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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, 2026, 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, 2026, 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 25 RS BR 109
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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, 2026, 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, 2026, made by January 31, 2026; 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, 2026, 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 25 RS BR 109
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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 25 RS BR 109
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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, 2026, 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 25 RS BR 109
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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 25 RS BR 109
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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, 2026, 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, 2026, 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, 2026, or who 27 UNOFFICIAL COPY 25 RS BR 109
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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, 2026, 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, 2026, 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
2026, who makes an election under subsection (3) of Section 1 of this Act, or 22
who, prior to the effective date of this Act, made an election under Section 7 of 23
this Act[or a member making an election pursuant to KRS 61.5955], shall receive 24
the retirement benefits provided by this section in lieu of the retirement benefits 25
provided under KRS 16.576 and 16.577. The retirement benefit provided by this 26
section shall be known as the hybrid cash balance plan and shall operate as another 27 UNOFFICIAL COPY 25 RS BR 109
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benefit tier within the State Police Retirement System and the Kentucky Employees 1
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 25 RS BR 109
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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 25 RS BR 109
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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 25 RS BR 109
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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, 2026[, 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
who, prior to the effective date of this Act, made an election under Section 7 of 18
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 25 RS BR 109
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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, 2026, 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 25 RS BR 109
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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, 2026, 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 25 RS BR 109
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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, 2026, who makes an election under subsection (3) 3
of Section 1 of this Act, or who, prior to the effective date of this Act, made an 4
election under Section 7 of this Act,[ or a member who makes an election pursuant 5
to KRS 61.5955,] shall receive the retirement benefits provided by this section in 6
lieu of the retirement benefits provided under KRS 78.5514. The retirement benefit 7
provided by this section shall be known as the hybrid cash balance plan and shall 8
operate as 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 seven and one-half percent (7.5%) of the creditable 14
compensation earned by the employee for each month the employee is 15
contributing to the 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 25 RS BR 109
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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 25 RS BR 109
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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 date, 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) At any age, provided he or she has earned twenty-five (25) or more years of 15
service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another 16
state-administered retirement system. 17
(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 system in accordance with the 20
actuarial assumptions and actuarial methods adopted by the board and in 21
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
(8) The provisions of this section shall not apply to: 27 UNOFFICIAL COPY 25 RS BR 109
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(a) Members who began participating in the Kentucky Employees Retirement 1
System, County Employees Retirement System, or the State Police 2
Retirement System prior to January 1, 2014; 3
(b) Members who are presumed under Section 1 of this Act to have begun 4
participating in the State Police Retirement System, in a hazardous position 5
in the Kentucky Employees Retirement System, or in a hazardous position 6
in the County Employees Retirement System immediately prior to January 7
1, 2014, and have not made an election under subsection (3) of Section 1 of 8
this Act; or 9
(c) Members who begin participating in the State Police Retirement System, in 10
a hazardous position in the Kentucky Employees Retirement System, or in a 11
hazardous position in the County Employees Retirement System on or after 12
January 1, 2026[, except as provided by KRS 61.5955]. 13
Section 7. KRS 61.5955 is amended to read as follows: 14
As of the effective date of this Act, notwithstanding any provision of KRS 16.505 to 15
16.652, 61.510 to 61.705, and 78.510 to 78.852 to the contrary: 16
(1) Subject to the provisions of this section, a[any] member who began participating in 17
a nonhazardous position in the Kentucky Employees Retirement System[,] or the 18
County Employees Retirement System[, or the State Police Retirement System] on 19
or after September 1, 2008, but prior to January 1, 2014, may in lieu of the benefits 20
he or she is currently eligible to receive from the systems, elect to receive the 21
benefits and rights provided to members who began participating in the systems on 22
or after January 1, 2014, including participating in the hybrid cash balance plan 23
created pursuant to KRS 61.597 or 78.5512[ for members in nonhazardous duty 24
positions or pursuant to KRS 16.583 or 78.5516 for members in hazardous duty 25
positions], as applicable; 26
(2) The election provided by this section shall be made in writing and on a form 27 UNOFFICIAL COPY 25 RS BR 109
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prescribed by the Kentucky Public Pensions Authority and shall apply to all service 1
or accounts in the Kentucky Retirement Systems or the County Employees 2
Retirement System; 3
(3) For each member who makes an election provided by this section: 4
(a) Any service credit the member has accrued prior to January 1, 2014, shall be 5
considered as service credit earned on or after January 1, 2014, for purposes 6
of determining benefits under KRS 16.505 to 16.652, 61.510 to 61.705, and 7
78.510 to 78.852; 8
(b) On the member's effective election date, the value of the member's 9
accumulated contributions, less any interest, shall be deposited into the 10
member's hybrid cash balance account as provided by KRS 16.583, 61.597, 11
78.5512, or 78.5516, as applicable, and considered part of the member's 12
accumulated account balance; 13
(c) On the member's effective election date, an employer pay credit as provided 14
by KRS [16.583, ]61.597[,] or 78.5512,[ or 78.5516,] as applicable, shall be 15
added to the member's accumulated account balance for each month the 16
member contributed to the Kentucky Employees Retirement System[,] or the 17
County Employees Retirement System[, or the State Police Retirement 18
System] prior to his or her effective election date; and 19
(d) Interest credits as provided by KRS [16.583, ]61.597[,] or 78.5512,[ or 20
78.5516,] as applicable, shall only be applied for periods occurring on or after 21
the member's effective election date; 22
(4) Before accepting an election provided by this section, the Kentucky Public Pensions 23
Authority shall provide the member with information detailing the potential results 24
of the member's election; 25
(5) An election made pursuant to this section shall be irrevocable; 26
(6) (a) A member of the Kentucky Employees Retirement System[,] or the County 27 UNOFFICIAL COPY 25 RS BR 109
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Employees Retirement System[, or the State Police Retirement System] shall 1
not be eligible to make an election prescribed by this section until the 2
Kentucky Retirement Systems receives a favorable private letter ruling from 3
the Internal Revenue Service regarding this section. 4
(b) If the Internal Revenue Service denies the request for a private letter ruling as 5
provided by paragraph (a) of this subsection, this section shall be void. 6
(c) The Kentucky Public Pensions Authority may promulgate administrative 7
regulations under KRS Chapter 13A in order to carry out this section; and 8
(7) This section shall not apply to: 9
(a) Retirees who were reemployed on or after September 1, 2008, and who are 10
not eligible to participate in the systems during reemployment; or 11
(b) Service that a member may have in the State Police Retirement System, in a 12
hazardous position in the Kentucky Employees Retirement System, or in a 13
hazardous position in the County Employees Retirement System, unless the 14
member made an election under this section prior to the effective date of 15
this Act. 16
Section 8. KRS 16.505 is amended to read as follows: 17
As used in KRS 16.505 to 16.652, unless the context otherwise requires: 18
(1) "System" means the State Police Retirement System created by KRS 16.505 to 19
16.652; 20
(2) "Board" means the board of trustees of the Kentucky Retirement Systems; 21
(3) "Employer" or "State Police" means the Department of Kentucky State Police, or its 22
successor; 23
(4) "Current service" means the number of years and completed months of employment 24
as an employee subsequent to July 1, 1958, for which creditable compensation was 25
paid by the employer and employee contributions deducted except as otherwise 26
provided; 27 UNOFFICIAL COPY 25 RS BR 109
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(5) "Prior service" means the number of years and completed months of employment as 1
an employee prior to July 1, 1958, for which creditable compensation was paid to 2
the employee by the Commonwealth. Twelve (12) months of current service in the 3
system are required to validate prior service; 4
(6) "Service" means the total of current service and prior service; 5
(7) "Accumulated contributions" at any time means the sum of all amounts deducted 6
from the compensation of a member and credited to his or her individual account in 7
the member's account, including employee contributions picked up after August 1, 8
1982, pursuant to KRS 16.545(4), together with interest credited on such amounts 9
as provided in KRS 16.505 to 16.652, and any other amounts the member shall 10
have contributed, including interest credited. For members who begin participating 11
on or after September 1, 2008, "accumulated contributions" shall not include 12
employee contributions that are deposited into accounts established pursuant to 26 13
U.S.C. sec. 401(h) within the funds established in KRS 16.510 and 61.515, as 14
prescribed by KRS 61.702(3)(b); 15
(8) "Creditable compensation": 16
(a) Except as provided by paragraph (b) or (c) of this subsection, means all salary 17
and wages, including payments for compensatory time, paid to the employee 18
as a result of services performed for the employer or for time during which the 19
member is on paid leave, which are includable on the member's federal form 20
W-2 wage and tax statement under the heading "wages, tips, other 21
compensation," including employee contributions picked up after August 1, 22
1982, pursuant to KRS 16.545(4); 23
(b) Includes: 24
1. Lump-sum bonuses, severance pay, or employer-provided payments for 25
purchase of service credit, which shall be averaged over the employee's 26
total service with the system in which it is recorded if it is equal to or 27 UNOFFICIAL COPY 25 RS BR 109
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greater than one thousand dollars ($1,000); 1
2. Lump-sum payments for creditable compensation paid as a result of an 2
order of a court of competent jurisdiction, the Personnel Board, or the 3
Kentucky Commission on Human Rights, or for any creditable 4
compensation paid in anticipation of settlement of an action before a 5
court of competent jurisdiction, the Personnel Board, or the Kentucky 6
Commission on Human Rights, including notices of violations of state 7
or federal wage and hour statutes or violations of state or federal 8
discrimination statutes, which shall be credited to the fiscal year during 9
which the wages were earned or should have been paid by the employer. 10
This subparagraph shall also include lump-sum payments for reinstated 11
wages pursuant to KRS 61.569, which shall be credited to the period 12
during which the wages were earned or should have been paid by the 13
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 25 RS BR 109
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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, 2026, 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 25 RS BR 109
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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, 2026, 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 25 RS BR 109
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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 25 RS BR 109
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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, 2026, 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 25 RS BR 109
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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 25 RS BR 109
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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 25 RS BR 109
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2014, but prior to January 1, 2026, 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, or who, prior to the effective date of this Act, made an 3
election under Section 7 of this Act, the combined sum of the member's 4
accumulated contributions and the member's accumulated employer pay 5
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, 2026, who make an election under subsection 27 UNOFFICIAL COPY 25 RS BR 109
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(3) of Section 1 of this Act, or who, prior to the effective date of this Act, 1
made an election under Section 7 of this Act, the employer pay credit and 2
interest credited on such amounts as provided by KRS 16.583 shall be 3
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, 2026, 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, 2026, who make an election under subsection (3) of Section 1 of 27 UNOFFICIAL COPY 25 RS BR 109
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this Act, or who, prior to the effective date of this Act, made an election 1
under Section 7 of this Act to opt into[in] the hybrid cash balance plan, 2
interest shall be credited to their individual account in accordance with KRS 3
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, 2026, 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, 2026, 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 25 RS BR 109
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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 25 RS BR 109
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began participating on or after January 1, 2026, 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 25 RS BR 109
