16.505 to 16.652 or 61.510 to 61.705 and for 17
the purpose of determining whether the member is eligible to receive a 18
retirement allowance under KRS 16.505 to 16.652 or 61.510 to 61.705. 19
(3) For a member who begins participating in the Kentucky Employees Retirement 20
System or the State Police Retirement System on or after September 1, 2008, or for 21
a member who begins participating in a hazardous duty position in the Kentucky 22
Employees Retirement System or in the State Police Retirement System on or 23
after January 1, 2025, or for a member who is presumed under Section 1 of this 24
Act to begin participating in a hazardous duty position in the Kentucky 25
Employees Retirement System or in the State Police Retirement System 26
immediately prior to January 1, 2014: 27 UNOFFICIAL COPY 24 RS BR 1130
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(a) The member shall receive no more than twelve (12) months of service credit 1
upon retirement for accumulated unused sick leave accrued while contributing 2
to the retirement system or systems from which the retirement benefit is to be 3
paid; 4
(b) The service credited for accumulated unused sick leave as limited by this 5
section and added to the member's service credit shall be used for purposes of 6
determining the member's annual retirement allowance under KRS 16.505 to 7
16.652 and 61.510 to 61.705; and 8
(c) The service credited for accumulated unused sick leave and added to the 9
member's service credit shall not be used to determine whether a member is 10
eligible to receive a retirement allowance under any of the provisions of KRS 11
16.505 to 16.652 and 61.510 to 61.705 or to reduce any applicable actuarial 12
reductions. 13
(4) For a member who began participating in the Kentucky Employees Retirement 14
System or the State Police Retirement System prior to September 1, 2008, who 15
retires on or after July 1, 2023, the service credited for accumulated unused sick 16
leave and added to the member's service credit shall not be used to determine 17
whether a member is eligible to receive a retirement allowance under any of the 18
provisions of KRS 16.505 to 16.652 and 61.510 to 61.705 or to reduce any 19
applicable actuarial reductions. 20
(5) Notwithstanding any other provision of this section to the contrary, the value of any 21
accumulated sick leave that is added to the member's service credit in the Kentucky 22
Employees Retirement System or the State Police Retirement System on or after 23
July 1, 2010, shall be paid to the retirement system by the last participating 24
Kentucky Employees Retirement System or State Police Retirement System 25
employer based upon a formula adopted by the board. 26
(6) The provisions of this section shall not apply to a participating agency whose 27 UNOFFICIAL COPY 24 RS BR 1130
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employees are not employed by the Commonwealth until the agency certifies to the 1
system that a sick leave program has been formally adopted and is universally 2
administered within the agency, except that any agency participating in the 3
Kentucky Employees Retirement System who has not adopted a sick leave program 4
prior to August 1, 2018, shall not be eligible to adopt a sick leave program under 5
this section. 6
(7) This section shall not apply to: 7
(a) Members in a nonhazardous position who begin participating in the systems 8
administered by Kentucky Retirement Systems on or after January 1, 2014; or 9
(b) Members making an election under subsection (3) of Section 1 of this Act or 10
Section 7 of this Act. 11
Section 14. KRS 61.552 is amended to read as follows: 12
(1) Called to Active Duty Military Service. An employee of an employer participating 13
in the system who is called to active military duty in the Armed Forces of the 14
United States shall be credited in accordance with 38 U.S.C. sec. 4318 with service 15
credit, creditable compensation, and in the case of employees participating in the 16
hybrid cash balance plan, employee contributions, employer credits, and interest 17
credits, for a period of active military duty of up to six (6) years, provided: 18
(a) The employee was called to active military duty in the Armed Forces of the 19
United States: 20
1. After he or she began participating in the system and provided the 21
employee was on leave of absence from the employer and did not 22
withdraw his or her accumulated account balance; or 23
2. Prior to the date he or she began participating in the system and 24
terminated employment with his or her employer; 25
(b) The employee entered active military service within three (3) months of his or 26
her last day of paid employment; 27 UNOFFICIAL COPY 24 RS BR 1130
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(c) His or her discharge military service was terminated in a manner other than as 1
described in 38 U.S.C. sec. 4304; and 2
(d) He or she returns to work with an employer participating in the system within 3
two (2) years after completion of the period of active military duty, or upon 4
the subsequent termination of any total disability which existed at the 5
expiration of the two (2) years after discharge. 6
For periods of active military duty that meet the requirements of this subsection, the 7
employer shall pay the employer contributions payable under KRS 61.565, 61.702, 8
78.5536, and 78.635. 9
(2) (a) Omitted Service. Any person who is entitled to service credit for employment 10
which was not reported by the employer in accordance with KRS 16.543, 11
61.543, or 78.615 may obtain credit for the service subject to the provisions of 12
this subsection. 13
(b) Provided the person pays for the omitted service with within six (6) months of 14
notification by the system, the cost of the service shall be equal to the 15
employee contributions that would have been paid if the person had been 16
correctly reported in accordance with KRS 16.543, 61.543, or 78.615. 17
(c) Any employee participating in one (1) of the state-administered retirement 18
systems entitled to service credit under paragraph (a) of this subsection who 19
has not repaid the employee contributions due within six (6) months of 20
notification by the system may purchase the credit after the six (6) months by 21
paying to the system the employee contributions plus interest at the actuarially 22
assumed rate from the date of initial notification under paragraph (b) of this 23
subsection. 24
(d) Omitted service purchased under this subsection shall: 25
1. Be considered service credited under KRS 16.543(1), 61.543(1), or 26
78.615(1) for purposes of determining eligibility for retirement benefits 27 UNOFFICIAL COPY 24 RS BR 1130
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under KRS 78.510 to 78.852; and 1
2. Not be credited to the member's account until the employer 2
contributions due and any interest or penalties on the delinquent 3
employer contributions for the period of omitted service are received by 4
the system. 5
(e) Employees who begin participating on or after January 1, 2014, in the hybrid 6
cash balance plan provided by KRS 16.583 or 61.597 or 78.5512 or 78.5516 7
shall, upon payment of the employee and employer contributions due under 8
this subsection, have their accumulated account balance increased by the 9
employee contributions, employer pay credits, and interest credits that would 10
have been credited to their member's account if the contributions had been 11
paid on time. 12
(f) Contributions payable by the employer under this subsection for omitted 13
service shall be considered delinquent from the date the employee should 14
have been reported and received service credit in accordance with KRS 15
16.543, 61.543, and 78.615. 16
(3) (a) Recontribution of a Refund. Any employee participating in one (1) of the 17
state-administered retirement systems who has been refunded his or her 18
accumulated account balance under the provisions of KRS 61.625, thereby 19
losing service credit in the system, may regain the credit by paying to the 20
system the amount or amounts refunded by the system with interest at a rate 21
determined by the board. Service purchased under this subsection on or after 22
January 1, 2014, shall not be used to determine the member's participation 23
date in the systems. 24
(b) Recontribution of a refund purchased under this subsection shall not be used 25
in determining a retirement allowance until the member has accrued at least 26
six (6) months of service credit in a state-administered retirement system, 27 UNOFFICIAL COPY 24 RS BR 1130
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excluding the service purchased under this subsection. If the member does not 1
accrue at least six (6) months of service credit in a state-administered 2
retirement system, excluding service purchased under this subsection, then the 3
payment plus interest as provided in KRS 16.560, 61.575, or 78.640 shall be 4
refunded upon retirement, death, or written request following termination of 5
employment. The service requirement shall be waived if the member dies or 6
becomes disabled as provided for by KRS 16.582, 61.600, 61.621, 78.5522, or 7
78.5524. 8
(4) (a) Summer Months. Any employee participating in one (1) of the state-9
administered retirement systems who is or has been employed by a school 10
board or community action agency participating in the County Employees 11
Retirement System or a state-operated school under KRS Chapter 167 or an 12
institution of higher learning participating in the Kentucky Employees 13
Retirement System, who receives service credit for less than twelve (12) 14
months each year, may purchase the additional months of service credit 15
needed to total one (1) year of service credit, except the amount purchased for 16
any specific year shall not exceed three (3) months. 17
(b) The cost of the summer months service credit shall be determined by the 18
formula established by subsection (10) of this section and may be purchased 19
by the employee, or the employer on behalf of the employee, or the cost may 20
be paid by both the employer and employee in which case the employer and 21
employee shall each pay fifty percent (50%) of the cost. Service credit shall 22
not be credited to the member's account until both the employer's and 23
employee's payment are received by the system. 24
(c) If the employee has purchased service credit under this subsection based on 25
months reported by the employer for the fiscal year, and an audit of the 26
employee's account reduces the number of months of service credit for which 27 UNOFFICIAL COPY 24 RS BR 1130
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the employee is eligible to no fewer than nine (9) months, the employee shall 1
retain credit for the months purchased unless the employee is ineligible for 2
any service in the fiscal year. The employee shall be eligible to purchase the 3
additional months under this subsection to total one (1) year. 4
(d) This subsection shall not apply to members who began participating in the 5
County Employees Retirement System on or after January 1, 2014. 6
(5) Vested Service Purchases. Any employee who began participating in the County 7
Employees Retirement System, the Kentucky Employees Retirement System, or the 8
State Police Retirement System prior to January 1, 2014, or who began 9
participating in the State Police Retirement System or in a hazardous position in 10
the County Employees Retirement System or the Kentucky Employees Retirement 11
System on or after January 1, 2025, or who is presumed under Section 1 of this 12
Act to have begun participating in the State Police Retirement System or in a 13
hazardous position in the County Employees Retirement System or the Kentucky 14
Employees Retirement System immediately prior to January 1, 2014, who is 15
vested may purchase service credit for: 16
(a) Past service. "Past service" means periods of employment: 17
1. Between July 1, 1956, in the case of the Kentucky Employees 18
Retirement System, or July 1, 1958, in the case of the County 19
Employees Retirement System, and the effective date of participation by 20
the employer; 21
2. Where the employee did not participate in the system due to the 22
employee not electing to participate as provided in KRS 61.525(2) or 23
78.540(1); and 24
3. With a public agency that did not participate in the Kentucky Employees 25
Retirement System but would have been eligible to participate under 26
KRS 61.520 or a political subdivision that did not participate in the 27 UNOFFICIAL COPY 24 RS BR 1130
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County Employees Retirement System but would have been eligible to 1
participate under KRS 78.530, provided the public agency or political 2
subdivision has merged with or been taken over by a participating 3
employer; 4
(b) State university service, provided the university does not participate in a state-5
administered retirement system and the university service being purchased 6
was in a nonteaching position that did not participate in a defined benefit 7
retirement program; 8
(c) 1. Up to ten (10) years of out-of-state service. "Out-of-state" means service 9
credited to a state or local government-administered public defined 10
benefit plan in another state that is not a defined benefit plan for 11
teachers. 12
2. Up to ten (10) years of out-of-state hazardous service. "Out-of-state 13
hazardous service" means service in a regular full-time position that was 14
credited to a defined benefit retirement plan administered by a state or 15
local government in another state, if the service could be certified as 16
hazardous pursuant to KRS 61.592 or 78.5520, as applicable. The 17
employee may purchase out-of-state hazardous service under this 18
subparagraph provided the employee is vested to receive benefits from 19
the State Police Retirement System or hazardous duty benefits from the 20
Kentucky Employees Retirement System or the County Employees 21
Retirement System. 22
The employee must purchase out-of-state service or out-of-state hazardous 23
service in the system in which he or she is vested based solely upon the 24
service in that system; 25
(d) Active military duty, which means periods of active military duty in the 26
Armed Forces of the United States, provided: 27 UNOFFICIAL COPY 24 RS BR 1130
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1. The employee's military service was terminated in a manner other than 1
as described in 38 U.S.C. sec. 4304; and 2
2. The service has not been credited as free military service under 3
subsection (1) of this section; 4
(e) National Guard service. An employee may purchase one (1) month of service 5
for each six (6) months of service in the National Guard or the military 6
reserves of the United States. The service shall be treated as service earned 7
prior to participation in the system; 8
(f) Federal service. "Federal service" means service with the United States 9
government, that is not service in the Armed Forces; 10
(g) Seasonal, emergency, interim, probationary, or temporary employment or 11
part-time employment as provided by KRS 61.510(21) or 78.510(21) 12
averaging one hundred (100) or more hours of work per month on a calendar 13
or fiscal year basis. If the average number of hours of work is less than one 14
hundred (100) per month, the member may purchase credit for only those 15
months he or she receives creditable compensation for one hundred (100) 16
hours of work; 17
(h) Part-time employment in a noncertified position at a school board prior to the 18
1990-91 school year which averaged eighty (80) or more hours of work per 19
month on a calendar or fiscal year basis. If the average number of hours of 20
work is less than eighty (80) per month, the noncertified employee of a school 21
board shall be allowed to purchase credit only for those months he or she 22
receives creditable compensation for eighty (80) hours of work; 23
(i) Any period of: 24
1. Authorized maternity leave without pay or sick leave without pay; 25
2. Unpaid leave authorized under the federal Family and Medical Leave 26
Act; 27 UNOFFICIAL COPY 24 RS BR 1130
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3. Approved educational leave; and 1
4. Agency-approved leave to work for a work-related labor organization if 2
the agency subsequently participated in the County Employees 3
Retirement System, but only if the board receives a favorable private 4
letter ruling from the United States Internal Revenue Service or a 5
favorable opinion letter from the United States Department of Labor; 6
(j) Non-participating employer service, which means periods of employment 7
with the following types of agencies provided the agency does not participate 8
in a state-administered retirement system: 9
1. A regional community services program for mental health organized and 10
operated under the provisions of KRS 210.370 to 210.480; 11
2. A community action agency created under KRS 273.405 to 273.453. 12
The service provided by this subparagraph shall be purchased in the 13
County Employees Retirement System; 14
3. An area development district created pursuant to KRS 147A.050; or 15
4. A business development corporation created pursuant to KRS 155.001 16
to 155.230, provided the system receives a favorable private letter ruling 17
from the United States Internal Revenue Service or a favorable opinion 18
letter from the United States Department of Labor; 19
(k) Urban-county government service, which means employment in an urban-20
county government position that would qualify for hazardous duty coverage 21
under KRS 61.592 or 78.5520. The provisions of this paragraph shall only be 22
applicable to vested members participating in the State Police Retirement 23
System or in a hazardous position in the Kentucky Employees Retirement 24
System or the County Employees Retirement System; 25
(l) Periods of service as assistants to officers and employees of the General 26
Assembly for persons who were unable to acquire service under KRS 27 UNOFFICIAL COPY 24 RS BR 1130
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61.510(20) for service performed after January 1, 1960; 1
(m) Service as a volunteer in the Kentucky Peace Corps, created by KRS 154.1-2
720; and 3
(n) Employment with a vocational technical school in a noncertified part-time 4
position averaging eighty (80) or more hours per month, determined by using 5
the number of months actually worked within a calendar or fiscal year. The 6
service provided by this paragraph shall be purchased in the Kentucky 7
Employees Retirement System. 8
(6) Non-qualified service. Provided the employee's participation date in the system is 9
prior to July 15, 2002, and provided the employee has total service in all state-10
administered retirement systems of at least one hundred eighty (180) months of 11
service credit, the employee may purchase a combined maximum total of five (5) 12
years of service credit, known as non-qualified service, which is not otherwise 13
purchasable under any of the provisions of KRS 16.505 to 16.652, 61.510 to 14
61.705, or 78.510 to 78.852. The service purchased under this paragraph shall not 15
be used in determining a retirement allowance until the member has accrued at least 16
two hundred forty (240) months of service, excluding service purchased under this 17
subsection. If the member does not accrue at least two hundred forty (240) months 18
of service, excluding service purchased under this subsection, upon retirement, 19