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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 25 RS BR 109
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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 25 RS BR 109
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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 25 RS BR 109
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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 25 RS BR 109
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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
2026, 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 25 RS BR 109
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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, 2026, 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 7
Section 7 of this Act, the disability retirement allowance shall be the higher of 8
twenty-five percent (25%) of the member's monthly final rate of pay or the 9
retirement allowance determined in the same manner as for retirement at his 10
or her 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 25 RS BR 109
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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 25 RS BR 109
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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 25 RS BR 109
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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 or she received compensation for at least one hundred (100) hours of work; 19
provided, however, that each member, officer, and employee of the General 20
Assembly shall be credited with a month of prior service for each month he or she 21
served in the position prior to January 1, 1960. Twelve (12) months of current 22
service in the 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 25 RS BR 109
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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 25 RS BR 109
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Kentucky Commission on Human Rights, or for any creditable 1
compensation paid in anticipation of settlement of an action before a 2
court of competent jurisdiction, the Personnel Board, or the Kentucky 3
Commission on Human Rights, including notices of violations of state 4
or federal wage and hour statutes or violations of state or federal 5
discrimination statutes, which shall be credited to the fiscal year during 6
which the wages were earned or should have been paid by the employer. 7
This subparagraph shall also include lump-sum payments for reinstated 8
wages pursuant to KRS 61.569, which shall be credited to the period 9
during which the wages were earned or should have been paid by the 10
employer; 11
4. Amounts which are not includable in the member's gross income by 12
virtue of the member having taken a voluntary salary reduction provided 13
for under applicable provisions of the Internal Revenue Code; and 14
5. Elective amounts for qualified transportation fringes paid or made 15
available on or after January 1, 2001, for calendar years on or after 16
January 1, 2001, that are not includable in the gross income of the 17
employee by reason of 26 U.S.C. sec. 132(f)(4); and 18
(c) Excludes: 19
1. Living allowances, expense reimbursements, lump-sum payments for 20
accrued vacation leave, 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. For employees who begin participating on or after August 1, 2016, 24
nominal fees paid for services as a volunteer; and 25
4. Any salary or wages paid to an employee for services as a Kentucky 26
State Police school resource officer as defined by KRS 158.441; 27 UNOFFICIAL COPY 25 RS BR 109
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(14) "Final compensation" of a member means: 1
(a) For a member who begins participating before September 1, 2008, who is 2
employed in a nonhazardous position, the creditable compensation of the 3
member during the five (5) fiscal years he or she was paid at the highest 4
average monthly rate divided by the number of months of service credit 5
during that five (5) year period multiplied by twelve (12). The five (5) years 6
may be fractional and need not be consecutive. If the number of months of 7
service credit during the five (5) year period is less than forty-eight (48), one 8
(1) or more additional fiscal years shall be used; 9
(b) For a member who is employed in a nonhazardous position, whose effective 10
retirement date is between August 1, 2001, and January 1, 2009, and whose 11
total service credit is at least twenty-seven (27) years and whose age and years 12
of service total at least seventy-five (75), final compensation means the 13
creditable compensation of the member during the three (3) fiscal years the 14
member was paid at the highest average monthly rate divided by the number 15
of months of service credit during that three (3) years period multiplied by 16
twelve (12). The three (3) years may be fractional and need not be 17
consecutive. If the number of months of service credit during the three (3) 18
year period is less than twenty-four (24), one (1) or more additional fiscal 19
years shall be used. Notwithstanding the provision of KRS 61.565, the 20
funding for this paragraph shall be provided from existing funds of the 21
retirement allowance; 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 25 RS BR 109
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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 shall be used; 3
(d) For a member who begins participating on or after September 1, 2008, but 4
prior to January 1, 2014, who is employed in a nonhazardous position, the 5
creditable compensation of the member during the five (5) complete fiscal 6
years immediately preceding retirement divided by five (5). Each fiscal year 7
used to determine final compensation must contain twelve (12) months of 8
service credit. If the member does not have five (5) complete fiscal years that 9
each contain twelve (12) months of service credit, then one (1) or more 10
additional fiscal years, which may contain less than twelve (12) months of 11
service credit, shall be added until the number of months in the final 12
compensation calculation is at least sixty (60) months; or 13
(e) For a member who begins participating on or after September 1, 2008, but 14
prior to January 1, 2014, or a member who begins participating on or after 15
January 1, 2026, or a member who is presumed under Section 1 of this Act 16
to begin participating immediately prior to January 1, 2014, who is 17
employed in a hazardous position as provided in KRS 61.592, the creditable 18
compensation of the member during the three (3) complete fiscal years he or 19
she was paid at the highest average monthly rate divided by three (3). Each 20
fiscal year used to determine final compensation must contain twelve (12) 21
months of service credit. If the member does not have three (3) complete 22
fiscal years that each contain twelve (12) months of service credit, then one 23
(1) or more additional fiscal years, which may contain less than twelve (12) 24
months of service credit, shall be added until the number of months in the 25
final compensation calculation is at least thirty-six (36) months; 26
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 27 UNOFFICIAL COPY 25 RS BR 109
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calculated during the twelve (12) month period immediately preceding the 1
member's effective retirement date, including employee contributions picked up 2
after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the 3
system by the employer and the following equivalents shall be used to convert the 4
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 5
workdays, nineteen hundred fifty (1,950) hours for seven and one-half (7-1/2) hour 6
workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months, 7
one (1) year; 8
(16) "Retirement allowance" means the retirement payments to which a member is 9
entitled; 10
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 11
basis of the actuarial tables that are adopted by the board. In cases of disability 12
retirement, the options authorized by KRS 61.635 shall be computed by adding ten 13
(10) years to the age of the member, unless the member has chosen the Social 14
Security adjustment option as provided for in KRS 61.635(8), in which case the 15
member's actual age shall be used. For members who began participating in the 16
system prior to January 1, 2014, or who begin participating in a hazardous 17
position in the system on or after January 1, 2026, or who are presumed under 18
Section 1 of this Act to begin participating in a hazardous position in the system 19
immediately prior to January 1, 2014, no disability retirement option shall be less 20
than the same option computed under early retirement; 21
(18) "Normal retirement date" means the sixty-fifth birthday of a member, unless 22
otherwise provided in KRS 61.510 to 61.705; 23
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 24
following June 30, which shall also be the plan year. The "fiscal year" shall be the 25
limitation year used to determine contribution and benefit limits as established by 26
26 U.S.C. sec. 415; 27 UNOFFICIAL COPY 25 RS BR 109
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(20) "Officers and employees of the General Assembly" means the occupants of those 1
positions enumerated in KRS 6.150. The term shall also apply to assistants who 2
were employed by the General Assembly for at least one (1) regular legislative 3
session prior to July 13, 2004, who elect to participate in the retirement system, and 4
who serve for at least six (6) regular legislative sessions. Assistants hired after July 5
13, 2004, shall be designated as interim employees; 6
(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean 7
all positions that average one hundred (100) or more hours per month determined 8
by using the number of months actually worked within a calendar or fiscal year, 9
including all positions except: 10
(a) Seasonal positions, which although temporary in duration, are positions which 11
coincide in duration with a particular season or seasons of the year and which 12
may recur regularly from year to year, the period of time shall not exceed nine 13
(9) months; 14
(b) Emergency positions which are positions utilized by the employer during: 15
1. An emergency as determined by the employer for a period not 16
exceeding thirty (30) working days and are nonrenewable; or 17
2. A state of emergency declared by the President of the United States or 18
the Governor of the Commonwealth of Kentucky that are created or 19
filled specifically for addressing the employer's needs during and as a 20
result of the declared emergency; 21
(c) Temporary positions which are positions of employment with a participating 22
department for a period of time not to exceed nine (9) months and are 23
nonrenewable; 24
(d) Part-time positions which are positions which may be permanent in duration, 25
but which require less than a calendar or fiscal year average of one hundred 26
(100) hours of work per month, determined by using the number of months 27 UNOFFICIAL COPY 25 RS BR 109
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actually worked within a calendar or fiscal year, in the performance of duty; 1
and 2
(e) Interim positions which are positions established for a one-time or recurring 3
need not to exceed nine (9) months; 4
(22) "Vested" for purposes of determining eligibility for purchasing service credit under 5
KRS 61.552 means the employee has at least forty-eight (48) months of service if 6
age sixty-five (65) or older or at least sixty (60) months of service if under the age 7
of sixty-five (65). For purposes of this subsection, "service" means service in the 8
systems administered by the Kentucky Retirement Systems and County Employees 9
Retirement System; 10
(23) "Parted employer" means a department, portion of a department, board, or agency, 11
such as Outwood Hospital and School, which previously participated in the system, 12
but due to lease or other contractual arrangement is now operated by a publicly held 13
corporation or other similar organization, and therefore is no longer participating in 14
the system. The term "parted employer" shall not include a department, board, or 15
agency that ceased participation in the system pursuant to KRS 61.522; 16
(24) "Retired member" means any former member receiving a retirement allowance or 17
any former member who has filed the necessary documents for retirement benefits 18
and is no longer contributing to the retirement system; 19
(25) "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
(26) "Beneficiary" means the person or persons or estate or trust or trustee designated by 23
the member in accordance with KRS 61.542 or 61.705 to receive any available 24
benefits in the event of the member's death. As used in KRS 61.702, "beneficiary" 25
does not mean an estate, trust, or trustee; 26
(27) "Recipient" means the retired member or the person or persons designated as 27 UNOFFICIAL COPY 25 RS BR 109
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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
(28) "Level percentage of payroll amortization method" means a method of determining 5
the annual amortization payment on the unfunded actuarial accrued liability as 6
expressed as a percentage of payroll over a set period of years but that may be 7
converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method, 8
the percentage of payroll shall be projected to remain constant for all years 9
remaining in the set period of time and the unfunded actuarially accrued liability 10
shall be projected to be fully amortized at the conclusion of the set period of years; 11
(29) "Increment" means twelve (12) months of service credit which are purchased. The 12
twelve (12) months need not be consecutive. The final increment may be less than 13
twelve (12) months; 14
(30) "Person" means a natural person; 15
(31) "Retirement office" means the Kentucky Public Pensions Authority's office 16
building in Frankfort, unless otherwise designated by the Kentucky Public Pensions 17
Authority; 18
(32) "Last day of paid employment" means the last date employer and employee 19
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 20
78.615 to the retirement office in order for the employee to receive current service 21
credit for the month. Last day of paid employment does not mean a date the 22
employee receives payment for accrued leave, whether by lump sum or otherwise, 23
if that date occurs twenty-four (24) or more months after previous contributions; 24
(33) "Objective medical evidence" means reports of examinations or treatments; medical 25
signs which are anatomical, physiological, or psychological abnormalities that can 26
be observed; psychiatric signs which are medically demonstrable phenomena 27 UNOFFICIAL COPY 25 RS BR 109
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indicating specific abnormalities of behavior, affect, thought, memory, orientation, 1
or contact with reality; or laboratory findings which are anatomical, physiological, 2
or psychological phenomena that can be shown by medically acceptable laboratory 3
diagnostic techniques, including but not limited to chemical tests, 4
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 5
(34) "Participating" means an employee is currently earning service credit in the system 6
as provided in KRS 61.543; 7
(35) "Month" means a calendar month; 8
(36) "Membership date" means: 9
(a) The date upon which the member began participating in the system as 10
provided in KRS 61.543; 11
(b) For a member electing to participate in the system pursuant to KRS 12
196.167(4) or 311A.022(2) who has not previously participated in the system 13
or the Kentucky Teachers' Retirement System, the date the member began 14
participating in a defined contribution plan that meets the requirements of 26 15
U.S.C. sec. 403(b); 16
(c) For members bound by an educational contract as a conditional employee to 17
the state of Kentucky prior to December 31, 2003, the date on which the 18
educational contract became effective; or 19
(d) For a member participating in the system pursuant to KRS 31.045, the earlier 20