death, or written request following termination, the payment, plus interest as 20
provided in KRS 16.560, 61.575, or 78.640, as applicable, shall be refunded. 21
(7) For purposes of service purchased under subsections (2) to (6) of this section: 22
(a) Except for subsection (6) of this section, the service must qualify as regular 23
full-time as provided by KRS 61.510 and 78.510; 24
(b) No service credit may be purchased for periods already credited to the system 25
or another public defined benefit retirement fund, including non-qualified 26
service purchased in another state-administered retirement system; 27 UNOFFICIAL COPY 24 RS BR 1130
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(c) Except as provided by paragraph (a)2.a. of subsection (9) of this section, the 1
employee payment for service purchases shall not be picked up, as described 2
in KRS 16.545(4), 61.560(4), or 78.610(4), by the employer; 3
(d) Except for service purchased under subsection (2) or (3) of this section, 4
service purchases made pursuant to this section may be purchased by the 5
entire amount of service available or by increments. Service purchases made 6
pursuant to subsections (2) and (3) of this section shall only be purchased by 7
the entire amount of service available; and 8
(e) Service purchases as provided by subsections (5)(b), (5)(d) to (f), (5)(j)1., and 9
(6) of this section may be purchased in any system in which the member has 10
service credit. 11
(8) (a) Employer purchase of past service. Any employer participating in the system 12
may purchase service credit, between July 1, 1956, in the case of the 13
Kentucky Employees Retirement System, or July 1, 1958, in the case of the 14
County Employees Retirement System, and the participation date of the 15
employer, for present employees of the county or department who have 16
elected coverage under KRS 61.525(2) or 78.540(1), provided the employee 17
began participating in the system prior to January 1, 2014. 18
(b) A Kentucky Employees Retirement System employer shall pay the cost of the 19
service credit within the fiscal year the election is made to purchase the 20
service credit. A County Employees Retirement System employer may 21
purchase the service, with interest at the rate actuarially assumed by the board, 22
over a period not to exceed ten (10) years. 23
(c) If an employer elects to purchase service under the provisions of this 24
subsection, any present employee who would be eligible to receive service 25
credit under the provisions of this subsection and has purchased service credit 26
under subsection (5)(a) of this section shall have his or her payment for the 27 UNOFFICIAL COPY 24 RS BR 1130
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service credit refunded with interest at the rate paid under KRS 61.575 or 1
78.640; and 2
(d) Any payments made by an employer under this subsection shall be deposited 3
to the retirement allowance account of the system and these funds shall not be 4
considered accumulated contributions of the individual members. 5
(9) (a) An employee participating in the system may purchase service credit under 6
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 78.510 to 7
78.852 for which he or she is eligible to purchase, or as otherwise required by 8
38 U.S.C. ch. 43, by: 9
1. Making a lump-sum payment on a before-tax basis as provided in 10
subparagraph 3. of this paragraph, or on an after-tax basis if the 11
employee is purchasing service credit under subsection (1) or (3) of this 12
section, service available pursuant to 38 U.S.C. ch. 43 not otherwise 13
provided for in this section, or grandfathered service as defined in 14
paragraph (b) of this subsection; 15
2. Entering into an agreement to purchase service credit through an 16
installment purchase of service agreement with the systems as provided 17
by paragraph (c) of this subsection: 18
a. On a before-tax basis in which the service is purchased pursuant to 19
the employer pick-up provisions in 26 U.S.C. sec. 414(h)(2); or 20
b. On an after-tax basis if the employee is purchasing service credit 21
under subsection (1) or (3) of this section, service available 22
pursuant to 38 U.S.C. ch. 43 not otherwise provided for in this 23
section, or grandfathered service as defined in paragraph (b) of this 24
subsection; or 25
3. Transferring funds to the system through a direct trustee-to-trustee 26
transfer as permitted under the applicable sections of the Internal 27 UNOFFICIAL COPY 24 RS BR 1130
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Revenue Code and any regulations or rulings issued thereunder, through 1
a direct rollover as contemplated by and permitted under 26 U.S.C. sec. 2
401(a)(31) and any regulations or rulings issued thereunder, or through a 3
rollover of funds pursuant to and permitted under the rules specified in 4
26 U.S.C. secs. 402(c) and 408(d)(3). The system shall accept the 5
transfer or rollover to the extent permitted under the rules specified in 6
the applicable provisions of the Internal Revenue Code and any 7
regulations and rulings issued thereunder. 8
(b) For purposes of this subsection, "grandfathered service" means service 9
purchases for which a member, whose membership date in the system is prior 10
to July 1, 1999, is eligible to purchase under KRS 16.505 to 16.652, 61.510 to 11
61.705, or 78.510 to 78.852, that were available for all members of the system 12
to purchase on August 5, 1997. 13
(c) 1. For service purchased under a before-tax or after-tax installment 14
purchase of service agreement as provided by paragraph (a)2. of this 15
subsection, the cost of the service shall be computed in the same manner 16
as for a lump-sum payment which shall be the principal, except that 17
interest compounded annually at the actuarial rate in effect at the time 18
the member elects to make the purchase shall be added for the period 19
that the installments are to be made. 20
2. Multiple service purchases may be combined under a single installment 21
agreement, except that no employee may make more than one (1) 22
installment purchase at the same time. 23
3. For after-tax installment purchase of service agreements, the employee 24
may elect to stop the installment payments by notifying the system; may 25
have the installment purchase recalculated to add one (1) or more 26
additional service purchases; or may pay by lump sum the remaining 27 UNOFFICIAL COPY 24 RS BR 1130
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principal or a portion of the remaining principal. 1
4. Before-tax installment purchase of service agreements shall be 2
irrevocable, and the employee shall not be able to stop installment 3
payments or to pay off the remaining balance of the purchase of service 4
agreement, except upon termination of employment or death. 5
5. One (1) year of installment payments shall be made for each one 6
thousand dollars ($1,000) or any part thereof of the total cost, except 7
that the total period allowed for installments shall not be less than one 8
(1) year and shall not exceed five (5) years. 9
6. The employee shall pay the installments by payroll deduction for after-10
tax purchase of service agreements, and the employer shall pick up 11
installments for before-tax purchase of service agreements. Upon 12
notification by the system, the employer shall report the installment 13
payments monthly continuously over each twelve (12) month period at 14
the same time as, but separate from, regular employee contributions on 15
the forms or by the computer format specified by the board. 16
7. The system shall determine how much of the total cost represents 17
payment for one (1) month of the service to be purchased and shall 18
credit one (1) month of service to the member's account each time this 19
amount has been paid. The first service credited shall represent the first 20
calendar month of the service to be purchased and each succeeding 21
month of service credit shall represent the succeeding months of that 22
service. 23
8. If the employee utilizing an installment purchase of service agreement 24
dies, retires, does not continue employment in a position required to 25
participate in the system, or elects to stop an after-tax installment 26
purchase of service agreement, the member, or in the case of death, the 27 UNOFFICIAL COPY 24 RS BR 1130
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beneficiary, shall have sixty (60) days to pay the remaining principal or 1
a portion of the remaining principal of the installment purchase of 2
service agreement by lump sum, subject to the restrictions of paragraph 3
(a)1. of this subsection, or by transfer of funds under paragraph (a)3. of 4
this subsection, except that payment by the member shall be filed with 5
the system prior to the member's effective retirement date. If the 6
member or beneficiary does not pay the remaining cost, the system shall 7
refund to the member or the beneficiary the payment, payments, or 8
portion of a payment that does not represent a full month of service 9
purchased, except as provided by subsection (6) of this section. 10
9. If the employer does not report installment payments on an employee 11
for sixty (60) days for an after-tax installment purchase of service 12
agreement, except in the case of employees on military leave or sick 13
leave without pay, the installment purchase shall cease and the system 14
shall refund to the employee the payment, payments, or portion of a 15
payment that does not represent a full month of service purchased. 16
10. Installment payments of employees on military leave or sick leave 17
without pay shall be suspended during the period of leave and shall 18
resume without recalculation upon the employee's return from leave. 19
11. If payments have ceased under subparagraph 8. or 9. of this paragraph 20
and the member later becomes a participating employee in the County 21
Employees Retirement System, Kentucky Employees Retirement 22
System, or State Police Retirement System, the employee may complete 23
the adjusted original installment purchase by lump sum or installment 24
payments, subject to the restrictions of this subsection. If the employee 25
elects to renew the installment purchase, the cost of the remaining 26
service shall be recalculated in accordance with subsection (10) of this 27 UNOFFICIAL COPY 24 RS BR 1130
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section. 1
(d) Member payments, including interest, properly received pursuant to this 2
subsection, shall be deposited to the member's account and considered as 3
accumulated contributions of the individual member. 4
(10) (a) The cost of purchasing service credit under any provision of this section, 5
except as provided by subsections (1) to (3) of this section, shall be 6
determined by multiplying the higher of the employee's current rate of pay, 7
final rate of pay, or final compensation as of the end of the month in which 8
the purchase is made times the actuarial factor times the number of years of 9
service being purchased. The actuarial factor used to determine the cost of 10
purchasing service credit shall assume the earliest date the member may retire 11
without a reduction in benefits and the cost-of-living adjustments provided to 12
members upon retirement. 13
(b) Service purchased on or after August 1, 2004, under the provisions of KRS 14
16.505 to 16.652, 61.510 to 61.705, or 78.510 to 78.852, except for service 15
purchased under subsections (1) to (3) of this section or service purchased as 16
described by paragraph (d) of this subsection, shall not be used to determine 17
eligibility for or the amount of the monthly insurance contribution under KRS 18
61.702 or 78.5536. 19
(c) For a member whose participation begins on or after August 1, 2004, service 20
purchased under the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 21
78.510 to 78.852, except for service purchased under subsections (1) to (3) of 22
this section or service purchased as described by paragraph (d) of this 23
subsection: 24
1. Shall not be used to determine eligibility for a retirement allowance 25
under disability retirement, early retirement, normal retirement, or upon 26
death of the member under any of the provisions of KRS 16.505 to 27 UNOFFICIAL COPY 24 RS BR 1130
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16.652, 61.510 to 61.705, or 78.510 to 78.852; and 1
2. Shall only be used to determine the amount of the retirement allowance 2
of a member who is eligible for a retirement allowance under disability, 3
early retirement, normal retirement, or upon death of the member under 4
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 5
78.510 to 78.852, based on service earned as a participating employee. 6
(d) Paragraphs (b) and (c) of this subsection shall not apply to a member who was 7
bound by an educational contract as a conditional employee to the state of 8
Kentucky prior to December 31, 2003, regardless of participation date or 9
membership date in the system. Educational leave, seasonal service, or any 10
other qualified service purchased by a member with this classification under 11
this section shall be used to determine eligibility for benefits, membership 12
dates or participation dates, and the amount of benefit for: 13
1. A retirement allowance under disability retirement, early retirement, 14
normal retirement, or death under any of the provisions of KRS 16.505 15
to 16.652, 61.510 to 61.705, and 78.510 to 78.852; and 16
2. The monthly insurance contribution under KRS 61.702 or 78.5536. 17
Section 15. KRS 61.575 is amended to read as follows: 18
(1) The members' account shall be the account to which: 19
(a) All members' contributions, or contributions picked up by the employer after 20
August 1, 1982, and interest allowances as provided in KRS 61.510 to 61.692 21
shall be credited, except as provided by KRS 61.702(3)(b); and 22
(b) For members who begin participating in a nonhazardous position in the 23
system on or after January 1, 2014, and for those members who make an 24
election under subsection (3) of Section 1 of this Act or Section 7 of this 25
Act, the employer pay credit and interest credited on such amounts as 26
provided by KRS 16.583 and 61.597 shall be credited. 27 UNOFFICIAL COPY 24 RS BR 1130
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Only funds from this account shall be used to return the accumulated contributions 1
or accumulated account balances of a member when required by reason of any 2
provision of KRS 61.510 to 61.705. Prior to the member's retirement, death, or 3
refund in accordance with KRS 61.625, no funds shall be made available from the 4
member account. 5
(2) Each member's contribution or contribution picked up by the employer shall be 6
credited to the individual account of the contributing member, except as provided 7
by KRS 61.702(3)(b). 8
(3) (a) Each member shall have his or her individual account credited with interest on 9
June 30 of each fiscal year. 10
(b) For a member who begins participating before September 1, 2008, interest 11
shall be credited to his or her individual account at a rate determined by the 12
board but not less than two percent (2%) per annum on the accumulated 13
account balance of the member on June 30 of the preceding fiscal year. 14
(c) For a member who begins participating on or after September 1, 2008, but 15
prior to January 1, 2014, or who begins participating in a hazardous position 16
on or after January 1, 2025, for his or her service in a hazardous position, 17
or who is presumed under Section 1 of this Act to have begun participating 18
in a hazardous position immediately prior to January 1, 2014, interest shall 19
be credited to his or her individual account at a rate of two and one-half 20
percent (2.5%) per annum on the accumulated account balance of the member 21
on June 30 of the preceding fiscal year. 22
(d) For a member who begins participating in a nonhazardous position on or 23
after January 1, 2014, in the hybrid cash balance plan, and for those members 24
making an election under subsection (3) of Section 1 of this Act or Section 7 25
of this Act, interest shall be credited in accordance with KRS 16.583 and 26
61.597. 27 UNOFFICIAL COPY 24 RS BR 1130
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(e) The amounts of interest credited to a member's account under this subsection 1
shall be transferred from the retirement allowance account. 2
(4) (a) Upon the retirement of a member who began participating in the system prior 3
to January 1, 2014, or who begins participating in a hazardous position on 4
or after January 1, 2025, or who is presumed under Section 1 of this Act to 5
have begun participating in a hazardous position immediately prior to 6
January 1, 2014, his or her accumulated account balance shall be transferred 7
from the members' account to the retirement allowance account. 8
(b) Upon the retirement of a member in a nonhazardous position who began 9
participating in the system on or after January 1, 2014, or a member making 10
an election under subsection (3) of Section 1 of this Act or Section 7 of this 11
Act, who elects to annuitize his or her accumulated account balance as 12
prescribed by KRS 16.583(7)(a), except as otherwise provided under Section 13
1 of this Act, or 61.597(8)[(7)](a) or (b), the member's accumulated account 14
balance shall be transferred to the retirement allowance account. 15
Section 16. KRS 61.592 is amended to read as follows: 16
(1) (a) "Hazardous position" for employees participating in the Kentucky Employees 17
Retirement System means: 18
1. Any position whose principal duties involve active law enforcement, 19
including the positions of probation and parole officer and 20
Commonwealth detective, active fire suppression or prevention, or other 21
positions, including but not limited to pilots of the Transportation 22
Cabinet and paramedics and emergency medical technicians, with duties 23
that require frequent exposure to a high degree of danger or peril and 24
also require a high degree of physical conditioning; 25
2. Positions in the Department of Corrections in state correctional 26
institutions and the Kentucky Correctional Psychiatric Center with 27 UNOFFICIAL COPY 24 RS BR 1130
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duties that regularly and routinely require face-to-face contact with 1
inmates; and 2
3. Positions of employees who elect coverage under KRS 196.167(3)(b)2. 3
and who continue to provide educational services and support to inmates 4
as a Department of Corrections employee. 5
(b) The effective date of participation under hazardous duty coverage for 6
positions in the Department of Alcoholic Beverage Control shall be April 1, 7
1998. The employer and employee contributions shall be paid by the 8
employer and forwarded to the retirement system for the period not previously 9
reported. 10
(2) Each employer may request of the board hazardous duty coverage for those 11
positions as defined in subsection (1) of this section. Upon request, each employer 12
shall certify to the system, in the manner prescribed by the board, the names of all 13
employees working in a hazardous position as defined in subsection (1) of this 14
section for which coverage is requested. The certification of the employer shall bear 15
the approval of the agent or agency responsible for the budget of the department or 16
county indicating that the required employer contributions have been provided for 17
in the budget of the employing department or county. The system shall determine 18
whether the employees whose names have been certified by the employer are 19
working in positions meeting the definition of a hazardous position as provided by 20
subsection (1) of this section. This process shall not be required for employees who 21
elect coverage under KRS 196.167(3)(b)2. 22
(3) (a) An employee who elects coverage under KRS 196.167(3)(b)2., and an 23
employee participating in the Kentucky Employees Retirement System who is 24
determined by the system to be working in a hazardous position in accordance 25
with subsection (2) of this section, shall contribute, for each pay period for 26
which he or she receives compensation, eight percent (8%) of his or her 27 UNOFFICIAL COPY 24 RS BR 1130
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creditable compensation. 1
(b) Each employer shall pay employer contributions based on the creditable 2
compensation of the employees determined by the system to be working in a 3
hazardous position at the employer contribution rate as determined by the 4
board. The rate shall be determined by actuarial methods consistent with the 5
provisions of KRS 61.565. 6
(c) If the employer participated in the system prior to electing hazardous duty 7
coverage, the employer may pay to the system the cost of converting the 8
nonhazardous service to hazardous service from the date of participation to 9
the date the payment is made, or the employer may establish a payment 10
schedule for payment of the cost of the hazardous service above that which 11
would be funded within the existing employer contribution rate. The employer 12
may extend the payment schedule to a maximum of thirty (30) years. 13
Payments made by the employer under this subsection shall be deposited to 14
the retirement allowance account of the proper retirement system and these 15
funds shall not be considered accumulated contributions of the individual 16
members. If the employer elects not to make the additional payment, the 17
employee may pay the cost of converting the service and provide payment for 18
the cost as provided by KRS 61.552(9). Payments made by the employee 19
under this subsection shall not be picked up, as described in KRS 61.560(4), 20
by the employer. If neither the employer nor employee makes the payment, 21
the service prior to hazardous coverage shall remain nonhazardous. The 22
provisions of this paragraph shall not apply to members who begin 23
participating in the systems administered by Kentucky Retirement Systems on 24
or after January 1, 2014, but prior to January 1, 2025, who make an election 25
under subsection (3) of Section 1 of this Act or to a member who prior to the 26
effective date of this Act made an election under Section 7 of this Act. 27 UNOFFICIAL COPY 24 RS BR 1130
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(4) The normal retirement age, retirement allowance, hybrid cash balance plans except 1
as provided by KRS 16.583(2)(b)2. and 16.584, other benefits, eligibility 2
requirements, rights, and responsibilities of a member in a hazardous position, as 3
prescribed by subsections (1), (2), and (3) of this section, and the responsibilities, 4
rights, and requirements of his or her employer shall be as prescribed for a member 5
and employer participating in the State Police Retirement System as provided for by 6
KRS 16.505 to 16.652. 7
(5) Any person employed in a hazardous position after July 1, 1972, shall be required 8
to undergo a thorough medical examination by a licensed physician, and a copy of 9
the medical report of the physician shall be retained on file by the employee's 10
department or county and made available to the system upon request. 11
(6) If doubt exists regarding the benefits payable to a hazardous position employee 12
under this section, the board shall determine the benefits payable under KRS 61.510 13
to 61.705 or 16.505 to 16.652. 14
Section 17. KRS 61.597 is amended to read as follows: 15
(1) A member of the Kentucky Employees Retirement System who is participating in a 16
nonhazardous position, whose participation in the systems begins on or after 17
January 1, 2014, and those members making an election pursuant to KRS 61.5955, 18
shall receive the retirement benefits provided by this section in lieu of the 19
retirement benefits provided under KRS 61.559 and 61.595. The retirement benefit 20
provided by this section shall be known as the hybrid cash balance plan and shall 21
operate as another benefit tier within the Kentucky Employees Retirement System. 22
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the 23
member's accumulated account balance, which shall include: 24
(a) Contributions made by the member as provided by KRS 16.505 to 16.652 and 25
61.510 to 61.705, except for employee contributions prescribed by KRS 26
61.702(3)(b); 27 UNOFFICIAL COPY 24 RS BR 1130
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(b) An employer pay credit of four percent (4%) of the creditable compensation 1
earned by the employee for each month the employee is contributing to the 2
hybrid cash balance plan provided by this section; and 3
(c) Interest credits added annually to the member's accumulated account balance 4
as provided by this section. 5
(3) (a) Member contributions and employer pay credits as provided by subsection 6
(2)(a) and (b) of this section shall be credited to the member's account 7
monthly as contributions are reported and posted to the system in accordance 8
with KRS 61.675. 9
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be 10
credited to the member's account annually on June 30 of each fiscal year, as 11
determined by subsection (4) of this section. 12
(4) (a) On June 30 of each fiscal year, the system shall determine if the member 13
contributed to the hybrid cash balance plan or the County Employees 14
Retirement System during the fiscal year. 15
(b) If the member contributed to the hybrid cash balance plan or the County 16
Employees Retirement System during the fiscal year, the interest credit added 17
to the member's account for that fiscal year shall be determined by 18
multiplying the member's accumulated account balance on June 30 of the 19
preceding fiscal year by a percentage increase equal to: 20
1. Four percent (4%); plus 21
2. Seventy-five percent (75%) of the system's geometric average 22
investment return in excess of the four percent (4%) rate of return. 23
(c) If the member did not contribute to the hybrid cash balance plan or the County 24
Employees Retirement System during the fiscal year, the interest credit added 25
to the member's account for that fiscal year shall be determined by 26
multiplying the member's accumulated account balance on June 30 of the 27 UNOFFICIAL COPY 24 RS BR 1130
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preceding fiscal year by a percentage increase equal to four percent (4%). 1
(d) For purposes of this subsection, "system's geometric average net investment 2
return": 3
1. Means the annual average geometric investment return, net of 4
administrative and investment fees and expenses, over the last five (5) 5
fiscal years as of the date the interest is credited to the member's 6
account; and 7
2. Shall be expressed as a percentage and based upon the system in which 8
the member has an account. 9
(e) No employer pay credits or interest credits shall be provided to a member who 10
has taken a refund of contributions as provided by KRS 61.625 or who has 11
retired and annuitized his or her accumulated account balance as prescribed 12
by this section. 13
(5) (a) Upon termination of employment, a member who has less than five (5) years 14
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 15
elects to take a refund of his or her accumulated account balance as provided 16
by KRS 61.625, shall forfeit the accumulated employer credit, and shall only 17
receive a refund of his or her accumulated contributions. 18
(b) Upon termination of employment, a member who has five (5) or more years 19
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 20
elects to take a refund of his or her accumulated account balance as provided 21
by KRS 61.625, shall receive a full refund of his or her accumulated account 22
balance. 23
(6) A member participating in the hybrid cash balance plan provided by this section 24
may retire: 25
(a) At his or her normal retirement date, provided he or she has earned five (5) or 26
more years of service credited under KRS 16.543(1), 61.543(1), 78.615(1), or 27 UNOFFICIAL COPY 24 RS BR 1130
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another state-administered retirement system; or 1
(b) If the member is at least age fifty-seven (57) and has an age and years of 2
service total of at least eighty-seven (87) years. The years of service used to 3
determine eligibility for retirement under this paragraph shall only include 4
years of service credited under KRS 16.543(1), 61.543(1), 78.615(1), or 5
another state-administered retirement system. 6
(7) A member who has hazardous service credit presumed under Section 1 of this Act 7
to be service credit earned immediately prior to January 1, 2014, and 8
nonhazardous service credit earned on or after January 1, 2014, in the hybrid 9
cash balance plan or the County Employees Retirement System, who is eligible 10
for a reduced or unreduced benefit under Sections 2 and 3 of this Act when his or 11
her hazardous service credit and nonhazardous service credit are consolidated 12
pursuant to Section 19 of this Act, shall be eligible to retire from the hybrid cash 13
balance plan at the same time with a benefit amount calculated by the board's 14
actuary to reflect the earlier commencement of benefits. The actuarial calculation 15
of benefits shall not apply if the member satisfies the requirements provided in 16
subsection (6) of this section. 17
(8)[(7)] A member eligible to retire under subsection (6) of this section may elect to: 18
(a) Receive a monthly retirement allowance payable for life by having his or her 19
accumulated account balance annuitized by the retirement systems in 20
accordance with the actuarial assumptions and actuarial methods adopted by 21
the board and in effect on the member's retirement date; 22
(b) Receive the actuarial equivalent of his or her retirement allowance calculated 23
under paragraph (a) of this subsection payable under one (1) of the options set 24
forth in KRS 61.635, except for the option provided by KRS 61.635(11); or 25
(c) Take a refund of his or her account balance as provided by KRS 61.625. 26
(9)[(8)] The provisions of this section shall not apply to members who began 27 UNOFFICIAL COPY 24 RS BR 1130
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participating in the Kentucky Employees Retirement System prior to January 1, 1
2014, except for those members who make an election pursuant to KRS 61.5955. 2
Section 18. KRS 61.615 is amended to read as follows: 3
(1) If the board's medical examiner determines that a recipient of a disability retirement 4
allowance is, prior to his or her normal retirement date, employed in a position with 5
the same or similar duties, or in a position with duties requiring greater residual 6
functional capacity and physical exertion, as the position from which he or she was 7
disabled, except where the recipient has returned to work on a trial basis not to 8
exceed nine (9) months, the system may reduce or discontinue the retirement 9
allowance. Each recipient of a disability retirement allowance who is engaged in 10
gainful employment shall notify the system of any employment; otherwise, the 11
system shall have the right to recover payments of a disability retirement allowance 12
made during the employment. 13
(2) If the board's medical examiner determines that a recipient of a disability retirement 14
allowance is, prior to his or her normal retirement date, no longer incapacitated by 15
the bodily injury, mental illness, or disease for which he or she receives a disability 16
retirement allowance, the board may reduce or discontinue the retirement 17
allowance. 18
(3) (a) The system shall have full power and exclusive authority to reduce or 19
discontinue a disability retirement allowance and the system shall utilize the 20
services of a medical examiner as provided in KRS 61.665, in determining 21
whether to continue, reduce, or discontinue a disability retirement allowance 22
under this section. 23
(b)[(a)] The system shall select a medical examiner to evaluate the forms and 24
medical information submitted by the person. If there is objective medical 25
evidence of a mental impairment, the medical examiner may request the 26
board's licensed mental health professional to assist in determining the level 27 UNOFFICIAL COPY 24 RS BR 1130
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of the mental impairment. 1
(c)[(b)] The medical examiners shall be paid a reasonable amount by the 2
retirement system for each case evaluated. 3
(d)[(c)] 1. The medical examiner shall recommend that disability retirement 4
allowance be continued, reduced, or discontinued. 5
2.[1.] If the medical examiner recommends that the disability retirement 6
allowance be continued, the system shall make retirement payments in 7
accordance with the retirement plan selected by the person. 8
3.[2.] a. If the medical examiner recommends that the disability retirement 9
allowance be reduced or discontinued, the system shall send notice 10
of the recommendation by United States first-class mail to the 11
person's last address on file in the retirement office, by electronic 12
mail to the person's last electronic mail address on file in the 13
retirement office, or by other electronic means. 14
b.[a.] The person shall have sixty (60) days from the day that the system 15
sent the notice to file at the retirement office additional supporting 16
employment or medical information and certify to the retirement 17
office that the forms and additional supporting employment 18
information or medical information are ready to be evaluated by 19
the medical examiner or to appeal the recommendation of the 20
medical examiner to reduce or discontinue the disability retirement 21
allowance by filing at the retirement office a request for a formal 22
hearing. 23
c.[b.] If the person fails or refuses to file at the retirement office the 24
forms, the additional supporting employment information, and 25
current medical information or to appeal the recommendation of 26
the medical examiners to reduce or discontinue the disability 27 UNOFFICIAL COPY 24 RS BR 1130
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retirement allowance, his or her retirement allowance shall be 1
discontinued on the first day of the month following the expiration 2
of the period of the sixty (60) days from the day the system sent 3
the notice of the recommendation by United States first-class mail 4
to the person's last address on file in the retirement office, by 5
electronic mail to the person's last electronic mail address on file 6
in the retirement office, or by other electronic means. 7
(e)[(d)] 1. The medical examiner shall make a recommendation based upon 8
the evaluation of additional supporting medical information submitted in 9
accordance with paragraph (d)3.b.[(c)2.a.] of this subsection. 10
2.[1.] If the medical examiner recommends that the disability retirement 11
allowance be continued, the system shall make disability retirement 12
payments in accordance with the retirement plan selected by the person. 13
3.[2.] a. If the medical examiner recommends that the disability retirement 14
allowance be reduced or discontinued based upon the evaluation of 15
additional supporting medical information, the system shall send 16
notice of this recommendation by United States first-class mail to 17
the person's last address on file in the retirement office, by 18
electronic mail to the person's last electronic mail address on file 19
in the retirement office, or by other electronic means. 20
b.[a.] The person shall have sixty (60) days from the day that the system 21
sent the notice of the recommendation to appeal the 22
recommendation to reduce or discontinue the disability retirement 23
allowance by filing at the retirement office a request for formal 24
hearing. 25
c.[b.] If the person fails or refuses to appeal the recommendation of the 26
medical examiners to reduce or discontinue the disability 27 UNOFFICIAL COPY 24 RS BR 1130
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retirement allowance, his or her retirement allowance shall be 1
discontinued on the first day of the month following the expiration 2
of the period of the sixty (60) days from the day the system sent 3
the notice of the recommendation by United States first-class mail 4
to the person's last address on file in the retirement office, by 5
electronic mail to the person's last electronic mail address on file 6
in the retirement office, or by other electronic means. 7
(f)[(e)] Any person whose disability benefits have been reduced or 8
discontinued, pursuant to paragraph (d)3.[(c)2.] or (e)3.[(d)2.] of this 9
subsection, may file at the retirement office a request for formal hearing to be 10
conducted in accordance with KRS Chapter 13B. The right to demand a 11
formal hearing shall be limited to a period of sixty (60) days after the person 12
had notice, as described in paragraph (c) or (d) of this subsection. The request 13
for formal hearing shall be filed with the system, at the retirement office in 14
Frankfort. The request for formal hearing shall include a short and plain 15
statement of the reasons the reduction, discontinuance, or denial of disability 16
retirement is being contested. 17
(g)[(f)] Failure of the person to request a formal hearing within the period of 18
time specified shall preclude the person from proceeding any further with 19
contesting the reduction or discontinuation of disability retirement allowance, 20
except as provided in subsection (6)(d) of this section. This paragraph shall 21
not limit the person's right to appeal to a court. 22
(h)[(g)] A final order of the board shall be based on substantial evidence 23
appearing in the record as a whole and shall set forth the decision of the board 24
and the facts and law upon which the decision is based. If the board orders 25
that the person's disability retirement allowance be discontinued or reduced, 26
the order shall take effect on the first day of the month following the day the 27 UNOFFICIAL COPY 24 RS BR 1130
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system sent the order by United States first-class mail to the person's last 1
address on file in the retirement office, by electronic mail to the person's last 2
electronic mail address on file in the retirement office, or by other electronic 3
means. Judicial review of the final board order shall not operate as a stay and 4
the system shall discontinue or reduce the person's disability retirement 5
allowance as provided in this section. 6
(i)[(h)] Notwithstanding any other provisions of this section, the system may 7
require the person to submit to one (1) or more medical or psychological 8
examinations at any time. The system shall be responsible for any costs 9
associated with any examinations of the person requested by the medical 10
examiner or the system for the purpose of providing medical information 11
deemed necessary by the medical examiner or the system. Notice of the time 12
and place of the examination shall be provided to the person or his or her legal 13