of the date upon which the member began participating in the system under 21
paragraph (a) of this subsection or the date the member began employment 22
with the Louisville and Jefferson County Public Defender Corporation; 23
(37) "Participant" means a member, as defined by subsection (8) of this section, or a 24
retired member, as defined by subsection (24) of this section; 25
(38) "Qualified domestic relations order" means any judgment, decree, or order, 26
including approval of a property settlement agreement, that: 27 UNOFFICIAL COPY 25 RS BR 109
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(a) Is issued by a court or administrative agency; and 1
(b) Relates to the provision of child support, alimony payments, or marital 2
property rights to an alternate payee; 3
(39) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 4
participant, who is designated to be paid retirement benefits in a qualified domestic 5
relations order; 6
(40) "Accumulated employer credit" mean the employer pay credit deposited to the 7
member's account and interest credited on such amounts as provided by KRS 8
16.583 and 61.597; 9
(41) "Accumulated account balance" means: 10
(a) For members who began participating in the system prior to January 1, 2014, 11
the member's accumulated contributions; or 12
(b) For members who began participating in the system on or after January 1, 13
2014, in the hybrid cash balance plan as provided by KRS 16.583 and 61.597, 14
who make an election under subsection (3) of Section 1 of this Act, or who, 15
prior to the effective date of this Act, made an election under Section 7 of 16
this Act, the combined sum of the member's accumulated contributions and 17
the member's accumulated employer credit; 18
(42) "Volunteer" means an individual who: 19
(a) Freely and without pressure or coercion performs hours of service for an 20
employer participating in one (1) of the systems administered by Kentucky 21
Retirement Systems without receipt of compensation for services rendered, 22
except for reimbursement of actual expenses, payment of a nominal fee to 23
offset the costs of performing the voluntary services, or both; and 24
(b) If a retired member, does not become an employee, leased employee, or 25
independent contractor of the employer for which he or she is performing 26
volunteer services for a period of at least twelve (12) months following the 27 UNOFFICIAL COPY 25 RS BR 109
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retired member's most recent retirement date; 1
(43) "Nominal fee" means compensation earned for services as a volunteer that does not 2
exceed five hundred dollars ($500) per month with each participating employer. 3
Compensation earned for services as a volunteer from more than one (1) 4
participating employer during a month shall not be aggregated to determine whether 5
the compensation exceeds the five hundred dollars ($500) per month maximum 6
provided by this subsection; 7
(44) "Nonhazardous position" means a position that does not meet the requirements of 8
KRS 61.592 or has not been approved by the board as a hazardous position; 9
(45) "Monthly average pay" means: 10
(a) In the case of a member who dies as a direct result of an act in line of duty as 11
defined in KRS 16.505 or who dies as a result of a duty-related injury as 12
defined in KRS 61.621, the higher of the member's monthly final rate of pay 13
or the average monthly creditable compensation earned by the deceased 14
member during his or her last twelve (12) months of employment; or 15
(b) In the case where a member becomes totally and permanently disabled as a 16
direct result of an act in line of duty as defined in KRS 16.505 or becomes 17
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 18
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 19
member's monthly final rate of pay or the average monthly creditable 20
compensation earned by the disabled member during his or her last twelve 21
(12) months of employment prior to the date the act in line of duty or duty-22
related injury occurred; 23
(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 24
61.505; 25
(47) "Executive director" means the executive director of the Kentucky Public Pensions 26
Authority; 27 UNOFFICIAL COPY 25 RS BR 109
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(48) "Instructional staff" means the employees of a state college or university 1
participating under KRS 61.520 who are: 2
(a) Faculty; 3
(b) Staff responsible for teaching; or 4
(c) Other individuals employed in an administrative position that is eligible for 5
participation in the Teachers' Insurance and Annuity Association (TIAA) of 6
the Teachers' Retirement System; 7
(49) "Agency reporting official" means the person designated by the participating 8
employer who shall be responsible for forwarding all employer and employee 9
contributions and a record of the contributions to the system and for performing 10
other administrative duties pursuant to KRS 61.510 to 61.705; and 11
(50) "Gainful employment" means work in any capacity that is or may be performed 12
with regularity and is or may be usually done for pay, whether pay is received or 13
not received, including seasonal, volunteer, part-time, and on-call work. 14
Section 13. KRS 61.546 is amended to read as follows: 15
(1) Except as otherwise provided by this section, any member of the Kentucky 16
Employees Retirement System or the State Police Retirement System whose 17
retirement date is July 14, 1984, or thereafter, shall receive credit for unused sick 18
leave accrued while contributing to the retirement system from which the retirement 19
benefit is to be paid in accordance with this section. 20
(2) (a) Upon the member's notification of retirement as prescribed in KRS 16.576 or 21
61.590, the employer shall certify the retiring member's unused, accumulated 22
sick leave balance to the system. 23
(b) The member's sick leave balance, expressed in days, shall be divided by the 24
average number of working days per month in the state service and rounded to 25
the nearest number of whole months. 26
(c) Except as provided by subsection (3) of this section, the member's sick leave 27 UNOFFICIAL COPY 25 RS BR 109
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balance, expressed in months, shall upon retirement be added to his or her 1
service credit for the purpose of determining his or her annual retirement 2
allowance under KRS 16.505 to 16.652 or 61.510 to 61.705 and for the 3
purpose of determining whether the member is eligible to receive a retirement 4
allowance under KRS 16.505 to 16.652 or 61.510 to 61.705. 5
(3) For a member who begins participating in the Kentucky Employees Retirement 6
System or the State Police Retirement System on or after September 1, 2008, or for 7
a member who begins participating in a hazardous duty position in the Kentucky 8
Employees Retirement System or in the State Police Retirement System on or 9
after January 1, 2026, or for a member who is presumed under Section 1 of this 10
Act to begin participating in a hazardous duty position in the Kentucky 11
Employees Retirement System or in the State Police Retirement System 12
immediately prior to January 1, 2014: 13
(a) The member shall receive no more than twelve (12) months of service credit 14
upon retirement for accumulated unused sick leave accrued while contributing 15
to the retirement system or systems from which the retirement benefit is to be 16
paid; 17
(b) The service credited for accumulated unused sick leave as limited by this 18
section and added to the member's service credit shall be used for purposes of 19
determining the member's annual retirement allowance under KRS 16.505 to 20
16.652 and 61.510 to 61.705; and 21
(c) The service credited for accumulated unused sick leave and added to the 22
member's service credit shall not be used to determine whether a member is 23
eligible to receive a retirement allowance under any of the provisions of KRS 24
16.505 to 16.652 and 61.510 to 61.705. 25
(4) Notwithstanding any other provision of this section to the contrary, the value of any 26
accumulated sick leave that is added to the member's service credit in the Kentucky 27 UNOFFICIAL COPY 25 RS BR 109
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Employees Retirement System or the State Police Retirement System on or after 1
July 1, 2010, shall be paid to the retirement system by the last participating 2
Kentucky Employees Retirement System or State Police Retirement System 3
employer based upon a formula adopted by the board. 4
(5) The provisions of this section shall not apply to a participating agency whose 5
employees are not employed by the Commonwealth until the agency certifies to the 6
system that a sick leave program has been formally adopted and is universally 7
administered within the agency. 8
(6) This section shall not apply to: 9
(a) Members in a nonhazardous position who begin participating in the systems 10
administered by Kentucky Retirement Systems on or after January 1, 2014; or 11
(b) Members who make an election under subsection (3) of Section 1 of this 12
Act, or who, prior to the effective date of this Act, made an election under or 13
Section 7 of this Act. 14
Section 14. KRS 61.552 is amended to read as follows: 15
(1) Called to Active Duty Military Service. An employee of an employer participating 16
in the system who is called to active military duty in the Armed Forces of the 17
United States shall be credited in accordance with 38 U.S.C. sec. 4318 with service 18
credit, creditable compensation, and in the case of employees participating in the 19
hybrid cash balance plan, employee contributions, employer credits, and interest 20
credits, for a period of active military duty of up to six (6) years, provided: 21
(a) The employee was called to active military duty in the Armed Forces of the 22
United States: 23
1. After the employee's membership date in the system and provided the 24
employee was on leave of absence from the employer and did not 25
withdraw his or her accumulated account balance; or 26
2. Prior to the employee's membership date in the system and the date the 27 UNOFFICIAL COPY 25 RS BR 109
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employee terminated employment with his or her employer; 1
(b) The employee entered active military service within three (3) months of his or 2
her last day of paid employment; 3
(c) The employee's discharge military service was terminated in a manner other 4
than as described in 38 U.S.C. sec. 4304; 5
(d) The employee returns to work with an employer participating in the system 6
within two (2) years after completion of the period of active military duty, or 7
upon the subsequent termination of any total disability which existed at the 8
expiration of the two (2) years after discharge; and 9
(e) For an employee who is a member in a nonhazardous position whose 10
membership date is on or after January 1, 2014, or who is a member in a 11
hazardous position beginning prior to January 1, 2026, who makes an 12
election under subsection (3) of Section 1 of this Act, or who, prior to the 13
effective date of this Act, made an election under Section 7 of this Act, who 14
is participating in the hybrid cash balance plan under KRS 16.583, 61.597, 15
78.5512, or 78.5516, the employee pays the employee contributions on the 16
credited compensation as provided under KRS 16.543, 61.543, and 78.615. 17
For periods of active military duty that meet the requirements of this subsection, the 18
employer shall pay the employer contributions payable under KRS 61.565, 61.702, 19
78.5536, and 78.635. 20
(2) (a) Omitted Service. Any person who is entitled to service credit for employment 21
which was not reported by the employer in accordance with KRS 16.543, 22
61.543, or 78.615 may obtain credit for the service subject to the provisions of 23
this subsection. 24
(b) Provided the person pays for the omitted service with within six (6) months of 25
notification by the system, the cost of the service shall be equal to the 26
employee contributions that would have been paid if the person had been 27 UNOFFICIAL COPY 25 RS BR 109
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correctly reported in accordance with KRS 16.543, 61.543, or 78.615. 1
(c) Any employee participating in one (1) of the state-administered retirement 2
systems entitled to service credit under paragraph (a) of this subsection who 3
has not repaid the employee contributions due within six (6) months of 4
notification by the system may purchase the credit after the six (6) months by 5
paying to the system the employee contributions plus interest at the actuarially 6
assumed rate from the date of initial notification under paragraph (b) of this 7
subsection. 8
(d) Omitted service purchased under this subsection shall: 9
1. Be considered service credited under KRS 16.543(1), 61.543(1), or 10
78.615(1) for purposes of determining eligibility for retirement benefits 11
under KRS 78.510 to 78.852; and 12
2. Not be credited to the member's account until the employer 13
contributions due and any interest or penalties on the delinquent 14
employer contributions for the period of omitted service are received by 15
the system. 16
(e) Employees who begin participating on or after January 1, 2014, in the hybrid 17
cash balance plan provided by KRS 16.583 or 61.597 or 78.5512 or 78.5516 18
shall, upon payment of the employee and employer contributions due under 19
this subsection, have their accumulated account balance increased by the 20
employee contributions, employer pay credits, and interest credits that would 21
have been credited to their member's account if the contributions had been 22
paid on time. 23
(f) Contributions payable by the employer under this subsection for omitted 24
service shall be considered delinquent from the date the employee should 25
have been reported and received service credit in accordance with KRS 26
16.543, 61.543, and 78.615. 27 UNOFFICIAL COPY 25 RS BR 109
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(3) (a) Recontribution of a Refund. Any employee participating in one (1) of the 1
state-administered retirement systems who has been refunded his or her 2
accumulated account balance under the provisions of KRS 61.625, thereby 3
losing service credit in the system, may regain the credit by paying to the 4
system the amount or amounts refunded by the system with interest at a rate 5
determined by the board. Service purchased under this subsection on or after 6
January 1, 2014, shall not be used to determine the member's membership 7
date in the systems. 8
(b) Recontribution of a refund purchased under this subsection shall not be used 9
in determining a retirement allowance until the member has accrued at least 10
six (6) months of service credit in a state-administered retirement system, 11
excluding the service purchased under this subsection. If the member does not 12
accrue at least six (6) months of service credit in a state-administered 13
retirement system, excluding service purchased under this subsection, then the 14
payment plus interest as provided in KRS 16.560, 61.575, or 78.640 shall be 15
refunded upon retirement, death, or written request following termination of 16
employment. The service requirement shall be waived if the member dies or 17
becomes disabled as provided for by KRS 16.582, 61.600, 61.621, 78.5522, or 18
78.5524. 19
(4) (a) Summer Months. Any employee participating in one (1) of the state-20
administered retirement systems who is or has been employed by a school 21
board or community action agency participating in the County Employees 22
Retirement System or a state-operated school under KRS Chapter 167 or an 23
institution of higher learning participating in the Kentucky Employees 24
Retirement System, who receives service credit for less than twelve (12) 25
months each year, may purchase the additional months of service credit 26
needed to total one (1) year of service credit, except the amount purchased for 27 UNOFFICIAL COPY 25 RS BR 109
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any specific year shall not exceed three (3) months. 1
(b) The cost of the summer months service credit shall be determined by the 2