representative. If the person fails or refuses to submit to one (1) or more 14
medical examinations, his or her rights to further disability retirement 15
allowance shall cease. 16
(j)[(i)] All requests for a hearing pursuant to this section shall be made in 17
writing. 18
(4) The board may establish an appeals committee whose members shall be appointed 19
by the chair and who shall have the authority to act upon the recommendations and 20
reports of the hearing officer pursuant to this section on behalf of the board. 21
(5) Any person aggrieved by a final order of the board may seek judicial review after 22
all administrative appeals have been exhausted by filing a petition for judicial 23
review in the Franklin Circuit Court in accordance with KRS Chapter 13B. 24
(6) If a disability retirement allowance is reduced or discontinued for a person who 25
began participating in the system prior to January 1, 2014, or a person in a 26
hazardous position who began participating on or after January 1, 2025, or a 27 UNOFFICIAL COPY 24 RS BR 1130
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person who is presumed under Section 1 of this Act to have begun participating 1
in a hazardous position immediately prior to January 1, 2014, the person may 2
apply for early retirement benefits as provided under KRS 61.559, subject to the 3
following provisions: 4
(a) The person may not change his or her beneficiary or payment option, except 5
as provided by KRS 61.542(5); 6
(b) If the person has returned to employment with an employer participating in 7
one (1) of the systems administered by Kentucky Retirement Systems, the 8
service and creditable compensation shall be used in recomputing his or her 9
benefit, except that the person's final compensation shall not be less than the 10
final compensation last used in determining his or her retirement allowance; 11
(c) The benefit shall be reduced as provided by KRS 61.595(2); 12
(d) The person shall remain eligible for reinstatement of his or her disability 13
allowance upon reevaluation by the medical review board until his or her 14
normal retirement age. The person shall apply for reinstatement of disability 15
benefits in accordance with the provisions of this section. An application for 16
reinstatement of disability benefits shall be administered as an application 17
under KRS 61.600, and only the bodily injuries, mental illnesses, diseases, or 18
conditions for which the person was originally approved for disability benefits 19
shall be considered. Bodily injuries, mental illnesses, diseases, or conditions 20
that came into existence after the person's last day of paid employment shall 21
not be considered as a basis for reinstatement of disability benefits. Bodily 22
injuries, mental illnesses, diseases, or conditions alleged by the person as 23
being incapacitating, but which were not the basis for the award of disability 24
retirement benefits, shall not be considered. If the person establishes that the 25
disability benefits should be reinstated, the retirement system shall pay 26
disability benefits effective from the first day of the month following the 27 UNOFFICIAL COPY 24 RS BR 1130
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month in which the person applied for reinstatement of the disability benefits; 1
and 2
(e) Upon attaining normal retirement age, the person shall receive the higher of 3
either his or her disability retirement allowance or his or her early retirement 4
allowance. 5
(7) If a disability retirement allowance is reduced or discontinued for a person who 6
began participating in the system on or after January 1, 2014, or for a person in a 7
hazardous position who began participating on or after January 1, 2025, or for a 8
person who is presumed under Section 1 of this Act to have begun participating 9
in a hazardous position immediately prior to January 1, 2014, the person shall 10
remain eligible for reinstatement of his or her disability allowance as provided 11
under subsection (6)(d) of this section. 12
(8) No disability retirement allowance shall be reduced or discontinued by the system 13
after the person's normal retirement date except in case of reemployment as 14
provided for by KRS 61.637. If a disability retirement allowance has been reduced 15
or discontinued, except if the person is reemployed as provided for by KRS 61.637, 16
the retirement allowance shall be reinstated upon attainment of the person's normal 17
retirement date to the retirement allowance prior to adjustment. No reinstated 18
payment shall be less than the person is receiving upon attainment of the person's 19
normal retirement date. 20
Section 19. KRS 61.680 is amended to read as follows: 21
(1) Prior to August 1, 1982, every employee shall be deemed to consent and agree to 22
any deduction from his or her compensation required by KRS 6.500 to 6.535, 23
16.505 to 16.652, 61.510 to 61.692, 78.510 to 78.852, and to all other provisions 24
thereof. Thereafter, employee contributions shall be picked up by the employer 25
pursuant to KRS 61.560(4). 26
(2) (a) Notwithstanding any other provisions of KRS 6.500 to 6.535, 16.505 to 27 UNOFFICIAL COPY 24 RS BR 1130
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16.652, 61.510 to 61.692, 78.510 to 78.852 and 161.220 to 161.714: 1
1. Upon death, disability, or service retirement, a member's accounts under 2
the Legislators' Retirement Plan, State Police Retirement System, 3
Kentucky Employees Retirement System, County Employees 4
Retirement System, and Teachers' Retirement System, except for service 5
prohibited by KRS 161.623(2), shall be consolidated for the purpose of 6
determining eligibility and amount of benefits, including: 7
a. [those ]Members who participate in the hybrid cash balance plan 8
within the Kentucky Employees Retirement System, the County 9
Employees Retirement System, and the State Police Retirement 10
System, on or after January 1, 2014; and[,] 11
b. Members who are presumed under Section 1 of this Act to begin 12
participating in a hazardous position immediately prior to 13
January 1, 2014, and have nonhazardous service credit in the 14
hybrid cash balance plan of either the Kentucky Employees 15
Retirement System or the County Employees Retirement System; 16
and regardless of the transition of administration of the County 17
Employees Retirement System to the County Employees Retirement 18
System board of trustees; 19
2. Vested service credit in a retirement system, other than the Teachers' 20
Retirement System, sponsored by a Kentucky institution of higher 21
education and accepted by the Kentucky Employees Retirement System 22
or the County Employees Retirement System, may be used to determine 23
eligibility for twenty-seven (27) year retirement for an employee who 24
begins participating before September 1, 2008, but not the amount of 25
benefits; 26
3. The computation of benefits shall be based on the applicable formula in 27 UNOFFICIAL COPY 24 RS BR 1130
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each system and service credit in each system, but the final 1
compensation, excluding compensation earned under KRS 161.155(10), 2
shall be determined as if all service were in one (1) system, including 3
for those members who are presumed under Section 1 of this Act to 4
begin participating in a hazardous position immediately prior to 5
January 1, 2014, and have nonhazardous service credit in the hybrid 6
cash balance plan of either the Kentucky Employees Retirement 7
System or the County Employees Retirement System; 8
4. If the member has prior service in more than one (1) system 9
administered by Kentucky Retirement Systems, he or she shall obtain at 10
least twelve (12) months' current service in each system in which he or 11
she has prior service in order to validate the prior service in each system 12
for purposes of determining consolidated benefits under this subsection; 13
and 14
5. Upon the determination of benefits, each system shall pay the applicable 15
amount of benefits due the member. 16
(b) The provisions of paragraph (a) of this subsection shall be waived if the 17
member: 18
1. Notifies the system of his or her desire to maintain separate retirement 19
accounts in the State Police Retirement System, Kentucky Employees 20
Retirement System, or County Employees Retirement System; or 21
2. Fails to simultaneously retire from all state-administered retirement 22
systems in which the member has an account or fails to retire from any 23
other systems not administered by Kentucky Retirement Systems within 24
one (1) month of the member's effective retirement date in the systems 25
administered by Kentucky Retirement Systems. 26
(c) If the member has not contributed at least one (1) year in a system in which he 27 UNOFFICIAL COPY 24 RS BR 1130
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or she has prior service, his or her current service in the system shall be valid 1
for purposes of determining eligibility and in computation of benefits on a 2
consolidated basis. 3
(3) (a) A member with service credit in the Kentucky Employees Retirement System, 4
State Police Retirement System, or the County Employees Retirement System 5
who becomes the holder of an office entitling him or her to membership in the 6
Judicial Retirement Plan or the Legislators' Retirement Plan, but who does not 7
elect within thirty (30) days after taking office in such service to participate in 8
the plan, in accordance with KRS 6.505 or 21.360, shall be deemed to have 9
elected to retain membership in the system in which he or she is a member, 10
either the Kentucky Employees Retirement System, State Police Retirement 11
System, or the County Employees Retirement System. In that event, the 12
agency employing the member shall withhold employee contributions, or 13
picked-up employee contributions after August 2, 1982, make employer 14
contributions and remit these contributions to the system in which the member 15
retained his or her membership. 16
(b) Any person entitled to membership in the Judicial Retirement Plan or the 17
Legislators' Retirement Plan, who does not elect within thirty (30) days after 18
taking office to participate in the plan, in accordance with KRS 6.505 or 19
21.360, and who at the time of taking office is not a contributing member of, 20
or does not have service credit in, any of the retirement systems mentioned in 21
this section, or the Teachers' Retirement System, shall participate in the 22
Kentucky Employees Retirement System. 23
(c) A member of one (1) of the state-administered retirement plans who ceases to 24
contribute to the plan as provided in KRS 21.360 and who is employed in a 25
nonelected position by an agency participating in the Kentucky Retirement 26
Systems or Kentucky Teachers' Retirement System shall be deemed to have 27 UNOFFICIAL COPY 24 RS BR 1130
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elected membership in the system in which the employer of the nonelected 1
position participates. A member of one (1) of the state-administered 2
retirement plans who ceases to contribute to the plan as provided in KRS 3
21.360 and who is not employed in a nonelected position by an agency 4
participating in the Kentucky Retirement Systems shall be deemed to have 5
elected membership in the Kentucky Employees Retirement System. 6
(4) (a) Prior to July 1, 1976, a person entering the service of an employer 7
participating in the Kentucky Employees Retirement System or the County 8
Employees Retirement System with service credit in the Teachers' Retirement 9
System and who desires to retain membership in the Teachers' Retirement 10
System, and who is permitted by that system to continue, shall be exempt 11
from participating in the Kentucky Employees Retirement System or the 12
County Employees Retirement System. 13
(b) Any person who has elected to retain membership in the Teachers' Retirement 14
System as provided in paragraph (a) of this subsection may cancel his or her 15
election and participate in the system under which his or her position would 16
normally participate, if he or she elects to cancel his or her option prior to 17
January 1, 1977. 18
(c) Any member of the General Assembly who upon election is a contributing 19
member of the Teachers' Retirement System and who does not elect within 20
thirty (30) days after taking office to participate in the Legislators' Retirement 21
Plan, in accordance with KRS 6.505, shall during his or her term of office 22
participate in the Kentucky Employees Retirement System unless an election 23
to retain membership in the Teachers' Retirement System is filed in writing 24
within ninety (90) days after his or her term of office begins. No contributions 25
may be made to the Teachers' Retirement System for the same period of 26
service under the Legislators' Retirement Plan or the Kentucky Employees 27 UNOFFICIAL COPY 24 RS BR 1130
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Retirement System as a member of the General Assembly, but contributions 1
made to the Teachers' Retirement System while a member of the General 2
Assembly shall be transferred to the Legislators' Retirement Plan, as provided 3
for in KRS 6.535, when the member elects to join the Legislators' Retirement 4
Plan, and service credit in the Legislators' Retirement Plan shall be granted as 5
provided for in KRS 6.505(5). 6
(5) Any member of the Kentucky Employees Retirement System or County Employees 7
Retirement System who is working in a position covered by one (1) of these 8
retirement systems and his or her employee contributions, service credit and 9
employer contributions made on his or her behalf are being transferred to the other 10
retirement system shall contribute to the system in which his or her employer 11
participates, or after August 1, 1982, the employer shall pick up the employee 12
contributions, and no further contributions or service credit shall be transferred to 13
the system in which he or she elected to retain membership, as subsection (2) of this 14
section eliminates the necessity of the transfers. 15
(6) (a) Except as provided by KRS 61.545(3)(b)2., any member of the Kentucky 16
Employees Retirement System or County Employees Retirement System who 17
is working in more than one (1) position covered by the same retirement 18
system, shall have his or her wages and contributions consolidated and his or 19
her retirement account administered as a single account. If part-time positions 20
are involved, an accumulation of all hours worked within the same retirement 21
system shall be used to determine eligibility under KRS 61.510(21). 22
(b) The provisions of this subsection shall not apply to an individual serving as a 23
volunteer who is receiving compensation from the employer equal to or less 24
than a nominal fee as defined by KRS 61.510 and 78.510 if the compensation 25
paid to the volunteer is excluded from the definition of creditable 26
compensation as provided by KRS 61.510(13) or 78.510(13). 27 UNOFFICIAL COPY 24 RS BR 1130
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(7) (a) Notwithstanding the provisions of subsection (2) of this section, a person who 1
does not have the amount of service required for service retirement in the 2
State Police Retirement System, Kentucky Employees Retirement System, 3
County Employees Retirement System, Legislators' Retirement Plan, or 4
Teachers' Retirement System, but who is a member of one (1) of the systems 5
or is a former member of one (1) or more of the systems with valid service 6
credit therein, shall become eligible for service retirement benefits attributable 7
to the amount of his or her actual service credit in each system in which he or 8
she has service credit when his or her combined service credit in all the 9
systems, plus any service credit he or she has in the Judicial Retirement Plan, 10
is equal to that required for service retirement in each respective system. The 11
computation of benefits shall be based on the applicable formula in each 12
system and service credit in each system, except that total service in all 13
systems, unless prohibited by KRS 161.623(2), shall be used to determine the 14
reduction for early retirement, if any. Except as provided in KRS 21.360, the 15
final compensation shall be determined by using the creditable compensation 16
reported to the State Police Retirement System, Kentucky Employees 17
Retirement System, County Employees Retirement System, Legislators' 18
Retirement Plan, or Teachers' Retirement System and only as much of the 19
compensation earned in the Judicial Retirement Plan as is needed to satisfy 20
the final compensation requirement applicable in the respective retirement 21
systems. 22
(b) Paragraph (a) of this subsection shall be waived if the member fails to 23
simultaneously retire from all state-administered retirement systems in which 24
the member has an account or fails to retire from any other systems not 25
administered by Kentucky Retirement Systems within one (1) month of the 26
member's effective retirement date in the systems administered by the 27 UNOFFICIAL COPY 24 RS BR 1130
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Kentucky Retirement Systems. 1
(8) Each retirement system from which the member retires shall pay a retirement 2
allowance upon receipt of required forms and documents, except that no retirement 3
system shall pay a retirement allowance or annuity until all forms and documents 4
are filed at all retirement systems in compliance with each system's requirements. 5
Section 20. KRS 78.510 is amended to read as follows: 6
As used in KRS 78.510 to 78.852, unless the context otherwise requires: 7
(1) "System" means the County Employees Retirement System; 8
(2) "Board" means the board of trustees of the system as provided in KRS 78.782; 9
(3) "County" means any county, or nonprofit organization created and governed by a 10
county, counties, or elected county officers, sheriff and his or her employees, 11
county clerk and his or her employees, circuit clerk and his or her deputies, former 12
circuit clerks or former circuit clerk deputies, or political subdivision or 13
instrumentality, including school boards, cities, charter county governments, urban-14
county governments, consolidated local governments, or unified local governments 15
participating in the system by order appropriate to its governmental structure, as 16
provided in KRS 78.530, and if the board is willing to accept the agency, 17
organization, or corporation, the board being hereby granted the authority to 18
determine the eligibility of the agency to participate; 19
(4) "School board" means: 20
(a) Any board of education participating in the system by order appropriate to its 21
governmental structure, as provided in KRS 78.530, and if the board is willing 22
to accept the agency or corporation, the board being hereby granted the 23
authority to determine the eligibility of the agency to participate; or 24
(b) A public charter school as defined in KRS 160.1590 if the public charter 25
school satisfies the criteria set by the Internal Revenue Service to participate 26
in a governmental retirement plan; 27 UNOFFICIAL COPY 24 RS BR 1130
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(5) "Examiner" means the medical examiners as provided in KRS 61.665; 1
(6) "Employee" means every regular full-time appointed or elective officer or 2
employee of a participating county and the coroner of a participating county, 3
whether or not he or she qualifies as a regular full-time officer. The term shall not 4
include persons engaged as independent contractors, seasonal, emergency, 5
temporary, and part-time workers. In case of any doubt, the board shall determine if 6
a person is an employee within the meaning of KRS 78.510 to 78.852; 7
(7) "Employer" means a county, as defined in subsection (3) of this section, the elected 8
officials of a county, or any authority of the county having the power to appoint or 9
elect an employee to office or employment in the county; 10
(8) "Member" means any employee who is included in the membership of the system 11
or any former employee whose membership has not ceased under KRS 78.535; 12
(9) "Service" means the total of current service and prior service as defined in this 13
section; 14
(10) "Current service" means the number of years and months of employment as an 15
employee, on and after July 1, 1958, for which creditable compensation is paid and 16
employee contributions deducted, except as otherwise provided; 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, 1958, for which 19
creditable compensation was paid. An employee shall be credited with one (1) 20
month of prior service only in those months he or she received compensation for at 21
least one hundred (100) hours of work. Twelve (12) months of current service in the 22
system shall be required to validate prior service; 23
(12) "Accumulated contributions" means the sum of all amounts deducted from the 24
compensation of a member and credited to his or her individual account in the 25
members' account, including employee contributions picked up after August 1, 26
1982, pursuant to KRS 78.610(4), together with interest credited, on the amounts, 27 UNOFFICIAL COPY 24 RS BR 1130
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and any other amounts the member shall have contributed thereto, including interest 1
credited thereon. "Accumulated contributions" shall not include employee 2
contributions that are deposited into accounts established pursuant to 26 U.S.C. sec. 3
401(h) within the fund established in KRS 78.520, as prescribed by KRS 4
78.5536(3)(b); 5
(13) "Creditable compensation": 6
(a) Except as limited by paragraph (c) of this subsection, means all salary, wages, 7
and fees, including payments for compensatory time, paid to the employee as 8
a result of services performed for the employer or for time during which the 9
member is on paid leave, which are includable on the member's federal form 10
W-2 wage and tax statement under the heading "wages, tips, other 11
compensation", including employee contributions picked up after August 1, 12
1982, pursuant to KRS 78.610(4). The creditable compensation of fee officers 13
who receive salary, fees, maintenance, or other perquisites as a result of their 14
official duties is the gross amount received decreased by the cost of salary 15
paid deputies and clerks and the cost of office supplies and other official 16
expenses; 17
(b) Includes: 18
1. Lump-sum bonuses, severance pay, or employer-provided payments for 19
purchase of service credit, which shall be averaged over the employee's 20
service with the system in which it is recorded if it is equal to or greater 21
than one thousand dollars ($1,000); 22
2. Cases where compensation includes maintenance and other perquisites, 23
but the board shall fix the value of that part of the compensation not paid 24
in money; 25
3. Lump-sum payments for creditable compensation paid as a result of an 26
order of a court of competent jurisdiction, the Personnel Board, or the 27 UNOFFICIAL COPY 24 RS BR 1130
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Commission on Human Rights, or for any creditable compensation paid 1
in anticipation of settlement of an action before a court of competent 2
jurisdiction, the Personnel Board, or the Commission on Human Rights, 3
including notices of violations of state or federal wage and hour statutes 4
or violations of state or federal discrimination statutes, which shall be 5
credited to the fiscal year during which the wages were earned or should 6
have been paid by the employer. This subparagraph shall also include 7
lump-sum payments for reinstated wages pursuant to KRS 61.569, 8
which shall be credited to the period during which the wages were 9
earned or should have been paid by the employer; 10
4. Amounts which are not includable in the member's gross income by 11
virtue of the member having taken a voluntary salary reduction provided 12
for under applicable provisions of the Internal Revenue Code; and 13
5. Elective amounts for qualified transportation fringes paid or made 14
available on or after January 1, 2001, for calendar years on or after 15
January 1, 2001, that are not includable in the gross income of the 16
employee by reason of 26 U.S.C. sec. 132(f)(4); and 17
(c) Excludes: 18
1. Living allowances, expense reimbursements, lump-sum payments for 19
accrued vacation leave, sick leave except as provided in KRS 78.616(5), 20
and other items determined by the board; 21
2. For employees who begin participating on or after September 1, 2008, 22
lump-sum payments for compensatory time; 23
3. Training incentive payments for city officers paid as set out in KRS 24
64.5277 to 64.5279; 25
4. For employees who begin participating on or after August 1, 2016, 26
nominal fees paid for services as a volunteer; and 27 UNOFFICIAL COPY 24 RS BR 1130
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5. Any salary or wages paid to an employee for services as a Kentucky 1
State Police school resource officer as defined by KRS 158.441; 2
(14) "Final compensation" means: 3
(a) For a member who begins participating before September 1, 2008, who is 4
employed in a nonhazardous position, the creditable compensation of the 5
member during the five (5) fiscal years he or she was paid at the highest 6
average monthly rate divided by the number of months of service credit 7
during that five (5) year period multiplied by twelve (12). The five (5) years 8
may be fractional and need not be consecutive. If the number of months of 9
service credit during the five (5) year period is less than forty-eight (48), one 10
(1) or more additional fiscal years shall be used; 11
(b) For a member who is employed in a nonhazardous position, whose effective 12
retirement date is between August 1, 2001, and January 1, 2009, and whose 13
total service credit is at least twenty-seven (27) years and whose age and years 14
of service total at least seventy-five (75), final compensation means the 15
creditable compensation of the member during the three (3) fiscal years the 16
member was paid at the highest average monthly rate divided by the number 17
of months of service credit during that three (3) year period multiplied by 18
twelve (12). The three (3) years may be fractional and need not be 19
consecutive. If the number of months of service credit during the three (3) 20
year period is less than twenty-four (24), one (1) or more additional fiscal 21
years shall be used; 22
(c) For a member who begins participating before September 1, 2008, who is 23
employed in a hazardous position, as provided in KRS 61.592, the creditable 24
compensation of the member during the three (3) fiscal years he or she was 25
paid at the highest average monthly rate divided by the number of months of 26
service credit during that three (3) year period multiplied by twelve (12). The 27 UNOFFICIAL COPY 24 RS BR 1130
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three (3) years may be fractional and need not be consecutive. If the number 1
of months of service credit during the three (3) year period is less than twenty-2
four (24), one (1) or more additional fiscal years, which may contain less than 3
twelve (12) months of service credit, shall be used; 4
(d) For a member who begins participating on or after September 1, 2008, but 5
prior to January 1, 2014, who is employed in a nonhazardous position, the 6
creditable compensation of the member during the five (5) complete fiscal 7
years immediately preceding retirement divided by five (5). Each fiscal year 8
used to determine final compensation must contain twelve (12) months of 9
service credit. If the member does not have five (5) complete fiscal years that 10
each contain twelve (12) months of service credit, then one (1) or more 11
additional fiscal years, which may contain less than twelve (12) months of 12
service credit, shall be added until the number of months in the final 13
compensation calculation is at least sixty (60) months; or 14
(e) For a member who begins participating on or after September 1, 2008, but 15
prior to January 1, 2014, or a member who begins participating on or after 16
January 1, 2025, or a member who is presumed under Section 1 of this Act 17
to begin participating immediately prior to January 1, 2014, who is 18
employed in a hazardous position as provided in KRS 61.592, the creditable 19
compensation of the member during the three (3) complete fiscal years he or 20
she was paid at the highest average monthly rate divided by three (3). Each 21
fiscal year used to determine final compensation must contain twelve (12) 22
months of service credit. If the member does not have three (3) complete 23
fiscal years that each contain twelve (12) months of service credit, then one 24
(1) or more additional fiscal years, which may contain less than twelve (12) 25
months of service credit, shall be added until the number of months in the 26
final compensation calculation is at least thirty-six (36) months; 27 UNOFFICIAL COPY 24 RS BR 1130
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(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, and shall include employee contributions 3
picked up after August 1, 1982, pursuant to KRS 78.610(4). The rate shall be 4
certified to the system by the employer and the following equivalents shall be used 5
to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8) 6
hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-7
half (7.5) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, 8
twelve (12) months, 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 adopted by the board. In cases of disability retirement, 13
the options authorized by KRS 61.635 shall be computed by adding ten (10) years 14
to the age of the member, unless the member has chosen the Social Security 15
adjustment option as provided for in KRS 61.635(8), in which case the member's 16
actual age shall be used. For members who begin participating in the system prior 17
to January 1, 2014, or who begin participating in a hazardous position in the 18
system on or after January 1, 2025, or who are presumed under Section 1 of this 19
Act to begin participating in a hazardous position in the system immediately prior 20
to January 1, 2014, no disability retirement option shall be less than the same 21
option computed under early retirement; 22
(18) "Normal retirement date", unless otherwise provided in KRS 78.510 to 78.852, 23
means: 24
(a) For a member with service in a nonhazardous position, the sixty-fifth birthday 25
of a member; 26
(b) For a member with service in a hazardous position who begins participating 27 UNOFFICIAL COPY 24 RS BR 1130
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before September 1, 2008, the first day of the month following a member's 1
fifty-fifth birthday; or 2
(c) For a member with service in a hazardous position who begins participating 3
on or after September 1, 2008, the first day of the month following a 4
member's sixtieth birthday; 5
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 6
following June 30, which shall also be the plan year. The "fiscal year" shall be the 7
limitation year used to determine contribution and benefits limits as set out in 26 8
U.S.C. sec. 415; 9
(20) "Agency reporting official" means the person designated by the participating 10
employer who shall be responsible for forwarding all employer and employee 11
contributions and a record of the contributions to the system and for performing 12
other administrative duties pursuant to the provisions of KRS 78.510 to 78.852; 13
(21) "Regular full-time positions," as used in subsection (6) of this section, shall mean 14
all positions that average one hundred (100) or more hours per month, determined 15
by using the number of hours actually worked in a calendar or fiscal year, or eighty 16
(80) or more hours per month in the case of noncertified employees of school 17
boards, determined by using the number of hours actually worked in a calendar or 18
school year, unless otherwise specified, except: 19
(a) Seasonal positions, which although temporary in duration, are positions which 20
coincide in duration with a particular season or seasons of the year and that 21
may recur regularly from year to year, in which case the period of time shall 22
not exceed nine (9) months, except for employees of school boards, in which 23
case the period of time shall not exceed six (6) months; 24
(b) Emergency positions which are positions utilized by the employer during: 25
1. An emergency as determined by the employer for a period not 26
exceeding thirty (30) working days and are nonrenewable; or 27 UNOFFICIAL COPY 24 RS BR 1130
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2. A state of emergency declared by the President of the United States or 1
the Governor of the Commonwealth of Kentucky that are created or 2
filled specifically for addressing the employer's needs during and as a 3
result of the declared emergency; 4
(c) Temporary positions that are positions of employment with a participating 5
agency for a period of time not to exceed twelve (12) months and not 6
renewable; 7
(d) Probationary positions which are positions of employment with a participating 8
employer that do not exceed twelve (12) months and that are used uniformly 9
by the participating agency on new employees who would otherwise be 10
eligible for participation in the system. Probationary positions shall not be 11
renewable by the participating employer for the same employee, unless the 12
employee has not been employed with the participating employer for a period 13
of at least twelve (12) months; or 14
(e) Part-time positions that are positions that may be permanent in duration, but 15
that require less than a calendar or fiscal year average of one hundred (100) 16
hours of work per month, determined by using the number of months actually 17
worked within a calendar or fiscal year, in the performance of duty, except in 18
case of noncertified employees of school boards, the school term average shall 19
be eighty (80) hours of work per month, determined by using the number of 20
months actually worked in a calendar or school year, in the performance of 21
duty; 22
(22) "Alternate participation plan" means a method of participation in the system as 23
provided for by KRS 78.530(3); 24
(23) "Retired member" means any former member receiving a retirement allowance or 25
any former member who has on file at the retirement office the necessary 26
documents for retirement benefits and is no longer contributing to the system; 27 UNOFFICIAL COPY 24 RS BR 1130
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(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 1
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 2
pay. The rate shall be certified by the employer; 3
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 4
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 5
in the event of the member's death. As used in KRS 78.5536, beneficiary shall not 6
mean an estate, trust, or trustee; 7
(26) "Recipient" means the retired member, the person or persons designated as 8
beneficiary by the member and drawing a retirement allowance as a result of the 9
member's death, or a dependent child drawing a retirement allowance. An alternate 10
payee of a qualified domestic relations order shall not be considered a recipient, 11
except for purposes of KRS 61.623; 12
(27) "Person" means a natural person; 13
(28) "School term or year" means the twelve (12) months from July 1 through the 14
following June 30; 15
(29) "Retirement office" means the Kentucky Public Pensions Authority office building 16
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 17
Authority; 18
(30) "Vested" for purposes of determining eligibility for purchasing service credit under 19
KRS 61.552 means the employee has at least forty-eight (48) months of service if 20
age sixty-five (65) or older or at least sixty (60) months of service if under the age 21
of sixty-five (65). For purposes of this subsection, "service" means service in the 22
systems administered by the Kentucky Retirement Systems and County Employees 23
Retirement System; 24
(31) "Participating" means an employee is currently earning service credit in the system 25
as provided in KRS 78.615; 26
(32) "Month" means a calendar month; 27 UNOFFICIAL COPY 24 RS BR 1130
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(33) "Membership date" means the date upon which the member began participating in 1
the system as provided in KRS 78.615; 2
(34) "Participant" means a member, as defined by subsection (8) of this section, or a 3
retired member, as defined by subsection (23) of this section; 4
(35) "Qualified domestic relations order" means any judgment, decree, or order, 5
including approval of a property settlement agreement, that: 6
(a) Is issued by a court or administrative agency; and 7
(b) Relates to the provision of child support, alimony payments, or marital 8
property rights to an alternate payee; 9
(36) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 10
participant, who is designated to be paid retirement benefits in a qualified domestic 11
relations order; 12
(37) "Accumulated employer credit" means the employer pay credit deposited to the 13
member's account and interest credited on such amounts as provided by KRS 14
78.5512 and 78.5516; 15
(38) "Accumulated account balance" means: 16
(a) For members who began participating in the system prior to January 1, 2014, 17
the member's accumulated contributions; or 18
(b) For members who began participating in the system on or after January 1, 19
2014, in the hybrid cash balance plan as provided by KRS 78.5512 and 20
78.5516, and for those making an election under subsection (3) of Section 1 21
of this Act or Section 7 of this Act, the combined sum of the member's 22
accumulated contributions and the member's accumulated employer credit; 23
(39) "Volunteer" means an individual who: 24
(a) Freely and without pressure or coercion performs hours of service for an 25
employer participating in one (1) of the systems administered by Kentucky 26
Retirement Systems or the County Employees Retirement System without 27 UNOFFICIAL COPY 24 RS BR 1130
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receipt of compensation for services rendered, except for reimbursement of 1
actual expenses, payment of a nominal fee to offset the costs of performing 2
the voluntary services, or both; and 3
(b) If a retired member, does not become an employee, leased employee, or 4
independent contractor of the employer for which he or she is performing 5
volunteer services for a period of at least twelve (12) months following the 6
retired member's most recent retirement date; 7
(40) "Nominal fee" means compensation earned for services as a volunteer that does not 8
exceed five hundred dollars ($500) per month with each participating employer. 9
Compensation earned for services as a volunteer from more than one (1) 10