formula established by subsection (10) of this section and may be purchased 3
by the employee, or the employer on behalf of the employee, or the cost may 4
be paid by both the employer and employee in which case the employer and 5
employee shall each pay fifty percent (50%) of the cost. Service credit shall 6
not be credited to the member's account until both the employer's and 7
employee's payment are received by the system. 8
(c) If the employee has purchased service credit under this subsection based on 9
months reported by the employer for the fiscal year, and an audit of the 10
employee's account reduces the number of months of service credit for which 11
the employee is eligible to no fewer than nine (9) months, the employee shall 12
retain credit for the months purchased unless the employee is ineligible for 13
any service in the fiscal year. The employee shall be eligible to purchase the 14
additional months under this subsection to total one (1) year. 15
(d) This subsection shall not apply to members who began participating in the 16
County Employees Retirement System on or after January 1, 2014. 17
(5) Vested Service Purchases. Any employee who began participating in the County 18
Employees Retirement System, the Kentucky Employees Retirement System, or the 19
State Police Retirement System prior to January 1, 2014, or who began 20
participating in the State Police Retirement System or in a hazardous position in 21
the County Employees Retirement System or the Kentucky Employees Retirement 22
System on or after January 1, 2026, or who is presumed under Section 1 of this 23
Act to have begun participating in the State Police Retirement System or in a 24
hazardous position in the County Employees Retirement System or the Kentucky 25
Employees Retirement System immediately prior to January 1, 2014, who is 26
vested may purchase service credit for: 27 UNOFFICIAL COPY 25 RS BR 109
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(a) Past service. "Past service" means periods of employment: 1
1. Between July 1, 1956, in the case of the Kentucky Employees 2
Retirement System, or July 1, 1958, in the case of the County 3
Employees Retirement System, and the effective date of participation by 4
the employer; or 5
2. With a public agency that did not participate in the Kentucky Employees 6
Retirement System but would have been eligible to participate under 7
KRS 61.520 or a political subdivision that did not participate in the 8
County Employees Retirement System but would have been eligible to 9
participate under KRS 78.530, provided the public agency or political 10
subdivision has merged with or been taken over by a participating 11
employer; 12
(b) State university service, provided the university does not participate in a state-13
administered retirement system and the university service being purchased 14
was in a nonteaching position that did not participate in a defined benefit 15
retirement program; 16
(c) 1. Up to ten (10) years of out-of-state service. "Out-of-state" means service 17
credited to a state or local government-administered public defined 18
benefit plan in another state that is not a defined benefit plan for 19
teachers. 20
2. Up to ten (10) years of out-of-state hazardous service. "Out-of-state 21
hazardous service" means service in a regular full-time position that was 22
credited to a defined benefit retirement plan administered by a state or 23
local government in another state, if the service could be certified as 24
hazardous pursuant to KRS 61.592 or 78.5520, as applicable. The 25
employee may purchase out-of-state hazardous service under this 26
subparagraph provided the employee is vested to receive benefits from 27 UNOFFICIAL COPY 25 RS BR 109
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the State Police Retirement System or hazardous duty benefits from the 1
Kentucky Employees Retirement System or the County Employees 2
Retirement System. 3
The employee must purchase out-of-state service or out-of-state hazardous 4
service in the system in which he or she is vested based solely upon the 5
service in that system; 6
(d) Active military duty, which means periods of active military duty in the 7
Armed Forces of the United States, provided: 8
1. The employee's military service was terminated in a manner other than 9
as described in 38 U.S.C. sec. 4304; and 10
2. The service has not been credited as free military service under 11
subsection (1) of this section; 12
(e) National Guard service. An employee may purchase one (1) month of service 13
for each six (6) months of service in the National Guard or the military 14
reserves of the United States. The service shall be treated as service earned 15
prior to participation in the system; 16
(f) Federal service. "Federal service" means service with the United States 17
government, that is not service in the Armed Forces; 18
(g) Seasonal, emergency, interim, probationary, or temporary employment or 19
part-time employment as provided by KRS 61.510(21) or 78.510(21) 20
averaging one hundred (100) or more hours of work per month on a calendar 21
or fiscal year basis. If the average number of hours of work is less than one 22
hundred (100) per month, the member may purchase credit for only those 23
months he or she receives creditable compensation for one hundred (100) 24
hours of work; 25
(h) Part-time employment in a noncertified position at a school board prior to the 26
1990-91 school year which averaged eighty (80) or more hours of work per 27 UNOFFICIAL COPY 25 RS BR 109
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month on a calendar or fiscal year basis. If the average number of hours of 1
work is less than eighty (80) per month, the noncertified employee of a school 2
board shall be allowed to purchase credit only for those months he or she 3
receives creditable compensation for eighty (80) hours of work; 4
(i) Any period of: 5
1. Authorized maternity leave without pay or sick leave without pay; 6
2. Unpaid leave authorized under the federal Family and Medical Leave 7
Act; 8
3. Approved educational leave; and 9
4. Agency-approved leave to work for a work-related labor organization if 10
the agency subsequently participated in the County Employees 11
Retirement System, but only if the board receives a favorable private 12
letter ruling from the United States Internal Revenue Service or a 13
favorable opinion letter from the United States Department of Labor; 14
(j) Non-participating employer service, which means periods of employment 15
with the following types of agencies provided the agency does not participate 16
in a state-administered retirement system: 17
1. A regional community services program for mental health organized and 18
operated under the provisions of KRS 210.370 to 210.480; 19
2. A community action agency created under KRS 273.405 to 273.453. 20
The service provided by this subparagraph shall be purchased in the 21
County Employees Retirement System; 22
3. An area development district created pursuant to KRS 147A.050; or 23
4. A business development corporation created pursuant to KRS 155.001 24
to 155.230, provided the system receives a favorable private letter ruling 25
from the United States Internal Revenue Service or a favorable opinion 26
letter from the United States Department of Labor; 27 UNOFFICIAL COPY 25 RS BR 109
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(k) Urban-county government service, which means employment in an urban-1
county government position that would qualify for hazardous duty coverage 2
under KRS 61.592 or 78.5520. The provisions of this paragraph shall only be 3
applicable to vested members participating in the State Police Retirement 4
System or in a hazardous position in the Kentucky Employees Retirement 5
System or the County Employees Retirement System; 6
(l) Periods of service as assistants to officers and employees of the General 7
Assembly for persons who were unable to acquire service under KRS 8
61.510(20) for service performed after January 1, 1960; 9
(m) Service as a volunteer in the Kentucky Peace Corps, created by KRS 154.1-10
720; and 11
(n) Employment with a vocational technical school in a noncertified part-time 12
position averaging eighty (80) or more hours per month, determined by using 13
the number of months actually worked within a calendar or fiscal year. The 14
service provided by this paragraph shall be purchased in the Kentucky 15
Employees Retirement System. 16
(6) Non-qualified service. Provided the employee's membership date in the system is 17
prior to July 15, 2002, and provided the employee has total service in all state-18
administered retirement systems of at least one hundred eighty (180) months of 19
service credit, the employee may purchase a combined maximum total of five (5) 20
years of service credit, known as non-qualified service, which is not otherwise 21
purchasable under any of the provisions of KRS 16.505 to 16.652, 61.510 to 22
61.705, or 78.510 to 78.852. The service purchased under this paragraph shall not 23
be used in determining a retirement allowance until the member has accrued at least 24
two hundred forty (240) months of service, excluding service purchased under this 25
subsection. If the member does not accrue at least two hundred forty (240) months 26
of service, excluding service purchased under this subsection, upon retirement, 27 UNOFFICIAL COPY 25 RS BR 109
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death, or written request following termination, the payment, plus interest as 1
provided in KRS 16.560, 61.575, or 78.640, as applicable, shall be refunded. 2
(7) For purposes of service purchased under subsections (2) to (6) of this section: 3
(a) Except for subsection (6) of this section, the service must qualify as regular 4
full-time as provided by KRS 61.510 and 78.510; 5
(b) No service credit may be purchased for periods already credited to the system 6
or another public defined benefit retirement fund, including non-qualified 7
service purchased in another state-administered retirement system; 8
(c) Except as provided by paragraph (a)2.a. of subsection (9) of this section, the 9
employee payment for service purchases shall not be picked up, as described 10
in KRS 16.545(4), 61.560(4), or 78.610(4), by the employer; 11
(d) Except for service purchased under subsection (2) or (3) of this section, 12
service purchases made pursuant to this section may be purchased by the 13
entire amount of service available or by increments. Service purchases made 14
pursuant to subsections (2) and (3) of this section shall only be purchased by 15
the entire amount of service available; and 16
(e) Service purchases as provided by subsections (5)(b), (d) to (f), and (j)1. and 17
(6) of this section may be purchased in any system in which the member has 18
service credit. 19
(8) (a) Employer purchase of past service. Any employer participating in the system 20
may purchase service credit, between July 1, 1956, in the case of the 21
Kentucky Employees Retirement System, or July 1, 1958, in the case of the 22
County Employees Retirement System, and the participation date of the 23
employer, for present employees of the county or department who have 24
elected coverage under KRS 61.525(2) or 78.540(1), provided the employee 25
began participating in the system prior to January 1, 2014. 26
(b) A Kentucky Employees Retirement System employer shall pay the cost of the 27 UNOFFICIAL COPY 25 RS BR 109
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service credit within the fiscal year the election is made to purchase the 1
service credit. A County Employees Retirement System employer may 2
purchase the service, with interest at the rate actuarially assumed by the board, 3
over a period not to exceed ten (10) years. 4
(c) If an employer elects to purchase service under the provisions of this 5
subsection, any present employee who would be eligible to receive service 6
credit under the provisions of this subsection and has purchased service credit 7
under subsection (5)(a) of this section shall have his or her payment for the 8
service credit refunded with interest at the rate paid under KRS 61.575 or 9
78.640. 10
(d) Any payments made by an employer under this subsection shall be deposited 11
to the retirement allowance account of the system and these funds shall not be 12
considered accumulated contributions of the individual members. 13
(9) (a) An employee participating in the system may purchase service credit under 14
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 78.510 to 15
78.852 for which he or she is eligible to purchase, or as otherwise required by 16
38 U.S.C. ch. 43, by: 17
1. Making a lump-sum payment on a before-tax basis as provided in 18
subparagraph 3. of this paragraph, or on an after-tax basis if the 19
employee is purchasing service credit under subsection (1) or (3) of this 20
section, service available pursuant to 38 U.S.C. ch. 43 not otherwise 21
provided for in this section, or grandfathered service as defined in 22
paragraph (b) of this subsection; 23
2. Entering into an agreement to purchase service credit through an 24
installment purchase of service agreement with the systems as provided 25
by paragraph (c) of this subsection: 26
a. On a before-tax basis in which the service is purchased pursuant to 27 UNOFFICIAL COPY 25 RS BR 109
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the employer pick-up provisions in 26 U.S.C. sec. 414(h)(2); or 1
b. On an after-tax basis if the employee is purchasing service credit 2
under subsection (1) or (3) of this section, service available 3
pursuant to 38 U.S.C. ch. 43 not otherwise provided for in this 4
section, or grandfathered service as defined in paragraph (b) of this 5
subsection; or 6
3. Transferring funds to the system through a direct trustee-to-trustee 7
transfer as permitted under the applicable sections of the Internal 8
Revenue Code and any regulations or rulings issued thereunder, through 9
a direct rollover as contemplated by and permitted under 26 U.S.C. sec. 10
401(a)(31) and any regulations or rulings issued thereunder, or through a 11
rollover of funds pursuant to and permitted under the rules specified in 12
26 U.S.C. secs. 402(c) and 408(d)(3). The system shall accept the 13
transfer or rollover to the extent permitted under the rules specified in 14
the applicable provisions of the Internal Revenue Code and any 15
regulations and rulings issued thereunder. 16
(b) For purposes of this subsection, "grandfathered service" means service 17
purchases for which a member, whose membership date in the system is prior 18
to July 1, 1999, is eligible to purchase under KRS 16.505 to 16.652, 61.510 to 19
61.705, or 78.510 to 78.852, that were available for all members of the system 20
to purchase on August 5, 1997. 21
(c) 1. For service purchased under a before-tax or after-tax installment 22
purchase of service agreement as provided by paragraph (a)2. of this 23
subsection, the cost of the service shall be computed in the same manner 24
as for a lump-sum payment which shall be the principal, except that 25
interest compounded annually at the actuarial rate in effect at the time 26
the member elects to make the purchase shall be added for the period 27 UNOFFICIAL COPY 25 RS BR 109
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that the installments are to be made. 1
2. Multiple service purchases may be combined under a single installment 2
agreement, except that no employee may make more than one (1) 3
installment purchase at the same time. 4
3. For after-tax installment purchase of service agreements, the employee 5
may elect to stop the installment payments by notifying the system; may 6
have the installment purchase recalculated to add one (1) or more 7
additional service purchases; or may pay by lump sum the remaining 8
principal or a portion of the remaining principal. 9
4. Before-tax installment purchase of service agreements shall be 10
irrevocable, and the employee shall not be able to stop installment 11
payments or to pay off the remaining balance of the purchase of service 12
agreement, except upon termination of employment or death. 13
5. One (1) year of installment payments shall be made for each one 14
thousand dollars ($1,000) or any part thereof of the total cost, except 15
that the total period allowed for installments shall not be less than one 16
(1) year and shall not exceed five (5) years. 17
6. The employee shall pay the installments by payroll deduction for after-18
tax purchase of service agreements, and the employer shall pick up 19
installments for before-tax purchase of service agreements. Upon 20
notification by the system, the employer shall report the installment 21
payments monthly continuously over each twelve (12) month period at 22
the same time as, but separate from, regular employee contributions on 23
the forms or by the computer format specified by the board. 24
7. The system shall determine how much of the total cost represents 25
payment for one (1) month of the service to be purchased and shall 26
credit one (1) month of service to the member's account each time this 27 UNOFFICIAL COPY 25 RS BR 109
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amount has been paid. The first service credited shall represent the first 1
calendar month of the service to be purchased and each succeeding 2
month of service credit shall represent the succeeding months of that 3
service. 4
8. If the employee utilizing an installment purchase of service agreement 5
dies, retires, does not continue employment in a position required to 6
participate in the system, or elects to stop an after-tax installment 7
purchase of service agreement, the member, or in the case of death, the 8
beneficiary, shall have sixty (60) days to pay the remaining principal or 9
a portion of the remaining principal of the installment purchase of 10
service agreement by lump sum, subject to the restrictions of paragraph 11
(a)1. of this subsection, or by transfer of funds under paragraph (a)3. of 12
this subsection, except that payment by the member shall be filed with 13
the system prior to the member's effective retirement date. If the 14
member or beneficiary does not pay the remaining cost, the system shall 15
refund to the member or the beneficiary the payment, payments, or 16
portion of a payment that does not represent a full month of service 17
purchased, except as provided by subsection (6) of this section. 18
9. If the employer does not report installment payments on an employee 19
for sixty (60) days for an after-tax installment purchase of service 20
agreement, except in the case of employees on military leave or sick 21
leave without pay, the installment purchase shall cease and the system 22
shall refund to the employee the payment, payments, or portion of a 23
payment that does not represent a full month of service purchased. 24
10. Installment payments of employees on military leave or sick leave 25
without pay shall be suspended during the period of leave and shall 26
resume without recalculation upon the employee's return from leave. 27 UNOFFICIAL COPY 25 RS BR 109
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11. If payments have ceased under subparagraph 8. or 9. of this paragraph 1
and the member later becomes a participating employee in the County 2
Employees Retirement System, Kentucky Employees Retirement 3
System, or State Police Retirement System, the employee may complete 4
the adjusted original installment purchase by lump sum or installment 5
payments, subject to the restrictions of this subsection. If the employee 6
elects to renew the installment purchase, the cost of the remaining 7
service shall be recalculated in accordance with subsection (10) of this 8
section. 9
(d) Member payments, including interest, properly received pursuant to this 10
subsection, shall be deposited to the member's account and considered as 11
accumulated contributions of the individual member. 12
(10) (a) The cost of purchasing service credit under any provision of this section, 13
except as provided by subsections (1) to (3) of this section, shall be 14
determined by multiplying the higher of the employee's current rate of pay, 15
final rate of pay, or final compensation as of the end of the month in which 16
the purchase is made times the actuarial factor times the number of years of 17
service being purchased. The actuarial factor used to determine the cost of 18
purchasing service credit shall assume the earliest date the member may retire 19
without a reduction in benefits and the cost-of-living adjustments provided to 20
members upon retirement. 21
(b) Service purchased on or after August 1, 2004, under the provisions of KRS 22
16.505 to 16.652, 61.510 to 61.705, or 78.510 to 78.852, except for service 23
purchased under subsections (1) to (3) of this section or service purchased as 24
described by paragraph (d) of this subsection, shall not be used to determine 25
eligibility for or the amount of the monthly insurance contribution under KRS 26
61.702 or 78.5536. 27 UNOFFICIAL COPY 25 RS BR 109
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(c) For a member whose membership date is on or after August 1, 2004, service 1
purchased under the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 2
78.510 to 78.852, except for service purchased under subsections (1) to (3) of 3
this section or service purchased as described by paragraph (d) of this 4
subsection: 5
1. Shall not be used to determine eligibility for a retirement allowance 6
under disability retirement, early retirement, normal retirement, or upon 7
death of the member under any of the provisions of KRS 16.505 to 8
16.652, 61.510 to 61.705, or 78.510 to 78.852; and 9
2. Shall only be used to determine the amount of the retirement allowance 10
of a member who is eligible for a retirement allowance under disability, 11
early retirement, normal retirement, or upon death of the member under 12
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 13
78.510 to 78.852, based on service earned as a participating employee. 14
(d) Paragraphs (b) and (c) of this subsection shall not apply to a member who was 15
bound by an educational contract as a conditional employee to the state of 16
Kentucky prior to December 31, 2003, regardless of membership date in the 17
system. Educational leave, seasonal service, or any other qualified service 18
purchased by a member with this classification under this section shall be 19
used to determine eligibility for benefits, membership dates, and the amount 20
of benefit for: 21
1. A retirement allowance under disability retirement, early retirement, 22
normal retirement, or death under any of the provisions of KRS 16.505 23
to 16.652, 61.510 to 61.705, and 78.510 to 78.852; and 24
2. The monthly insurance contribution under KRS 61.702 or 78.5536. 25
Section 15. KRS 61.575 is amended to read as follows: 26
(1) The members' account shall be the account to which: 27 UNOFFICIAL COPY 25 RS BR 109
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(a) All members' contributions, or contributions picked up by the employer after 1
August 1, 1982, and interest allowances as provided in KRS 61.510 to 61.692 2
shall be credited, except as provided by KRS 61.702(3)(b); and 3
(b) For members who begin participating in a nonhazardous position in the 4
system on or after January 1, 2014, or a member who makes an election 5
under subsection (3) of Section 1 of this Act, or who, prior to the effective 6
date of this Act, made an election under Section 7 of this Act, the employer 7
pay credit and interest credited on such amounts as provided by KRS 16.583 8
and 61.597 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 by reason of any 11
provision of KRS 61.510 to 61.705. Prior to the member's retirement, death, or 12
refund in accordance with KRS 61.625, no funds shall be made available from the 13
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 61.702(3)(b). 17
(3) (a) Each member shall have his or her individual account credited with interest on 18
June 30 of each fiscal 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, 2026, for his or her service in a hazardous position, 26
or who is presumed under Section 1 of this Act to have begun participating 27 UNOFFICIAL COPY 25 RS BR 109
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in a hazardous position immediately prior to January 1, 2014, interest shall 1
be credited to his or her individual account at a rate of two and one-half 2
percent (2.5%) per annum on the accumulated account balance of the member 3
on June 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, or a member who 6
makes an election under subsection (3) of Section 1 of this Act, or who, 7
prior to the effective date of this Act, made an election under Section 7 of 8
this Act, interest shall be credited in accordance with KRS 16.583 and 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 begins participating in a hazardous position on 13
or after January 1, 2026, 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 in a nonhazardous position who began 18
participating in the system on or after January 1, 2014, or a member who 19
makes an election under subsection (3) of Section 1 of this Act, or who, 20
prior to the effective date of this Act, made an election under Section 7 of 21
this Act, who elects to annuitize his or her accumulated account balance as 22
prescribed by KRS 16.583(7)(a), except as otherwise provided under Section 23
1 of this Act, or 61.597(8)[(7)](a) or (b), the member's accumulated account 24
balance shall be transferred to the retirement allowance account. 25
Section 16. KRS 61.592 is amended to read as follows: 26
(1) (a) "Hazardous position" for employees participating in the Kentucky Employees 27 UNOFFICIAL COPY 25 RS BR 109
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Retirement System means: 1
1. Any position whose principal duties involve active law enforcement, 2
including the positions of probation and parole officer and 3
Commonwealth detective, active fire suppression or prevention, or other 4
positions, including but not limited to pilots of the Transportation 5
Cabinet and paramedics and emergency medical technicians, with duties 6
that require frequent exposure to a high degree of danger or peril and 7
also require a high degree of physical conditioning; 8
2. Positions in the Department of Corrections in state correctional 9
institutions and the Kentucky Correctional Psychiatric Center with 10
duties that regularly and routinely require face-to-face contact with 11
inmates; and 12
3. Positions of employees who elect coverage under KRS 196.167(3)(b)2. 13
and who continue to provide educational services and support to inmates 14
as a Department of Corrections employee. 15
(b) The effective date of participation under hazardous duty coverage for 16
positions in the Department of Alcoholic Beverage Control shall be April 1, 17
1998. The employer and employee contributions shall be paid by the 18
employer and forwarded to the retirement system for the period not previously 19
reported. 20
(2) Each employer may request of the board hazardous duty coverage for those 21
positions as defined in subsection (1) of this section. Upon request, each employer 22
shall certify to the system, in the manner prescribed by the board, the names of all 23
employees working in a hazardous position as defined in subsection (1) of this 24
section for which coverage is requested. The certification of the employer shall bear 25
the approval of the agent or agency responsible for the budget of the department or 26
county indicating that the required employer contributions have been provided for 27 UNOFFICIAL COPY 25 RS BR 109
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in the budget of the employing department or county. The system shall determine 1
whether the employees whose names have been certified by the employer are 2
working in positions meeting the definition of a hazardous position as provided by 3
subsection (1) of this section. This process shall not be required for employees who 4
elect coverage under KRS 196.167(3)(b)2. 5
(3) (a) An employee who elects coverage under KRS 196.167(3)(b)2., and an 6
employee participating in the Kentucky Employees Retirement System who is 7
determined by the system to be working in a hazardous position in accordance 8
with subsection (2) of this section, shall contribute, for each pay period for 9
which he or she receives compensation, eight percent (8%) of his or her 10
creditable compensation. 11
(b) Each employer shall pay employer contributions based on the creditable 12
compensation of the employees determined by the system to be working in a 13
hazardous position at the employer contribution rate as determined by the 14
board. The rate shall be determined by actuarial methods consistent with the 15
provisions of KRS 61.565. 16
(c) If the employer participated in the system prior to electing hazardous duty 17
coverage, the employer may pay to the system the cost of converting the 18
nonhazardous service to hazardous service from the date of participation to 19
the date the payment is made, or the employer may establish a payment 20
schedule for payment of the cost of the hazardous service above that which 21
would be funded within the existing employer contribution rate. The employer 22
may extend the payment schedule to a maximum of thirty (30) years. 23
Payments made by the employer under this subsection shall be deposited to 24
the retirement allowance account of the proper retirement system and these 25
funds shall not be considered accumulated contributions of the individual 26
members. If the employer elects not to make the additional payment, the 27 UNOFFICIAL COPY 25 RS BR 109
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employee may pay the cost of converting the service and provide payment for 1
the cost as provided by KRS 61.552(9). Payments made by the employee 2
under this subsection shall not be picked up, as described in KRS 61.560(4), 3
by the employer. If neither the employer nor employee makes the payment, 4
the service prior to hazardous coverage shall remain nonhazardous. The 5
provisions of this paragraph shall not apply to members who begin 6
participating in the systems administered by Kentucky Retirement Systems on 7
or after January 1, 2014, but prior to January 1, 2026, who make an election 8
under subsection (3) of Section 1 of this Act, or who, prior to the effective 9
date of this Act, made an election under Section 7 of this Act. 10
(4) The normal retirement age, retirement allowance, hybrid cash balance plans except 11
as provided by KRS 16.583(2)(b)2. and 16.584, other benefits, eligibility 12
requirements, rights, and responsibilities of a member in a hazardous position, as 13
prescribed by subsections (1), (2), and (3) of this section, and the responsibilities, 14
rights, and requirements of his or her employer shall be as prescribed for a member 15
and employer participating in the State Police Retirement System as provided for by 16
KRS 16.505 to 16.652. 17
(5) Any person employed in a hazardous position after July 1, 1972, shall be required 18
to undergo a thorough medical examination by a licensed physician, and a copy of 19
the medical report of the physician shall be retained on file by the employee's 20
department or county and made available to the system upon request. 21
(6) If doubt exists regarding the benefits payable to a hazardous position employee 22
under this section, the board shall determine the benefits payable under KRS 61.510 23
to 61.705 or 16.505 to 16.652. 24
Section 17. KRS 61.597 is amended to read as follows: 25
(1) A member of the Kentucky Employees Retirement System who is participating in a 26
nonhazardous position, whose participation in the systems begins on or after 27 UNOFFICIAL COPY 25 RS BR 109
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January 1, 2014, and those members making an election pursuant to KRS 61.5955, 1
shall receive the retirement benefits provided by this section in lieu of the 2
retirement benefits provided under KRS 61.559 and 61.595. The retirement benefit 3
provided by this section shall be known as the hybrid cash balance plan and shall 4
operate as another benefit tier within the Kentucky Employees Retirement System. 5
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the 6
member's accumulated account balance, which shall include: 7