participating employer during a month shall not be aggregated to determine whether 11
the compensation exceeds the five hundred dollars ($500) per month maximum 12
provided by this subsection; 13
(41) "Nonhazardous position" means a position that does not meet the requirements of 14
KRS 78.5520 or has not been approved by the board as a hazardous position; 15
(42) "Hazardous position" means a position that meets the requirements of KRS 78.5520 16
and has been approved by the board as hazardous; 17
(43) "Level-percentage-of-payroll amortization method" means a method of determining 18
the annual amortization payment on the unfunded actuarial accrued liability as 19
expressed as a percentage of payroll over a set period of years. Under this method, 20
the percentage of payroll shall be projected to remain constant for all years 21
remaining in the set period and the unfunded actuarially accrued liability shall be 22
projected to be fully amortized at the conclusion of the set period; 23
(44) "Increment" means twelve (12) months of service credit which are purchased. The 24
twelve (12) months need not be consecutive. The final increment may be less than 25
twelve (12) months; 26
(45) "Last day of paid employment" means the last date employer and employee 27 UNOFFICIAL COPY 24 RS BR 1130
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contributions are required to be reported in accordance with KRS 16.543, 61.543, or 1
78.615 to the retirement office in order for the employee to receive current service 2
credit for the month. Last day of paid employment does not mean a date the 3
employee receives payment for accrued leave, whether by lump sum or otherwise, 4
if that date occurs twenty-four (24) or more months after previous contributions; 5
(46) "Objective medical evidence" means reports of examinations or treatments; medical 6
signs which are anatomical, physiological, or psychological abnormalities that can 7
be observed; psychiatric signs which are medically demonstrable phenomena 8
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 9
or contact with reality; or laboratory findings which are anatomical, physiological, 10
or psychological phenomena that can be shown by medically acceptable laboratory 11
diagnostic techniques, including but not limited to chemical tests, 12
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 13
(47) "Hazardous disability" as used in KRS 78.510 to 78.852 means a disability which 14
results in an employee's total incapacity to continue as an employee in a hazardous 15
position, but the employee is not necessarily deemed to be totally and permanently 16
disabled to engage in other occupations for remuneration or profit; 17
(48) "Act in line of duty" means, for employees in hazardous positions under KRS 18
78.5520: 19
(a) A single act occurring which was required in the performance of the principal 20
duties of the hazardous position as defined by the job description; or 21
(b) A single act of violence committed against the employee that is found to be 22
related to his or her job duties, whether or not it occurs at his or her job site; 23
(49) "Dependent child" means a child in the womb and a natural or legally adopted child 24
of the member who has neither attained age eighteen (18) nor married or who is an 25
unmarried full-time student who has not attained age twenty-two (22). Solely in the 26
case of a member who dies as a direct result of an act in line of duty as defined in 27 UNOFFICIAL COPY 24 RS BR 1130
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this section, dies as a result of a duty-related injury as defined in KRS 61.621, 1
becomes totally and permanently disabled as a direct result of an act in the line of 2
duty as defined in this section, or becomes disabled as a result of a duty-related 3
injury as defined in KRS 61.621 and is eligible for the benefits provided by KRS 4
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 5
child of the member, regardless of the child's age, if the child has been determined 6
to be eligible for federal Social Security disability benefits or is being claimed as a 7
qualifying child for tax purposes due to the child's total and permanent disability; 8
(50) "Normal retirement age" means the age at which the member meets the 9
requirements for his or her normal retirement date as provided by subsection (18) of 10
this section; 11
(51) "Disability retirement date" means the first day of the month following the last day 12
of paid employment; 13
(52) "Monthly average pay" means: 14
(a) In the case of a member who dies as a direct result of an act in line of duty as 15
defined in KRS 16.505 or who dies as a result of a duty-related injury as 16
defined in KRS 61.621, the higher of the member's monthly final rate of pay 17
or the average monthly creditable compensation earned by the deceased 18
member during his or her last twelve (12) months of employment; or 19
(b) In the case where a member becomes totally and permanently disabled as a 20
direct result of an act in line of duty as defined in KRS 16.505 or becomes 21
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 22
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 23
member's monthly final rate of pay or the average monthly creditable 24
compensation earned by the disabled member during his or her last twelve 25
(12) months of employment prior to the date the act in line of duty or duty-26
related injury occurred; 27 UNOFFICIAL COPY 24 RS BR 1130
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(53) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 1
61.505; and 2
(54) "Executive director" means the executive director of the Kentucky Public Pensions 3
Authority. 4
Section 21. KRS 78.545 is amended to read as follows: 5
The following matters shall be administered for the County Employees Retirement 6
System in the same manner subject to the same limitations and requirements as provided 7
for the Kentucky Employees Retirement System as follows: 8
(1) Statement of member and employer, as provided for by KRS 61.540; 9
(2) Beneficiary to be designated by member, change, rights, as provided for by KRS 10
61.542; 11
(3) Service credit determination, as provided for by KRS 61.545; 12
(4) Retirement application procedure, effective retirement date, as provided for by KRS 13
61.590; 14
(5) Refund of contributions, conditions, as provided for by KRS 61.625; 15
(6) Refund of contributions, death after retirement, as provided for by KRS 61.630; 16
(7) Recontribution and delayed contribution payments, purchase of service credit, 17
interest, and installment payments, as provided for by KRS 61.552; 18
(8) Optional retirement plans, as provided for by KRS 61.635; 19
(9) Board of trustees, conflict of interest, as provided for by KRS 61.655; 20
(10) Custodian of funds, payments made, when, as provided for by KRS 61.660; 21
(11) Medical examiners and hearing procedures, as provided for by KRS 61.665; 22
(12) Correction of errors in records, as provided for by KRS 61.685; 23
(13) Exemptions of retirement allowances, and qualified domestic relations orders, as 24
provided for by KRS 61.690; 25
(14) Credit for service prior to membership date, as provided for by KRS 61.526; 26
(15) Members' account, confidential, as provided for by KRS 61.661; 27 UNOFFICIAL COPY 24 RS BR 1130
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(16) Consent of employees to deductions and reciprocal arrangement between systems, 1
as provided for by KRS 61.680; 2
(17) Reinstated employee, contributions on creditable compensation, as provided for by 3
KRS 61.569; 4
(18) Statement to be made under oath, good faith reliance, as provided for in KRS 5
61.699; 6
(19) Direct deposit of recipient's retirement allowance as provided for in KRS 61.623; 7
(20) Death or disability from a duty-related injury as provided in KRS 61.621; 8
(21) Payment of small accounts upon death of member, retiree, or recipient without 9
formal administration of the estate as provided in KRS 61.703; 10
(22) Employer payment of increases in creditable compensation and adjustments to 11
creditable compensation during the last five (5) years of employment as provided 12
by KRS 61.598; 13
(23) Calculation of retirement allowance, as provided by KRS 61.599;[ and] 14
(24) Benefit election for members of the Kentucky Retirement Systems as provided by 15
KRS 61.5955; and 16
(25) Benefit change for members of the State Police Retirement System, members in a 17
hazardous position in the Kentucky Employees Retirement System, and members 18
in a hazardous position in the County Employees Retirement System, as provided 19
by Section 1 of this Act. 20
Effective April 1, 2021, as it relates to KRS 61.590, 61.598, 61.655, 61.665, and 61.703, 21
references to "Kentucky Retirement Systems" or "systems administered by Kentucky 22
Retirement Systems" as it relates to benefit eligibility shall include the County 23
Employees Retirement System and references to "Kentucky Retirement Systems" or the 24
"Kentucky Retirement Systems board of trustees" as it relates to administrative decisions, 25
duties, requirements, or conflict of interest provisions shall for purposes of the County 26
Employees Retirement System mean the County Employees Retirement System or 27 UNOFFICIAL COPY 24 RS BR 1130
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County Employees Retirement System board of trustees, as applicable. 1
Section 22. KRS 78.5512 is amended to read as follows: 2
(1) A member of the County Employees Retirement System who is participating in a 3
nonhazardous position and who began participating in the system on or after 4
January 1, 2014, or a member who makes an election pursuant to KRS 61.5955, 5
shall receive the retirement benefits provided by this section in lieu of the 6
retirement benefits provided under KRS 78.5510. The retirement benefit provided 7
by this section shall be known as the hybrid cash balance plan and shall operate as 8
another benefit tier within the County Employees Retirement System. 9
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the 10
member's accumulated account balance, which shall include: 11
(a) Contributions made by the member as provided by KRS 78.510 to 78.852, 12
except for employee contributions prescribed by KRS 78.5536(3)(b); 13
(b) An employer pay credit of four percent (4%) of the creditable compensation 14
earned by the employee for each month the employee is contributing to the 15
hybrid cash balance plan provided by this section; and 16
(c) Interest credits added annually to the member's accumulated account balance 17
as provided by this section. 18
(3) (a) Member contributions and employer pay credits as provided by subsection 19
(2)(a) and (b) of this section shall be credited to the member's account 20
monthly as contributions are reported and posted to the system in accordance 21
with KRS 78.625. 22
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be 23
credited to the member's account annually on June 30 of each fiscal year, as 24
determined by subsection (4) of this section. 25
(4) (a) On June 30 of each fiscal year, the system shall determine if the member 26
contributed to the hybrid cash balance plan or the Kentucky Retirement 27 UNOFFICIAL COPY 24 RS BR 1130
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Systems during the fiscal year. 1
(b) If the member contributed to the hybrid cash balance plan or the Kentucky 2
Retirement Systems during the fiscal year, the interest credit added to the 3
member's account for that fiscal year shall be determined by multiplying the 4
member's accumulated account balance on June 30 of the preceding fiscal 5
year by a percentage increase equal to: 6
1. Four percent (4%); plus 7
2. Seventy-five percent (75%) of the system's geometric average net 8
investment return in excess of a four percent (4%) rate of return. 9
(c) If the member did not contribute to the hybrid cash balance plan or the 10
Kentucky Retirement Systems during the fiscal year, the interest credit added 11
to the member's account for that fiscal year shall be determined by 12
multiplying the member's accumulated account balance on June 30 of the 13
preceding fiscal year by four percent (4%). 14
(d) For purposes of this subsection, "system's geometric average net investment 15
return": 16
1. Means the annual average geometric investment return, net of 17
administrative and investment fees and expenses, over the last five (5) 18
fiscal years as of the date the interest is credited to the member's 19
account; and 20
2. Shall be expressed as a percentage and based upon the system in which 21
the member has an account. 22
(e) No employer pay credits or interest credits shall be provided to a member who 23
has taken a refund of contributions as provided by KRS 61.625 or who has 24
retired and annuitized his or her accumulated account balance as prescribed 25
by this section. 26
(5) (a) Upon termination of employment, a member who has less than five (5) years 27 UNOFFICIAL COPY 24 RS BR 1130
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of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 1
elects to take a refund of his or her accumulated account balance as provided 2
by KRS 61.625, shall forfeit the accumulated employer credit, and shall only 3
receive a refund of his or her accumulated contributions. 4
(b) Upon termination of employment, a member who has five (5) or more years 5
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 6
elects to take a refund of his or her accumulated account balance as provided 7
by KRS 61.625, shall receive a full refund of his or her accumulated account 8
balance. 9
(6) A member participating in the hybrid cash balance plan provided by this section 10
may retire: 11
(a) At his or her normal retirement age, provided he or she has earned five (5) or 12
more years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), 13
or another state-administered retirement system; or 14
(b) If the member is at least age fifty-seven (57) and has an age and years of 15
service total of at least eighty-seven (87) years. The years of service used to 16
determine eligibility for retirement under this paragraph shall only include 17
years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or 18
another state-administered retirement system. 19
(7) A member who has hazardous service credit presumed under Section 1 of this Act 20
to be service credit earned immediately prior to January 1, 2014, and 21
nonhazardous service credit earned on or after January 1, 2014, in the hybrid 22
cash balance plan or the Kentucky Employees Retirement System, who is eligible 23
for a reduced or unreduced benefit under Sections 2 and 3 of this Act when his or 24
her hazardous service credit and nonhazardous service credit are consolidated 25
pursuant to Section 19 of this Act, shall be eligible to retire from the hybrid cash 26
balance plan at the same time with a benefit amount calculated by the board's 27 UNOFFICIAL COPY 24 RS BR 1130
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actuary to reflect the earlier commencement of benefits. The actuarial calculation 1
of benefits shall not apply if the member satisfies the requirements provided in 2
subsection (6) of this section. 3
(8)[(7)] A member eligible to retire under subsection (6) of this section may elect to: 4
(a) Receive a monthly retirement allowance payable for life by having his or her 5
accumulated account balance annuitized by the system in accordance with the 6
actuarial assumptions and actuarial methods adopted by the board and in 7
effect on the member's retirement date; 8
(b) Receive the actuarial equivalent of his or her retirement allowance calculated 9
under paragraph (a) of this subsection payable under one (1) of the options set 10
forth in KRS 61.635, except for the option provided by KRS 61.635(11); or 11
(c) Take a refund of his or her account balance as provided by KRS 61.625. 12
(9)[(8)] The provisions of this section shall not apply to members who began 13
participating in the Kentucky Employees Retirement System, County Employees 14
Retirement System, or the State Police Retirement System prior to January 1, 2014, 15
except as provided by KRS 61.5955. 16
Section 23. KRS 78.5520 is amended to read as follows: 17
(1) For purposes of this section: 18
(a) "Hazardous position" for employees who began participating in the County 19
Employees Retirement System prior to September 1, 2008, means any 20
position whose principal duties involve active law enforcement, including the 21
positions of probation and parole officer, active fire suppression or 22
prevention, correctional officers with duties that routinely and regularly 23
require face-to-face contact with inmates, or other positions, including but not 24
limited to paramedics and emergency medical technicians, with duties that 25
require frequent exposure to a high degree of danger or peril and also require 26
a high degree of physical conditioning; and 27 UNOFFICIAL COPY 24 RS BR 1130
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(b) "Hazardous position" for employees who begin participating in the County 1
Employees Retirement System on or after September 1, 2008, means police 2
officers and firefighters as defined in KRS 61.315(1), paramedics, 3
correctional officers with duties that routinely and regularly require face-to-4
face contact with inmates, and emergency medical technicians, if: 5
1. The employee's duties require frequent exposure to a high degree of 6
danger or peril and a high degree of physical conditioning; and 7
2. The employee's duties are not primarily clerical or administrative. 8
(2) (a) Each employer may request of the board hazardous coverage for those 9
positions as defined in subsection (1) of this section. Upon request, each 10
employer shall certify to the system, in the manner prescribed by the board, 11
the names of all employees working in a hazardous position as defined in 12
subsection (1) of this section for which coverage is requested. The 13
certification of the employer shall bear the approval of the agent or agency 14
responsible for the budget of the employer indicating that the required 15
employer contributions have been provided for in the budget of the employer. 16
The system shall determine whether the employees whose names have been 17
certified by the employer are working in positions meeting the definition of a 18
hazardous position as provided by subsection (1) of this section. 19
(b) Each employer shall also certify, under penalty of perjury in accordance with 20
KRS Chapter 523, that each employee's actual job duties are accurately 21
reflected in the job description provided to the system. The system shall 22
determine whether the employees whose names have been certified by the 23
employer are working in positions meeting the definition of a hazardous 24
position as defined in subsection (1) of this section. 25
(c) The board shall have the authority to remove any employee from hazardous 26
coverage if the board determines the employee is not working in a hazardous 27 UNOFFICIAL COPY 24 RS BR 1130
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position or if the employee is classified in a hazardous position but has 1
individual job duties that do not meet the definition of a hazardous position or 2
are not accurately reflected in the job descriptions filed by the employer with 3
the system. 4
(3) (a) If the employer participated in the system prior to electing hazardous 5
coverage, the employer may pay to the system the cost of converting the 6