(a) Contributions made by the member as provided by KRS 16.505 to 16.652 and 8
61.510 to 61.705, except for employee contributions prescribed by KRS 9
61.702(3)(b); 10
(b) An employer pay credit of four percent (4%) of the creditable compensation 11
earned by the employee for each month the employee is contributing to the 12
hybrid cash balance plan provided by this section; and 13
(c) Interest credits added annually to the member's accumulated account balance 14
as provided by this section. 15
(3) (a) Member contributions and employer pay credits as provided by subsection 16
(2)(a) and (b) of this section shall be credited to the member's account 17
monthly as contributions are reported and posted to the system in accordance 18
with KRS 61.675. 19
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be 20
credited to the member's account annually on June 30 of each fiscal year, as 21
determined by subsection (4) of this section. 22
(4) (a) On June 30 of each fiscal year, the system shall determine if the member 23
contributed to the hybrid cash balance plan or the County Employees 24
Retirement System during the fiscal year. 25
(b) If the member contributed to the hybrid cash balance plan or the County 26
Employees Retirement System during the fiscal year, the interest credit added 27 UNOFFICIAL COPY 25 RS BR 109
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to the member's account for that fiscal year shall be determined by 1
multiplying the member's accumulated account balance on June 30 of the 2
preceding fiscal year by a percentage increase equal to: 3
1. Four percent (4%); plus 4
2. Seventy-five percent (75%) of the system's geometric average 5
investment return in excess of the four percent (4%) rate of return. 6
(c) If the member did not contribute to the hybrid cash balance plan or the County 7
Employees Retirement System during the fiscal year, the interest credit added 8
to the member's account for that fiscal year shall be determined by 9
multiplying the member's accumulated account balance on June 30 of the 10
preceding fiscal year by a percentage increase equal to four percent (4%). 11
(d) For purposes of this subsection, "system's geometric average net investment 12
return": 13
1. Means the annual average geometric investment return, net of 14
administrative and investment fees and expenses, over the last five (5) 15
fiscal years as of the date the interest is credited to the member's 16
account; and 17
2. Shall be expressed as a percentage and based upon the system in which 18
the member has an account. 19
(e) No employer pay credits or interest credits shall be provided to a member who 20
has taken a refund of contributions as provided by KRS 61.625 or who has 21
retired and annuitized his or her accumulated account balance as prescribed 22
by this section. 23
(5) (a) Upon termination of employment, a member who has less than five (5) years 24
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 25
elects to take a refund of his or her accumulated account balance as provided 26
by KRS 61.625, shall forfeit the accumulated employer credit, and shall only 27 UNOFFICIAL COPY 25 RS BR 109
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receive a refund of his or her accumulated contributions. 1
(b) Upon termination of employment, a member who has five (5) or more years 2
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 3
elects to take a refund of his or her accumulated account balance as provided 4
by KRS 61.625, shall receive a full refund of his or her accumulated account 5
balance. 6
(6) A member participating in the hybrid cash balance plan provided by this section 7
may retire: 8
(a) At his or her normal retirement date, provided he or she has earned five (5) or 9
more years of service credited under KRS 16.543(1), 61.543(1), 78.615(1), or 10
another state-administered retirement system; or 11
(b) If the member is at least age fifty-seven (57) and has an age and years of 12
service total of at least eighty-seven (87) years. The years of service used to 13
determine eligibility for retirement under this paragraph shall only include 14
years of service credited under KRS 16.543(1), 61.543(1), 78.615(1), or 15
another state-administered retirement system. 16
(7) A member who has hazardous service credit presumed under Section 1 of this Act 17
to be service credit earned immediately prior to January 1, 2014, and 18
nonhazardous service credit earned on or after January 1, 2014, in the hybrid 19
cash balance plan or the County Employees Retirement System, who is eligible 20
for a reduced or unreduced benefit under Sections 2 and 3 of this Act when his or 21
her hazardous service credit and nonhazardous service credit are consolidated 22
pursuant to Section 19 of this Act, shall be eligible to retire from the hybrid cash 23
balance plan at the same time with a benefit amount calculated by the board's 24
actuary to reflect the earlier commencement of benefits. The actuarial calculation 25
of benefits shall not apply if the member satisfies the requirements provided in 26
subsection (6) of this section. 27 UNOFFICIAL COPY 25 RS BR 109
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(8)[(7)] A member eligible to retire under subsection (6) of this section may elect to: 1
(a) Receive a monthly retirement allowance payable for life by having his or her 2
accumulated account balance annuitized by the retirement systems in 3
accordance with the actuarial assumptions and actuarial methods adopted by 4
the board and in effect on the member's retirement date; 5
(b) Receive the actuarial equivalent of his or her retirement allowance calculated 6
under paragraph (a) of this subsection payable under one (1) of the options set 7
forth in KRS 61.635, except for the option provided by KRS 61.635(11); or 8
(c) Take a refund of his or her account balance as provided by KRS 61.625. 9
(9)[(8)] The provisions of this section shall not apply to members who began 10
participating in the Kentucky Employees Retirement System prior to January 1, 11
2014, except for those members who make an election pursuant to KRS 61.5955. 12
Section 18. KRS 61.615 is amended to read as follows: 13
(1) (a) The Authority may contract for the services of one (1) or more vocational 14
experts upon terms and conditions it prescribes to: 15
1. Review and investigate all employment information and forms 16
submitted by a disability recipient under this section and KRS 61.610; 17
and 18
2. Report in writing to the Authority the conclusions and recommendations 19
upon all matters referred for review and investigation. 20
(b) A vocational expert providing services to the Authority shall have a master's 21
degree or higher degree in counseling or rehabilitation, an American Board of 22
Vocational Experts certification, or a certification as a Certified Rehabilitation 23
Counselor, Certified Disability Management Specialist, Associate Disability 24
Case Manager, Licensed Rehabilitation Counselor, or Certified Case 25
Manager. 26
(2) (a) Each recipient of a disability retirement allowance who is engaged in gainful 27 UNOFFICIAL COPY 25 RS BR 109
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employment shall notify the Authority upon beginning the employment. If the 1
member fails to notify the Authority of the gainful employment, the Authority 2
may recover the payment of a disability retirement allowance made during the 3
gainful employment. 4
(b) The system may reduce or discontinue a disability retirement allowance if the 5
Authority's medical examiner selected under KRS 61.665 or vocational expert 6
selected under this section determines that: 7
1. A recipient of a disability retirement allowance is, prior to his or her 8
normal retirement date, gainfully employed in a position with the same 9
or similar duties, or in a position with duties requiring greater residual 10
functional capacity and physical exertion, as the position from which he 11
or she was disabled, except where the recipient has returned to work on 12
a trial basis not to exceed nine (9) months; or 13
2. A recipient of a disability allowance resulting solely from mental illness 14
is, prior to his or her normal retirement date, gainfully employed in a 15
position with the same or similar duties, or in a position with duties 16
requiring greater residual functional capacity, as the position from which 17
he or she was disabled. 18
(3) The system may reduce or discontinue a disability retirement allowance if the 19
Authority's medical examiner determines that a recipient of a disability retirement 20
allowance is, prior to his or her normal retirement date, no longer incapacitated by 21
the bodily injury, mental illness, or disease for which he or she receives a disability 22
retirement allowance. 23
(4) (a) The system shall have full power and exclusive authority to reduce or 24
discontinue a disability retirement allowance, and the Authority shall utilize 25
the services of a medical examiner as provided in KRS 61.665 or a vocational 26
expert selected under this section, in determining whether to continue, reduce, 27 UNOFFICIAL COPY 25 RS BR 109
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or discontinue a disability retirement allowance under this section. 1
(b) The Authority shall select one (1) medical examiner to evaluate the forms and 2
employment and medical information submitted by the person. If only 3
employment information is submitted, the Authority may select one (1) 4
vocational expert to evaluate the forms and employment information 5
submitted by the person. If there is objective medical evidence of a mental 6
impairment, the medical examiner may request the Authority's licensed 7
mental health professional to assist in determining the level of the mental 8
impairment. 9
(c) The medical examiner or vocational expert shall be paid a reasonable amount 10
by the Authority for each case evaluated. 11
(d) 1. The medical examiner or vocational expert shall recommend that 12
disability retirement allowance be continued, reduced, or discontinued. 13
2. If the medical examiner or vocational expert recommends that the 14
disability retirement allowance be continued, the system shall make 15
retirement payments in accordance with the retirement plan selected by 16
the person. 17
3. a. If the medical examiner or vocational expert recommends that the 18
disability retirement allowance be reduced or discontinued, the 19
Authority shall send notice of the recommendation by United 20
States first-class mail to the person's last address on file in the 21
retirement office, by electronic mail to the person's last electronic 22
mail address on file in the retirement office, or by other electronic 23
means. 24
b. The person shall have sixty (60) days from the day that the 25
Authority sent the notice to file at the retirement office additional 26
supporting employment or medical information and certify to the 27 UNOFFICIAL COPY 25 RS BR 109
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retirement office that the forms and additional supporting 1
employment information or medical information are ready to be 2
evaluated by the medical examiner or vocational expert or to 3
appeal the recommendation of the medical examiner or vocational 4
expert to reduce or discontinue the disability retirement allowance 5
by filing at the retirement office a request for a formal hearing. 6
c. If the person fails or refuses to file at the retirement office the 7
forms, the additional supporting employment information, and 8
current medical information or to appeal the recommendation of 9
the medical examiner or vocational expert to reduce or discontinue 10
the disability retirement allowance, his or her retirement allowance 11
shall be discontinued on the first day of the month following the 12
expiration of the period of the sixty (60) days from the day the 13
Authority sent the notice of the recommendation by United States 14
first-class mail to the person's last address on file in the retirement 15
office, by electronic mail to the person's last electronic mail 16
address on file in the retirement office, or by other electronic 17
means. 18
(e) 1. The medical examiner shall make a recommendation based upon the 19
evaluation of additional supporting employment and medical 20
information submitted in accordance with paragraph (d)3.b. of this 21
subsection, or the vocational expert shall make a recommendation upon 22
the evaluation of additional supporting employment information 23
submitted in accordance with paragraph (d)3.b. of this subsection. 24
2. If the medical examiner or vocational expert recommends that the 25
disability retirement allowance be continued, the system shall make 26
disability retirement payments in accordance with the retirement plan 27 UNOFFICIAL COPY 25 RS BR 109
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selected by the person. 1
3. a. If the medical examiner recommends that the disability retirement 2
allowance be reduced or discontinued based upon the evaluation of 3
additional supporting employment information and medical 4
information, or if the vocational expert recommends that the 5
disability allowance be reduced or discontinued based upon the 6
evaluation of additional supporting employment information, the 7
Authority shall send notice of this recommendation by United 8
States first-class mail to the person's last address on file in the 9
retirement office, by electronic mail to the person's last electronic 10
mail address on file in the retirement office, or by other electronic 11
means. 12
b. The person shall have sixty (60) days from the day that the 13
Authority sent the notice of the recommendation to appeal the 14
recommendation to reduce or discontinue the disability retirement 15
allowance by filing at the retirement office a request for formal 16
hearing. 17
c. If the person fails or refuses to appeal the recommendation of the 18
medical examiner or vocational expert to reduce or discontinue the 19
disability retirement allowance, his or her retirement allowance 20
shall be discontinued on the first day of the month following the 21
expiration of the period of the sixty (60) days from the day the 22
Authority sent the notice of the recommendation by United States 23
first-class mail to the person's last address on file in the retirement 24
office, by electronic mail to the person's last electronic mail 25
address on file in the retirement office, or by other electronic 26
means. 27 UNOFFICIAL COPY 25 RS BR 109
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(f) Any person whose disability benefits have been reduced or discontinued, 1
pursuant to paragraph (d)3.a. or (e)3.a. of this subsection, may file at the 2
retirement office a request for formal hearing to be conducted in accordance 3
with KRS Chapter 13B. The right to demand a formal hearing shall be limited 4
to a period of sixty (60) days after the person had notice, as described in 5
paragraph (d) or (e) of this subsection. The request for formal hearing shall be 6
filed with the Authority, at the retirement office in Frankfort. The request for 7
formal hearing shall include a short and plain statement of the reasons the 8
reduction, discontinuance, or denial of disability retirement is being contested. 9
(g) Failure of the person to request a formal hearing within the period of time 10
specified shall preclude the person from proceeding any further with 11
contesting the reduction or discontinuation of disability retirement allowance, 12
except as provided in subsection (7)(d) of this section. This paragraph shall 13
not limit the person's right to appeal to a court. 14
(h) A final order of the board shall be based on substantial evidence appearing in 15
the record as a whole and shall set forth the decision of the board and the facts 16
and law upon which the decision is based. If the board orders that the person's 17
disability retirement allowance be discontinued or reduced, the order shall 18
take effect on the first day of the month following the day the system sent the 19
order by United States first-class mail to the person's last address on file in the 20
retirement office, by electronic mail to the person's last electronic mail 21
address on file in the retirement office, or by other electronic means. Judicial 22
review of the final board order shall not operate as a stay and the system shall 23
discontinue or reduce the person's disability retirement allowance as provided 24
in this section. 25
(i) Notwithstanding any other provisions of this section, the system may require 26
the person to submit to one (1) or more medical or psychological 27 UNOFFICIAL COPY 25 RS BR 109
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examinations at any time. The system shall be responsible for any costs 1
associated with any examinations of the person requested by the medical 2
examiner or the system for the purpose of providing medical information 3
deemed necessary by the medical examiner or the system. Notice of the time 4
and place of the examination shall be provided to the person or his or her legal 5
representative. If the person fails or refuses to submit to one (1) or more 6
medical examinations, his or her rights to further disability retirement 7
allowance shall cease. 8
(j) All requests for a hearing pursuant to this section shall be made in writing. 9
(5) The board may establish an appeals committee whose members shall be appointed 10
by the chair and who shall have the authority to act upon the recommendations and 11
reports of the hearing officer pursuant to this section on behalf of the board. 12
(6) Any person aggrieved by a final order of the board may seek judicial review after 13
all administrative appeals have been exhausted by filing a petition for judicial 14
review in the Franklin Circuit Court in accordance with KRS Chapter 13B. 15
(7) If a disability retirement allowance is reduced or discontinued for a person who 16
began participating in the system prior to January 1, 2014, or a person in a 17
hazardous position who began participating on or after January 1, 2026, or a 18
person who is presumed under Section 1 of this Act to have begun participating 19
in a hazardous position immediately prior to January 1, 2014, the person may 20
apply for early retirement benefits as provided under KRS 61.559, subject to the 21
following provisions: 22
(a) The person may not change his or her beneficiary or payment option, except 23
as provided by KRS 61.542(5); 24
(b) If the person has returned to employment with an employer participating in 25
the Kentucky Employees Retirement System, State Police Retirement System, 26
or County Employees Retirement System, the service and creditable 27 UNOFFICIAL COPY 25 RS BR 109
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compensation shall be used in recomputing his or her benefit, except that the 1
person's final compensation shall not be less than the final compensation last 2
used in determining his or her retirement allowance; 3
(c) The benefit shall be reduced as provided by KRS 61.595(2); 4
(d) 1. The person shall remain eligible for reinstatement of his or her disability 5
allowance upon reevaluation until his or her normal retirement age. The 6
person shall apply for reinstatement of disability benefits in accordance 7
with the provisions of this paragraph. 8
2. An application for reinstatement of disability benefits shall be 9
administered as an application under KRS 61.600, except: 10
a. Only the bodily injuries, mental illnesses, diseases, or conditions 11
for which the person was originally approved for disability 12
benefits shall be considered. Bodily injuries, mental illnesses, 13
diseases, or conditions that came into existence after the person's 14
last day of paid employment shall not be considered as a basis for 15
reinstatement of disability benefits. Bodily injuries, mental 16
illnesses, diseases, or conditions alleged by the person as being 17
incapacitating, but which were not the basis for the award of 18
disability retirement benefits, shall not be considered; 19
b. A person whose disability allowance was discontinued under 20
subsection (2) of this section, who is still employed in the same 21
position on which his or her disability allowance was 22
discontinued, shall submit with the application employment 23
information detailing the changes to the position evidencing cause 24
for reinstatement; 25
c. A person whose disability allowance was discontinued under 26
subsection (3) of this section shall provide with the application 27 UNOFFICIAL COPY 25 RS BR 109
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new objective medical evidence not previously considered by the 1
Authority's medical examiner; and 2
d. The application for reinstatement shall be reviewed by one (1) 3
medical examiner or vocational expert. 4
3. If the person establishes that the disability benefits should be reinstated, 5
the retirement system shall pay disability benefits effective from the first 6
day of the month following the month in which the person applied for 7
reinstatement of the disability benefits; and 8
(e) Upon attaining normal retirement age, the person shall receive the higher of 9
either his or her disability retirement allowance or his or her early retirement 10
allowance. 11
(8) If a disability retirement allowance is reduced or discontinued for a person who 12
began participating in the system on or after January 1, 2014, or a member who 13
makes an election under subsection (3) of Section 1 of this Act, or who, prior to 14
the effective date of this Act, made an election under Section 7 of this Act, the 15
person shall remain eligible for reinstatement of his or her disability allowance as 16
provided under subsection (7)(d) of this section. 17
(9) No disability retirement allowance shall be reduced or discontinued by the system 18
after the person's normal retirement date except in case of reemployment as 19
provided for by KRS 61.637. If a disability retirement allowance has been reduced 20
or discontinued, except if the person is reemployed as provided for by KRS 61.637, 21
the retirement allowance shall be reinstated upon attainment of the person's normal 22
retirement date to the retirement allowance prior to adjustment. No reinstated 23
payment shall be less than the person is receiving upon attainment of the person's 24
normal retirement date. 25
Section 19. KRS 61.680 is amended to read as follows: 26
(1) Prior to August 1, 1982, every employee shall be deemed to consent and agree to 27 UNOFFICIAL COPY 25 RS BR 109
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any deduction from his or her compensation required by KRS 6.500 to 6.535, 1
16.505 to 16.652, 61.510 to 61.692, 78.510 to 78.852, and to all other provisions 2
thereof. Thereafter, employee contributions shall be picked up by the employer 3
pursuant to KRS 61.560(4). 4
(2) (a) Notwithstanding any other provisions of KRS 6.500 to 6.535, 16.505 to 5
16.652, 61.510 to 61.692, 78.510 to 78.852 and 161.220 to 161.714: 6
1. Upon death, disability, or service retirement, a member's accounts under 7
the Legislators' Retirement Plan, State Police Retirement System, 8
Kentucky Employees Retirement System, County Employees 9
Retirement System, and Teachers' Retirement System, except for service 10
prohibited by KRS 161.623(2), shall be consolidated for the purpose of 11
determining eligibility and amount of benefits, including: 12
a. [those ]Members who participate in the hybrid cash balance plan 13
within the Kentucky Employees Retirement System, the County 14
Employees Retirement System, and the State Police Retirement 15
System, on or after January 1, 2014; and[,] 16
b. Members who are presumed under Section 1 of this Act to begin 17
participating in a hazardous position immediately prior to 18
January 1, 2014, and have nonhazardous service credit in the 19
hybrid cash balance plan of either the Kentucky Employees 20
Retirement System or the County Employees Retirement System; 21
and regardless of the transition of administration of the County 22
Employees Retirement System to the County Employees Retirement 23
System board of trustees; 24
2. Vested service credit in a retirement system, other than the Teachers' 25
Retirement System, sponsored by a Kentucky institution of higher 26
education and accepted by the Kentucky Employees Retirement System 27 UNOFFICIAL COPY 25 RS BR 109
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or the County Employees Retirement System, may be used to determine 1
eligibility for twenty-seven (27) year retirement for an employee who 2
begins participating before September 1, 2008, but not the amount of 3
benefits; 4
3. The computation of benefits shall be based on the applicable formula in 5
each system and service credit in each system, but the final 6
compensation, excluding compensation earned under KRS 161.155(10), 7
shall be determined as if all service were in one (1) system, including 8
for those members who are presumed under Section 1 of this Act to 9
begin participating in a hazardous position immediately prior to 10
January 1, 2014, and have nonhazardous service credit in the hybrid 11
cash balance plan of either the Kentucky Employees Retirement 12
System or the County Employees Retirement System; 13
4. If the member has prior service in more than one (1) system 14
administered by Kentucky Retirement Systems, he or she shall obtain at 15
least twelve (12) months' current service in each system in which he or 16
she has prior service in order to validate the prior service in each system 17
for purposes of determining consolidated benefits under this subsection; 18
and 19
5. Upon the determination of benefits, each system shall pay the applicable 20
amount of benefits due the member. 21
(b) The provisions of paragraph (a) of this subsection shall be waived if the 22
member: 23
1. Notifies the system of his or her desire to maintain separate retirement 24
accounts in the State Police Retirement System, Kentucky Employees 25
Retirement System, or County Employees Retirement System; or 26
2. Fails to simultaneously retire from all state-administered retirement 27 UNOFFICIAL COPY 25 RS BR 109
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systems in which the member has an account or fails to retire from any 1
other systems not administered by Kentucky Retirement Systems within 2
one (1) month of the member's effective retirement date in the systems 3
administered by Kentucky Retirement Systems. 4
(c) If the member has not contributed at least one (1) year in a system in which he 5
or she has prior service, his or her current service in the system shall be valid 6
for purposes of determining eligibility and in computation of benefits on a 7
consolidated basis. 8
(3) (a) A member with service credit in the Kentucky Employees Retirement System, 9
State Police Retirement System, or the County Employees Retirement System 10
who becomes the holder of an office entitling him or her to membership in the 11
Judicial Retirement Plan or the Legislators' Retirement Plan, but who does not 12
elect within thirty (30) days after taking office in such service to participate in 13
the plan, in accordance with KRS 6.505 or 21.360, shall be deemed to have 14
elected to retain membership in the system in which he or she is a member, 15
either the Kentucky Employees Retirement System, State Police Retirement 16
System, or the County Employees Retirement System. In that event, the 17
agency employing the member shall withhold employee contributions, or 18
picked-up employee contributions after August 2, 1982, make employer 19
contributions and remit these contributions to the system in which the member 20
retained his or her membership. 21
(b) Any person entitled to membership in the Judicial Retirement Plan or the 22
Legislators' Retirement Plan, who does not elect within thirty (30) days after 23
taking office to participate in the plan, in accordance with KRS 6.505 or 24
21.360, and who at the time of taking office is not a contributing member of, 25
or does not have service credit in, any of the retirement systems mentioned in 26
this section, or the Teachers' Retirement System, shall participate in the 27 UNOFFICIAL COPY 25 RS BR 109
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Kentucky Employees Retirement System. 1
(c) A member of one (1) of the state-administered retirement plans who ceases to 2
contribute to the plan as provided in KRS 21.360 and who is employed in a 3
nonelected position by an agency participating in the Kentucky Retirement 4
Systems or Kentucky Teachers' Retirement System shall be deemed to have 5
elected membership in the system in which the employer of the nonelected 6
position participates. A member of one (1) of the state-administered 7
retirement plans who ceases to contribute to the plan as provided in KRS 8
21.360 and who is not employed in a nonelected position by an agency 9
participating in the Kentucky Retirement Systems shall be deemed to have 10
elected membership in the Kentucky Employees Retirement System. 11
(4) (a) Prior to July 1, 1976, a person entering the service of an employer 12
participating in the Kentucky Employees Retirement System or the County 13
Employees Retirement System with service credit in the Teachers' Retirement 14
System and who desires to retain membership in the Teachers' Retirement 15
System, and who is permitted by that system to continue, shall be exempt 16
from participating in the Kentucky Employees Retirement System or the 17
County Employees Retirement System. 18
(b) Any person who has elected to retain membership in the Teachers' Retirement 19
System as provided in paragraph (a) of this subsection may cancel his or her 20
election and participate in the system under which his or her position would 21
normally participate, if he or she elects to cancel his or her option prior to 22
January 1, 1977. 23
(c) Any member of the General Assembly who upon election is a contributing 24
member of the Teachers' Retirement System and who does not elect within 25
thirty (30) days after taking office to participate in the Legislators' Retirement 26
Plan, in accordance with KRS 6.505, shall during his or her term of office 27 UNOFFICIAL COPY 25 RS BR 109
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participate in the Kentucky Employees Retirement System unless an election 1
to retain membership in the Teachers' Retirement System is filed in writing 2
within ninety (90) days after his or her term of office begins. No contributions 3
may be made to the Teachers' Retirement System for the same period of 4
service under the Legislators' Retirement Plan or the Kentucky Employees 5
Retirement System as a member of the General Assembly, but contributions 6
made to the Teachers' Retirement System while a member of the General 7
Assembly shall be transferred to the Legislators' Retirement Plan, as provided 8
for in KRS 6.535, when the member elects to join the Legislators' Retirement 9
Plan, and service credit in the Legislators' Retirement Plan shall be granted as 10
provided for in KRS 6.505(5). 11
(5) Any member of the Kentucky Employees Retirement System or County Employees 12
Retirement System who is working in a position covered by one (1) of these 13
retirement systems and his or her employee contributions, service credit and 14
employer contributions made on his or her behalf are being transferred to the other 15
retirement system shall contribute to the system in which his or her employer 16
participates, or after August 1, 1982, the employer shall pick up the employee 17
contributions, and no further contributions or service credit shall be transferred to 18
the system in which he or she elected to retain membership, as subsection (2) of this 19
section eliminates the necessity of the transfers. 20
(6) (a) Except as provided by KRS 61.545(3)(b)2., any member of the Kentucky 21
Employees Retirement System or County Employees Retirement System who 22
is working in more than one (1) position covered by the same retirement 23
system, shall have his or her wages and contributions consolidated and his or 24
her retirement account administered as a single account. If part-time positions 25
are involved, an accumulation of all hours worked within the same retirement 26
system shall be used to determine eligibility under KRS 61.510(21). 27 UNOFFICIAL COPY 25 RS BR 109
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(b) The provisions of this subsection shall not apply to an individual serving as a 1