nonhazardous service to hazardous service from the date of participation to 7
the date the payment is made, or the employer may establish a payment 8
schedule for payment of the cost of the hazardous service above that which 9
would be funded within the existing employer contribution rate. The employer 10
may extend the payment schedule to a maximum of thirty (30) years. 11
Payments made by the employer under this subsection shall be deposited to 12
the retirement allowance account of the proper retirement or retiree health 13
fund and shall not be considered accumulated contributions of the individual 14
members. 15
(b) If the employer elects not to make the additional payment as provided by 16
paragraph (a) of this subsection, the employee may pay the cost of converting 17
the service and provide payment for the cost as provided by KRS 61.552(9). 18
Payments made by the employee under this subsection shall not be picked up, 19
as described in KRS 78.610(4), by the employer. 20
(c) If neither the employer nor employee makes the payment, the service prior to 21
hazardous position coverage shall remain nonhazardous. 22
(d) The provisions of this subsection shall not apply to members who begin 23
participating in the system on or after January 1, 2014, but prior to January 24
1, 2025, who make an election under subsection (3) of Section 1 of this Act 25
or to a member who prior to the effective date of this Act made an election 26
under Section 7 of this Act. 27 UNOFFICIAL COPY 24 RS BR 1130
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(4) Any person employed in a hazardous position shall be required to undergo a 1
thorough medical examination by a licensed physician, and a copy of the medical 2
report of the physician shall be retained on file by the person's employer and made 3
available to the system upon request. 4
(5) If doubt exists regarding the benefits payable to a hazardous position employee 5
under this section, the board shall determine the benefits payable under KRS 78.510 6
to 78.852. 7
Section 24. KRS 78.5528 is amended to read as follows: 8
(1) If the Authority's medical examiner determines that a recipient of a disability 9
retirement allowance is, prior to his or her normal retirement date, employed in a 10
position with the same or similar duties, or in a position with duties requiring 11
greater residual functional capacity and physical exertion, as the position from 12
which he or she was disabled, except where the recipient has returned to work on a 13
trial basis not to exceed nine (9) months, the system may reduce or discontinue the 14
retirement allowance. Each recipient of a disability retirement allowance who is 15
engaged in gainful employment shall notify the Authority of any employment; 16
otherwise, the system shall have the right to recover payments of a disability 17
retirement allowance made during the employment. 18
(2) If the Authority's medical examiner determines that a recipient of a disability 19
retirement allowance is, prior to his or her normal retirement date, no longer 20
incapacitated by the bodily injury, mental illness, or disease for which he or she 21
receives a disability retirement allowance, the system may reduce or discontinue the 22
retirement allowance. 23
(3) (a) The system shall have full power and authority to reduce or discontinue a 24
disability retirement allowance and the Authority shall utilize the services of a 25
medical examiner as provided in KRS 61.665, in determining whether to 26
continue, reduce, or discontinue a disability retirement allowance under this 27 UNOFFICIAL COPY 24 RS BR 1130
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section. 1
(b)[(a)] The Authority shall select a medical examiner to evaluate the forms and 2
medical information submitted by the person. If there is objective medical 3
evidence of a mental impairment, the medical examiner may request the 4
Authority's licensed mental health professional to assist in determining the 5
level of the mental impairment. 6
(c)[(b)] The medical examiners shall be paid a reasonable amount by the 7
retirement system for each case evaluated. 8
(d)[(c)] 1. The medical examiner shall recommend that the disability 9
retirement allowance be continued, reduced, or discontinued. 10
2.[1.] If the medical examiner recommends that the disability retirement 11
allowance be continued, the system shall make retirement payments in 12
accordance with the retirement plan selected by the person. 13
3.[2.] a. If the medical examiner recommends that the disability retirement 14
allowance be reduced or discontinued, the Authority shall send 15
notice of the recommendation by United States first-class mail to 16
the person's last address on file in the retirement office. 17
b.[a.] The person shall have sixty (60) days from the day that the 18
Authority mailed the notice to file at the retirement office 19
additional supporting employment or medical information and 20
certify to the Authority that the forms and additional supporting 21
employment information or medical information are ready to be 22
evaluated by the medical examiner or to appeal the 23
recommendation of the medical examiner to reduce or discontinue 24
the disability retirement allowance by filing at the retirement 25
office a request for a formal hearing. 26
c.[b.] If the person fails or refuses to file at the retirement office the 27 UNOFFICIAL COPY 24 RS BR 1130
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forms, the additional supporting employment information, and 1
current medical information or to appeal the recommendation of 2
the medical examiners to reduce or discontinue the disability 3
retirement allowance, his or her retirement allowance shall be 4
discontinued on the first day of the month following the expiration 5
of the period of the sixty (60) days from the day the Authority 6
mailed the notice of the recommendation to the person's last 7
address on file in the retirement office. 8
(e)[(d)] 1. The medical examiner shall make a recommendation based upon 9
the evaluation of additional supporting medical information submitted in 10
accordance with paragraph (d)3.b.[(c)2.a.] of this subsection. 11
2.[1.] If the medical examiner recommends that the disability retirement 12
allowance be continued, the system shall make disability retirement 13
payments in accordance with the retirement plan selected by the person. 14
3.[2.] a. If the medical examiner recommends that the disability retirement 15
allowance be reduced or discontinued based upon the evaluation of 16
additional supporting medical information, the Authority shall 17
send notice of this recommendation by United States first-class 18
mail to the person's last address on file in the retirement office. 19
b.[a.] The person shall have sixty (60) days from the day that the 20
Authority mailed the notice of the recommendation to appeal the 21
recommendation to reduce or discontinue the disability retirement 22
allowance by filing at the retirement office a request for formal 23
hearing. 24
c.[b.] If the person fails or refuses to appeal the recommendation of the 25
medical examiners to reduce or discontinue the disability 26
retirement allowance, his or her retirement allowance shall be 27 UNOFFICIAL COPY 24 RS BR 1130
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discontinued on the first day of the month following the expiration 1
of the period of the sixty (60) days from the day the Authority 2
mailed the notice of the recommendation to the person's last 3
address on file in the retirement office. 4
(f)[(e)] Any person whose disability benefits have been reduced or 5
discontinued, pursuant to paragraph (d)3.[(c)2.] or (e)3.[(d)2.] of this 6
subsection, may file at the retirement office a request for formal hearing to be 7
conducted in accordance with KRS Chapter 13B. The right to demand a 8
formal hearing shall be limited to a period of sixty (60) days after the person 9
had notice, as described in paragraph[ (c) or (d)] or (e) of this subsection. The 10
request for formal hearing shall be filed with the Authority, at the retirement 11
office in Frankfort. The request for formal hearing shall include a short and 12
plain statement of the reasons the reduction, discontinuance, or denial of 13
disability retirement is being contested. 14
(g)[(f)] Failure of the person to request a formal hearing within the period of 15
time specified shall preclude the person from proceeding any further with 16
contesting the reduction or discontinuation of disability retirement allowance, 17
except as provided in subsection (6)(d) of this section. This paragraph shall 18
not limit the person's right to appeal to a court. 19
(h)[(g)] A final order of the board shall be based on substantial evidence 20
appearing in the record as a whole and shall set forth the decision of the board 21
and the facts and law upon which the decision is based. If the board orders 22
that the person's disability retirement allowance be discontinued or reduced, 23
the order shall take effect on the first day of the month following the day the 24
Authority mailed the order to the person's last address on file in the retirement 25
office. Judicial review of the final board order shall not operate as a stay and 26
the system shall discontinue or reduce the person's disability retirement 27 UNOFFICIAL COPY 24 RS BR 1130
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allowance as provided in this section. 1
(i)[(h)] Notwithstanding any other provisions of this section, the Authority may 2
require the person to submit to one (1) or more medical or psychological 3
examinations at any time. The system shall be responsible for any costs 4
associated with any examinations of the person requested by the medical 5
examiner or the system for the purpose of providing medical information 6
deemed necessary by the medical examiner or the system. Notice of the time 7
and place of the examination shall be mailed to the person or his or her legal 8
representative. If the person fails or refuses to submit to one (1) or more 9
medical examinations, his or her rights to further disability retirement 10
allowance shall cease. 11
(j)[(i)] All requests for a hearing pursuant to this section shall be made in 12
writing. 13
(4) The board may establish an appeals committee whose members shall be appointed 14
by the chair and who shall have the authority to act upon the recommendations and 15
reports of the hearing officer pursuant to this section on behalf of the board. The 16
board may also establish a joint appeals committee with the Kentucky Retirement 17
Systems. 18
(5) Any person aggrieved by a final order of the board may seek judicial review after 19
all administrative appeals have been exhausted by filing a petition for judicial 20
review in the Franklin Circuit Court in accordance with KRS Chapter 13B. 21
(6) If a disability retirement allowance is reduced or discontinued for a person who 22
began participating prior to January 1, 2014, or a person in a hazardous position 23
who began participating on or after January 1, 2025, or a person who is 24
presumed under Section 1 of this Act to have begun participating in a hazardous 25
position immediately prior to January 1, 2014, the person may apply for early 26
retirement benefits as provided under KRS 78.5510 or 78.5514, as applicable, 27 UNOFFICIAL COPY 24 RS BR 1130
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subject to the following provisions: 1
(a) The person may not change his or her beneficiary or payment option; 2
(b) If the person has returned to employment with an employer participating in 3
the County Employees Retirement System or the Kentucky Retirement 4
Systems, the service and creditable compensation shall be used in 5
recomputing his or her benefit, except that the person's final compensation 6
shall not be less than the final compensation last used in determining his or 7
her retirement allowance; 8
(c) The benefit shall be reduced as provided by KRS 78.5510(4) or 78.5514(4); 9
(d) The person shall remain eligible for reinstatement of his or her disability 10
allowance upon reevaluation by the medical examiners until his or her normal 11
retirement age. The person shall apply for reinstatement of disability benefits 12
in accordance with the provisions of this section. An application for 13
reinstatement of disability benefits shall be administered as an application 14
under KRS 78.5524 or 78.5526, as applicable, and only the bodily injuries, 15
mental illnesses, diseases, or conditions for which the person was originally 16
approved for disability benefits shall be considered. Bodily injuries, mental 17
illnesses, diseases, or conditions that came into existence after the person's 18
last day of paid employment shall not be considered as a basis for 19
reinstatement of disability benefits. Bodily injuries, mental illnesses, diseases, 20
or conditions alleged by the person as being incapacitating, but which were 21
not the basis for the award of disability retirement benefits, shall not be 22
considered. If the person establishes that the disability benefits should be 23
reinstated, the system shall pay disability benefits effective from the first day 24
of the month following the month in which the person applied for 25
reinstatement of the disability benefits; and 26
(e) Upon attaining normal retirement age, the person shall receive the higher of 27 UNOFFICIAL COPY 24 RS BR 1130
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either his or her disability retirement allowance or his or her early retirement 1
allowance. 2
(7) No disability retirement allowance shall be reduced or discontinued by the system 3
after the person's normal retirement date except in case of reemployment as 4
provided for by KRS 78.5540. If a disability retirement allowance has been reduced 5
or discontinued, except if the person is reemployed as provided for by KRS 6
78.5540, the retirement allowance shall be reinstated upon attainment of the 7
person's normal retirement date to the retirement allowance prior to adjustment. No 8
reinstated payment shall be less than the person is receiving upon attainment of the 9
person's normal retirement date. 10
Section 25. KRS 78.5524 is amended to read as follows: 11
The disability retirement provisions contained in this section shall apply to a person 12
whose last date of paid employment was in a hazardous position. 13
(1) (a) For purposes of this section: 14
1. "Total and permanent disability" means a disability which results in the 15
member's incapacity to engage in any occupation for remuneration or 16
profit. Loss by severance of both hands at or above the wrists, or both 17
feet at or above the ankles, or one (1) hand above the wrist and one (1) 18
foot above the ankle, or the complete, irrevocable loss of the sight of 19
both eyes shall be considered as total and permanent; and 20
2. "Hazardous disability" means a disability which results in an employee's 21
total incapacity to continue as an employee in a hazardous position, but 22
the employee is not necessarily deemed to be totally and permanently 23
disabled to engage in other occupations for remuneration or profit. 24
(b) In determining whether the disability meets the requirement of this section, 25
any reasonable accommodation provided by the employer as provided in 42 26
U.S.C. sec. 12111(9) and 29 C.F.R. pt. 1630 shall be considered. 27 UNOFFICIAL COPY 24 RS BR 1130
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(c) If the board determines that the total and permanent disability of a member 1
receiving a retirement allowance under this section has ceased, then the board 2
shall determine if the member has a hazardous disability as defined by KRS 3
78.510. 4
(2) Any person may qualify to retire on disability, subject to the following: 5
(a) The person shall have sixty (60) months of service, twelve (12) of which shall 6
be current service credited under KRS 16.543(1), 61.543(1), or 78.615(1). The 7
service requirement shall be waived if the disability is a total and permanent 8
disability or a hazardous disability and is a direct result of an act in line of 9
duty; 10
(b) For a person whose membership date is prior to August 1, 2004, the person 11
shall not be eligible for an unreduced retirement allowance; 12
(c) The person's application shall be on file in the retirement office no later than 13
twenty-four (24) months after the person's last day of paid employment, as 14
defined in KRS 78.510, in a regular full-time position that has been approved 15
as a hazardous position in accordance with KRS 78.5520; 16
(d) The person shall receive a satisfactory determination pursuant to KRS 61.665; 17
and 18
(e) A person's disability application based on the same claim of incapacity shall 19
be accepted and reconsidered for disability if accompanied by new objective 20
medical evidence. The application shall be on file in the retirement office no 21
later than twenty-four (24) months after the person's last day of paid 22
employment in a regular full-time hazardous position. 23
(3) Upon the examination of the objective medical evidence by licensed physicians 24
pursuant to KRS 61.665, it shall be determined that: 25
(a) The incapacity results from bodily injury, mental illness, or disease. For 26
purposes of this section, "injury" means any physical harm or damage to the 27 UNOFFICIAL COPY 24 RS BR 1130
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human organism other than disease or mental illness; 1
(b) The incapacity is deemed to be permanent; and 2
(c) The incapacity does not result directly or indirectly from: 3
1. Injury intentionally self-inflicted while sane or insane; or 4
2. Bodily injury, mental illness, disease, or condition which pre-existed 5
membership in the system or reemployment, whichever is most recent, 6
unless: 7
a. The disability results from bodily injury, mental illness, disease, or 8
a condition which has been substantially aggravated by an injury 9
or accident arising out of or in the course of employment; or 10
b. The person has at least sixteen (16) years' current or prior service 11
for employment with employers participating in the County 12
Employees Retirement System or the Kentucky Retirement 13
Systems. 14
For purposes of this subparagraph, "reemployment" shall not mean a 15
change of employment between employers participating in the County 16
Employees Retirement System or the Kentucky Retirement Systems 17
with no loss of service credit. 18
(4) (a) 1. An incapacity shall be deemed to be permanent for the purpose of 19
hazardous disability if it is expected to result in death or can be expected 20
to last for a continuous period of not less than twelve (12) months from 21
the person's last day of paid employment in a hazardous position. 22
2. The determination of a permanent incapacity for the purpose of 23
hazardous disability shall be based on the medical evidence contained in 24
the member's file and the member's residual functional capacity and 25
physical exertion requirements. 26
3. The determination of a total and permanent incapacity shall be based on 27 UNOFFICIAL COPY 24 RS BR 1130
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the medical evidence contained in the member's file and the member's 1
residual functional capacity. 2
(b) The person's residual functional capacity shall be the person's capacity for 3
work activity on a regular and continuing basis. The person's physical ability 4
shall be assessed in light of the severity of the person's physical, mental, and 5
other impairments. The person's ability to walk, stand, carry, push, pull, reach, 6
handle, and other physical functions shall be considered with regard to 7
physical impairments. The person's ability to understand, remember, and carry 8
out instructions and respond appropriately to supervision, coworkers, and 9
work pressures in a work setting shall be considered with regard to mental 10
impairments. Other impairments, including skin impairments, epilepsy, visual 11
sensory impairments, postural and manipulative limitations, and 12
environmental restrictions, shall be considered in conjunction with the 13
person's physical and mental impairments to determine residual functional 14
capacity. 15
(c) The person's physical exertion requirements shall be determined based on the 16
following standards: 17
1. Sedentary work shall be work that involves lifting no more than ten (10) 18
pounds at a time and occasionally lifting or carrying articles such as 19
large files, ledgers, and small tools. Although a sedentary job primarily 20
involves sitting, occasional walking and standing may also be required 21
in the performance of duties. 22
2. Light work shall be work that involves lifting no more than twenty (20) 23
pounds at a time with frequent lifting or carrying of objects weighing up 24
to ten (10) pounds. A job shall be in this category if lifting is 25
infrequently required but walking and standing are frequently required, 26
or if the job primarily requires sitting with pushing and pulling of arm or 27 UNOFFICIAL COPY 24 RS BR 1130
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leg controls. If the person has the ability to perform substantially all of 1
these activities, the person shall be deemed capable of light work. A 2
person deemed capable of light work shall be deemed capable of 3
sedentary work unless the person has additional limitations such as the 4
loss of fine dexterity or inability to sit for long periods. 5
3. Medium work shall be work that involves lifting no more than fifty (50) 6
pounds at a time with frequent lifting or carrying of objects weighing up 7
to twenty-five (25) pounds. If the person is deemed capable of medium 8
work, the person shall be deemed capable of light and sedentary work. 9
4. Heavy work shall be work that involves lifting no more than one 10
hundred (100) pounds at a time with frequent lifting or carrying of 11
objects weighing up to fifty (50) pounds. If the person is deemed 12
capable of heavy work, the person shall also be deemed capable of 13
medium, light, and sedentary work. 14
5. Very heavy work shall be work that involves lifting objects weighing 15
more than one hundred (100) pounds at a time with frequent lifting or 16
carrying of objects weighing fifty (50) or more pounds. If the person is 17
deemed capable of very heavy work, the person shall be deemed capable 18
of heavy, medium, light, and sedentary work. 19
(5) Upon disability retirement, an employee may receive a disability retirement 20
allowance payable during his or her lifetime which shall be: 21
(a) For a member who began participating in the system prior to August 1, 2004, 22
an annual retirement allowance payable monthly and determined in the same 23
manner as for retirement at his or her normal retirement date with years of 24
service and final compensation being determined as of the date of his or her 25
disability, except that service shall be added beginning with his or her last 26
date of paid employment and continuing to his or her fifty-fifth birthday. The 27 UNOFFICIAL COPY 24 RS BR 1130
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maximum service credit added shall not exceed the total service the member 1
had on his or her last day of paid employment, and the maximum service 2
credit for calculating his or her retirement allowance, including his or her total 3
service and service added under this section, shall not exceed twenty (20) 4
years; 5
(b) For a member who begins participating on or after August 1, 2004, but prior 6
to January 1, 2014, or who begins participating in a hazardous position on 7
or after January 1, 2025, or who is presumed under Section 1 of this Act to 8
begin participating in a hazardous position immediately prior to January 1, 9
2014, the higher of twenty-five percent (25%) of the member's monthly final 10
rate of pay or the retirement allowance determined in the same manner as for 11
retirement at his or her normal retirement date with years of service and final 12
compensation being determined as of the date of his or her disability; or 13
(c) For a member who begins participating on or after January 1, 2014, but prior 14
to January 1, 2025, in the hybrid cash balance plan as provided by KRS 15
78.5516, who makes an election under subsection (3) of Section 1 of this 16
Act, or who prior to the effective date of this Act made an election under 17
Section 7 of this Act, the disability retirement allowance shall be the higher of 18
twenty-five percent (25%) of the member's monthly final rate of pay or the 19
retirement allowance determined in the same manner as for retirement at his 20
or her normal retirement date under KRS 78.5516. 21
(6) If the member receives a satisfactory determination of hazardous disability pursuant 22
to KRS 61.665 and the disability is the direct result of an act in line of duty as 23
defined in KRS 78.510, the member's retirement allowance shall be calculated as 24
follows: 25
(a) For the disabled member, benefits as provided in subsection (5) of this section 26
except that the monthly retirement allowance payable shall not be less than 27 UNOFFICIAL COPY 24 RS BR 1130
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twenty-five percent (25%) of the member's monthly final rate of pay; and 1
(b) For each dependent child of the member on his or her disability retirement 2
date, who is alive at the time any particular payment is due, a monthly 3
payment equal to ten percent (10%) of the disabled member's monthly final 4
rate of pay; however, total maximum dependent children's benefit shall not 5
exceed forty percent (40%) of the member's monthly final rate of pay. The 6
payments shall be payable to each dependent child, or to a legally appointed 7
guardian or as directed by the system. 8
(7) If the member receives a satisfactory determination of total and permanent 9
disability pursuant to KRS 61.665 and the disability is the direct result of an act in 10
line of duty as defined in KRS 78.510, the member's retirement allowance shall be 11
calculated as follows: 12
(a) For the disabled member, the benefits as provided in subsection (5) of this 13
section, except that the monthly retirement allowance payable shall not be less 14
than seventy-five percent (75%) of the member's monthly average pay; and 15
(b) For each dependent child of the member on his or her disability retirement 16
date, who is alive at the time any particular payment is due, a monthly 17
payment equal to ten percent (10%) of the disabled member's monthly 18
average pay, except that: 19
1. Member and dependent children payments under this subsection shall 20
not exceed one hundred percent (100%) of the member's monthly 21
average pay; and 22
2. Total maximum dependent children's benefits shall not exceed twenty-23
five percent (25%) of the member's monthly average pay while the 24
member is living and forty percent (40%) of the member's monthly 25
average pay after the member's death. The payments shall be payable to 26
each dependent child, or to a legally appointed guardian or as directed 27 UNOFFICIAL COPY 24 RS BR 1130
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by the system, and shall be divided equally among all dependent 1
children. 2
(8) No benefit provided in this section shall be reduced as a result of any change in the 3
extent of disability of any retired member who is normal retirement age or older. 4
(9) If a regular full-time member in a hazardous position has been approved for 5
benefits under a hazardous disability, the board shall, upon request of the member, 6
permit the member to receive the hazardous disability allowance while accruing 7
benefits in a nonhazardous position, subject to proper medical review of the 8
nonhazardous position's job description by the Authority's medical examiner. 9
Section 26. KRS 78.616 is amended to read as follows: 10
(1) Any employer participating in the County Employees Retirement System which has 11
formally adopted a sick-leave program that is universally administered to its 12
employees may purchase service credit with the retirement system for up to six (6) 13
months of unused sick leave for each retiring employee. 14
(2) Participation under this section shall be at the option of each participating 15
employer. The election to participate shall be made by the governing authority of 16
the participating employer and shall be certified in writing to the system on forms 17
prescribed by the board. The certification shall provide for equal treatment of all 18
employees participating under this section. 19
(3) (a) Upon the member's notification of retirement as prescribed in KRS 61.590, 20
the employer shall certify the retiring employee's unused, accumulated sick-21
leave balance to the system. The member's sick-leave balance, expressed in 22
days, shall be divided by the average number of working days per month in 23
county service and rounded to the nearest number of whole months. A 24
maximum of six (6) months of the member's sick-leave balance, expressed in 25
months, shall be added to his or her service credit for the purpose of 26
determining his or her annual retirement allowance under KRS 78.510 to 27 UNOFFICIAL COPY 24 RS BR 1130
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78.852 and for the purpose of determining whether the member is eligible to 1
receive a retirement allowance under KRS 78.510 to 78.852, except as 2
provided by paragraph (d) of this subsection. Accumulated sick-leave in 3
excess of six (6) months shall be added to the member's service credit if the 4
member or employer pays to the retirement system the value of the additional 5
service credit based on the formula adopted by the board, subject to the 6
restrictions provided by paragraph (d) of this subsection. 7
(b) The employer may elect to pay fifty percent (50%) of the cost of the sick 8
leave in excess of six (6) months on behalf of its employees. The employee 9
shall pay the remaining fifty percent (50%). The payment by the employer 10
shall not be deposited to the member's account. Service credit shall not be 11
credited to the member's account until both the employer's and employee's 12
payments are received by the retirement system. 13
(c) Once the employer elects to pay all or fifty percent (50%) of the cost on 14
behalf of its employees, it shall continue to pay the same portion of the cost. 15
(d) For a member who begins participating in the retirement system on or after 16
September 1, 2008, but prior to January 1, 2014, or who begins participating 17
in a hazardous position on or after January 1, 2025, or who is presumed 18
under Section 1 of this Act to begin participating in a hazardous position 19
immediately prior to January 1, 2014, whose employer has established a 20
sick-leave program under subsections (1) to (4) and (6) of this section: 21
1. The member shall receive no more than twelve (12) months of service 22
credit upon retirement for accumulated unused sick leave accrued while 23
contributing to the retirement system from which the retirement benefit 24
is to be paid; 25
2. The service added to the member's service credit shall be used for 26
purposes of determining the member's annual retirement allowance 27 UNOFFICIAL COPY 24 RS BR 1130
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under KRS 78.510 to 78.852; 1
3. The service added to the member's service credit shall not be used to 2
determine whether a member is eligible to receive a retirement 3
allowance under KRS 78.510 to 78.852; and 4
4. The cost of the service provided by this paragraph shall be paid by the 5
employer. 6
(4) The system shall compute the cost of the sick-leave credit of each retiring employee 7
and bill each employer with whom the employee accrued sick leave accordingly. 8
The employer shall remit payment within thirty (30) days from receipt of the bill. 9
(5) (a) As an alternative to subsections (1), (3), (4), and (6) of this section, any 10
agency participating in the County Employees Retirement System which has 11
formally adopted a sick-leave program that is universally administered to its 12
employees, or administered to a majority of eligible employees in accordance 13
with subsection (6) of this section, shall, at the time of termination, or as 14
provided in KRS 161.155 in the case of school boards, compensate the 15
employee for unused sick-leave days the employee has accumulated which it 16
is the uniform policy of the agency to allow. 17
(b) The rate of compensation for each unused sick-leave day shall be based on the 18
daily salary rate calculated from the employee's current rate of pay. Payment 19
for unused sick-leave days shall be incorporated into the employee's final 20
compensation if the employee and employer make the regular employee and 21
employer contributions, respectively, on the sick-leave payment. 22
(c) The number of sick-leave days for which the employee is compensated shall 23
be divided by the average number of working days per month in county 24
service and rounded to the nearest number of whole months. This number of 25
months shall be added to the employee's total service credit and to the number 26
of months used to determine creditable compensation, pursuant to KRS 27 UNOFFICIAL COPY 24 RS BR 1130
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78.510, but no more than sixty (60) months shall be used to determine final 1
compensation. For an employee who begins participating on or after 2
September 1, 2008, but prior to January 1, 2014, or who begins participating 3
in a hazardous position on or after January 1, 2025, or who is presumed 4
under Section 1 of this Act to begin participating in a hazardous position 5
immediately prior to January 1, 2014, the number of months added to the 6
employee's total service credit under this paragraph shall not exceed twelve 7
(12) months, and the additional service shall not be used to determine whether 8
a member is eligible to receive a retirement allowance under KRS 78.510 to 9
78.852. 10
(6) Any city of the first class that has two (2) or more sick-leave programs for its 11
employees may purchase service credit with the retirement system for up to six (6) 12
months of unused sick leave for each retiring employee who participates in the sick-13
leave program administered to a majority of the eligible employees of the city. An 14
employee participating in a sick-leave program administered to a minority of the 15
eligible employees shall become eligible for the purchase of service credit under 16
this subsection when the employee commences participating in the sick-leave 17
program that is administered to a majority of the eligible employees of the city. 18
(7) The provisions of this section shall not apply to: 19
(a) Employees in a nonhazardous position who begin participating in the system 20
on or after January 1, 2014;[,] or 21
(b) Employees making an election under subsection (3) of Section 1 of this Act 22
or Section 7 of this Act; 23
and no service credit shall be provided for accumulated sick leave balances of those 24
employees described in paragraphs (a) and (b) of this subsection[ who begin 25
participating in the system on or after January 1, 2014]. 26
Section 27. KRS 78.640 is amended to read as follows: 27 UNOFFICIAL COPY 24 RS BR 1130
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(1) The members' account shall be the account to which: 1
(a) All members' contributions, or contributions picked up by the employer after 2
August 1, 1982, and interest allowances as provided in KRS 78.510 to 78.852 3
shall be credited, except as provided by KRS 78.5536(3)(b); and 4
(b) For members who begin participating in a nonhazardous position in the 5
system on or after January 1, 2014, and for those members making an 6
election under subsection (3) of Section 1 of this Act or Section 7 of this 7
Act, the employer pay credit and interest credited on such amounts as 8
provided by KRS 78.5512 and 78.5516 shall be credited. 9
Only funds from this account shall be used to return the accumulated contributions 10
or accumulated account balances of a member when required to be returned to him 11
or her by reason of any provision of KRS 78.510 to 78.852. Prior to the member's 12
retirement, death, or refund in accordance with KRS 61.625, no funds shall be made 13
available from the member account. 14
(2) Each member's contribution or contribution picked up by the employer shall be 15
credited to the individual account of the contributing member, except as provided 16
by KRS 78.5536(3)(b). 17
(3) (a) Each member shall have his or her individual account credited with interest on 18
June 30 of each year. 19
(b) For a member who begins participating before September 1, 2008, interest 20
shall be credited to his or her individual account at a rate determined by the 21
board but not less than two percent (2%) per annum on the accumulated 22
account balance of the member on June 30 of the preceding fiscal year. 23
(c) For a member who begins participating on or after September 1, 2008, but 24
prior to January 1, 2014, or who begins participating in a hazardous position 25
on or after January 1, 2025, for his or her service in a hazardous position, 26
or who is presumed under Section 1 of this Act to begin participating in a 27 UNOFFICIAL COPY 24 RS BR 1130
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hazardous position immediately prior to January 1, 2014, interest shall be 1
credited to his or her individual account at a rate of two and one-half percent 2
(2.5%) per annum on the accumulated contributions of the member on June 3
30 of the preceding fiscal year. 4
(d) For a member who begins participating in a nonhazardous position on or 5
after January 1, 2014, in the hybrid cash balance plan, and for those members 6
making an election under subsection (3) of Section 1 of this Act or Section 7 7
of this Act, interest shall be credited in accordance with KRS 16.583 and 8
61.597. 9
(e) The amounts of interest credited to a member's account under this subsection 10
shall be transferred from the retirement allowance account. 11
(4) (a) Upon the retirement of a member who began participating in the system prior 12
to January 1, 2014, or who began participating in a hazardous position on or 13
after January 1, 2025, or who is presumed under Section 1 of this Act to 14
have begun participating in a hazardous position immediately prior to 15
January 1, 2014, his or her accumulated account balance shall be transferred 16
from the members' account to the retirement allowance account. 17
(b) Upon the retirement of a member who began participating in a nonhazardous 18
position in the system on or after January 1, 2014, or a member making an 19
election under subsection (3) of Section 1 of this Act or Section 7 of this 20
Act, who elects to annuitize his or her accumulated account balance as 21
prescribed by KRS 78.5512(8)[(7)](a) or (b) or 78.5516(7)(a) or (b), the 22
member's accumulated account balance shall be transferred to the retirement 23
allowance account. 24