volunteer who is receiving compensation from the employer equal to or less 2
than a nominal fee as defined by KRS 61.510 and 78.510 if the compensation 3
paid to the volunteer is excluded from the definition of creditable 4
compensation as provided by KRS 61.510(13) or 78.510(13). 5
(7) (a) Notwithstanding the provisions of subsection (2) of this section, a person who 6
does not have the amount of service required for service retirement in the 7
State Police Retirement System, Kentucky Employees Retirement System, 8
County Employees Retirement System, Legislators' Retirement Plan, or 9
Teachers' Retirement System, but who is a member of one (1) of the systems 10
or is a former member of one (1) or more of the systems with valid service 11
credit therein, shall become eligible for service retirement benefits attributable 12
to the amount of his or her actual service credit in each system in which he or 13
she has service credit when his or her combined service credit in all the 14
systems, plus any service credit he or she has in the Judicial Retirement Plan, 15
is equal to that required for service retirement in each respective system. The 16
computation of benefits shall be based on the applicable formula in each 17
system and service credit in each system, except that total service in all 18
systems, unless prohibited by KRS 161.623(2), shall be used to determine the 19
reduction for early retirement, if any. Except as provided in KRS 21.360, the 20
final compensation shall be determined by using the creditable compensation 21
reported to the State Police Retirement System, Kentucky Employees 22
Retirement System, County Employees Retirement System, Legislators' 23
Retirement Plan, or Teachers' Retirement System and only as much of the 24
compensation earned in the Judicial Retirement Plan as is needed to satisfy 25
the final compensation requirement applicable in the respective retirement 26
systems. 27 UNOFFICIAL COPY 25 RS BR 109
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(b) Paragraph (a) of this subsection shall be waived if the member fails to 1
simultaneously retire from all state-administered retirement systems in which 2
the member has an account or fails to retire from any other systems not 3
administered by Kentucky Retirement Systems within one (1) month of the 4
member's effective retirement date in the systems administered by the 5
Kentucky Retirement Systems. 6
(8) Each retirement system from which the member retires shall pay a retirement 7
allowance upon receipt of required forms and documents, except that no retirement 8
system shall pay a retirement allowance or annuity until all forms and documents 9
are filed at all retirement systems in compliance with each system's requirements. 10
Section 20. KRS 78.510 is amended to read as follows: 11
As used in KRS 78.510 to 78.852, unless the context otherwise requires: 12
(1) "System" means the County Employees Retirement System created by KRS 78.510 13
to 78.852; 14
(2) "Board" means the board of trustees of the system as provided in KRS 78.782; 15
(3) "County" means any county, or nonprofit organization created and governed by a 16
county, counties, or elected county officers, sheriff and his or her employees, 17
county clerk and his or her employees, circuit clerk and his or her deputies, former 18
circuit clerks or former circuit clerk deputies, or political subdivision or 19
instrumentality, including school boards, cities, charter county governments, urban-20
county governments, consolidated local governments, or unified local governments 21
participating in the system by order appropriate to its governmental structure, as 22
provided in KRS 78.530, and if the board is willing to accept the agency, 23
organization, or corporation, the board being hereby granted the authority to 24
determine the eligibility of the agency to participate; 25
(4) "School board" means: 26
(a) Any board of education participating in the system by order appropriate to its 27 UNOFFICIAL COPY 25 RS BR 109
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governmental structure, as provided in KRS 78.530, and if the board is willing 1
to accept the agency or corporation, the board being hereby granted the 2
authority to determine the eligibility of the agency to participate; or 3
(b) A public charter school as defined in KRS 160.1590 if the public charter 4
school satisfies the criteria set by the Internal Revenue Service to participate 5
in a governmental retirement plan; 6
(5) "Examiner" means the medical examiners as provided in KRS 61.665; 7
(6) "Employee" means every regular full-time appointed or elective officer or 8
employee of a participating county and the coroner of a participating county, 9
whether or not he or she qualifies as a regular full-time officer. The term shall not 10
include persons engaged as independent contractors, seasonal, emergency, 11
temporary, and part-time workers. In case of any doubt, the board shall determine if 12
a person is an employee within the meaning of KRS 78.510 to 78.852; 13
(7) "Employer" means a county, as defined in subsection (3) of this section, the elected 14
officials of a county, or any authority of the county having the power to appoint or 15
elect an employee to office or employment in the county; 16
(8) "Member" means any employee who is included in the membership of the system 17
or any former employee whose membership has not ceased under KRS 78.535; 18
(9) "Service" means the total of current service and prior service as defined in this 19
section; 20
(10) "Current service" means the number of years and months of employment as an 21
employee, on and after July 1, 1958, for which creditable compensation is paid and 22
employee contributions deducted, except as otherwise provided; 23
(11) "Prior service" means the number of years and completed months, expressed as a 24
fraction of a year, of employment as an employee, prior to July 1, 1958, for which 25
creditable compensation was paid. An employee shall be credited with one (1) 26
month of prior service only in those months he or she received compensation for at 27 UNOFFICIAL COPY 25 RS BR 109
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least one hundred (100) hours of work. Twelve (12) months of current service in the 1
system shall be required to validate prior service; 2
(12) "Accumulated contributions" means the sum of all amounts deducted from the 3
compensation of a member and credited to his or her individual account in the 4
members' account, including employee contributions picked up after August 1, 5
1982, pursuant to KRS 78.610(4), together with interest credited, on the amounts, 6
and any other amounts the member shall have contributed thereto, including interest 7
credited thereon. "Accumulated contributions" shall not include employee 8
contributions that are deposited into accounts established pursuant to 26 U.S.C. sec. 9
401(h) within the fund established in KRS 78.520, as prescribed by KRS 10
78.5536(3)(b); 11
(13) "Creditable compensation": 12
(a) Except as limited by paragraph (c) of this subsection, means all salary, wages, 13
and fees, including payments for compensatory time, paid to the employee as 14
a result of services performed for the employer or for time during which the 15
member is on paid leave, which are includable on the member's federal form 16
W-2 wage and tax statement under the heading "wages, tips, other 17
compensation", including employee contributions picked up after August 1, 18
1982, pursuant to KRS 78.610(4). The creditable compensation of fee officers 19
who receive salary, fees, maintenance, or other perquisites as a result of their 20
official duties is the gross amount received decreased by the cost of salary 21
paid deputies and clerks and the cost of office supplies and other official 22
expenses; 23
(b) Includes: 24
1. Lump-sum bonuses, severance pay, or employer-provided payments for 25
purchase of service credit, which shall be averaged over the employee's 26
service with the system in which it is recorded if it is equal to or greater 27 UNOFFICIAL COPY 25 RS BR 109
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than one thousand dollars ($1,000); 1
2. Cases where compensation includes maintenance and other perquisites, 2
but the board shall fix the value of that part of the compensation not paid 3
in money; 4
3. Lump-sum payments for creditable compensation paid as a result of an 5
order of a court of competent jurisdiction, the Personnel Board, or the 6
Kentucky Commission on Human Rights, or for any creditable 7
compensation paid in anticipation of settlement of an action before a 8
court of competent jurisdiction, the Personnel Board, or the Kentucky 9
Commission on Human Rights, including notices of violations of state 10
or federal wage and hour statutes or violations of state or federal 11
discrimination statutes, which shall be credited to the fiscal year during 12
which the wages were earned or should have been paid by the employer. 13
This subparagraph shall also include lump-sum payments for reinstated 14
wages pursuant to KRS 61.569, which shall be credited to the period 15
during which the wages were earned or should have been paid by the 16
employer; 17
4. Amounts which are not includable in the member's gross income by 18
virtue of the member having taken a voluntary salary reduction provided 19
for under applicable provisions of the Internal Revenue Code; and 20
5. Elective amounts for qualified transportation fringes paid or made 21
available on or after January 1, 2001, for calendar years on or after 22
January 1, 2001, that are not includable in the gross income of the 23
employee by reason of 26 U.S.C. sec. 132(f)(4); and 24
(c) Excludes: 25
1. Living allowances, expense reimbursements, lump-sum payments for 26
accrued vacation leave, sick leave except as provided in KRS 78.616(5), 27 UNOFFICIAL COPY 25 RS BR 109
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and other items determined by the board; 1
2. For employees who begin participating on or after September 1, 2008, 2
lump-sum payments for compensatory time; 3
3. Training incentive payments for city officers paid as set out in KRS 4
64.5277 to 64.5279; 5
4. For employees who begin participating on or after August 1, 2016, 6
nominal fees paid for services as a volunteer; and 7
5. Any salary or wages paid to an employee for services as a Kentucky 8
State Police school resource officer as defined by KRS 158.441; 9
(14) "Final compensation" means: 10
(a) For a member who begins participating before September 1, 2008, who is 11
employed in a nonhazardous position, the creditable compensation of the 12
member during the five (5) fiscal years he or she was paid at the highest 13
average monthly rate divided by the number of months of service credit 14
during that five (5) year period multiplied by twelve (12). The five (5) years 15
may be fractional and need not be consecutive. If the number of months of 16
service credit during the five (5) year period is less than forty-eight (48), one 17
(1) or more additional fiscal years shall be used; 18
(b) For a member who is employed in a nonhazardous position, whose effective 19
retirement date is between August 1, 2001, and January 1, 2009, and whose 20
total service credit is at least twenty-seven (27) years and whose age and years 21
of service total at least seventy-five (75), final compensation means the 22
creditable compensation of the member during the three (3) fiscal years the 23
member was paid at the highest average monthly rate divided by the number 24
of months of service credit during that three (3) year period multiplied by 25
twelve (12). The three (3) years may be fractional and need not be 26
consecutive. If the number of months of service credit during the three (3) 27 UNOFFICIAL COPY 25 RS BR 109
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year period is less than twenty-four (24), one (1) or more additional fiscal 1
years shall be used; 2
(c) For a member who begins participating before September 1, 2008, who is 3
employed in a hazardous position, as provided in KRS 78.5520, the creditable 4
compensation of the member during the three (3) fiscal years he or she was 5
paid at the highest average monthly rate divided by the number of months of 6
service credit during that three (3) year period multiplied by twelve (12). The 7
three (3) years may be fractional and need not be consecutive. If the number 8
of months of service credit during the three (3) year period is less than twenty-9
four (24), one (1) or more additional fiscal years, which may contain less than 10
twelve (12) months of service credit, shall be used; 11
(d) For a member who begins participating on or after September 1, 2008, but 12
prior to January 1, 2014, who is employed in a nonhazardous position, the 13
creditable compensation of the member during the five (5) complete fiscal 14
years immediately preceding retirement divided by five (5). Each fiscal year 15
used to determine final compensation must contain twelve (12) months of 16
service credit. If the member does not have five (5) complete fiscal years that 17
each contain twelve (12) months of service credit, then one (1) or more 18
additional fiscal years, which may contain less than twelve (12) months of 19
service credit, shall be added until the number of months in the final 20
compensation calculation is at least sixty (60) months; or 21
(e) For a member who begins participating on or after September 1, 2008, but 22
prior to January 1, 2014, or a member who begins participating on or after 23
January 1, 2026, or a member who is presumed under Section 1 of this Act 24
to begin participating immediately prior to January 1, 2014, who is 25
employed in a hazardous position as provided in KRS 78.5520, the creditable 26
compensation of the member during the three (3) complete fiscal years he or 27 UNOFFICIAL COPY 25 RS BR 109
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she was paid at the highest average monthly rate divided by three (3). Each 1
fiscal year used to determine final compensation must contain twelve (12) 2
months of service credit. If the member does not have three (3) complete 3
fiscal years that each contain twelve (12) months of service credit, then one 4
(1) or more additional fiscal years, which may contain less than twelve (12) 5
months of service credit, shall be added until the number of months in the 6
final compensation calculation is at least thirty-six (36) months; 7
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 8
calculated during the twelve (12) month period immediately preceding the 9
member's effective retirement date, and shall include employee contributions 10
picked up after August 1, 1982, pursuant to KRS 78.610(4). The rate shall be 11
certified to the system by the employer and the following equivalents shall be used 12
to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8) 13
hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-14
half (7.5) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, 15
twelve (12) months, one (1) year; 16
(16) "Retirement allowance" means the retirement payments to which a member is 17
entitled; 18
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 19
basis of the actuarial tables adopted by the board. In cases of disability retirement, 20
the options authorized by KRS 61.635 shall be computed by adding ten (10) years 21
to the age of the member, unless the member has chosen the Social Security 22
adjustment option as provided for in KRS 61.635(8), in which case the member's 23
actual age shall be used. For members who begin participating in the system prior 24
to January 1, 2014, or who begin participating in a hazardous position in the 25
system on or after January 1, 2026, or who are presumed under Section 1 of this 26
Act to begin participating in a hazardous position in the system immediately prior 27 UNOFFICIAL COPY 25 RS BR 109
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to January 1, 2014, no disability retirement option shall be less than the same 1
option computed under early retirement; 2
(18) "Normal retirement date", unless otherwise provided in KRS 78.510 to 78.852, 3
means: 4
(a) For a member with service in a nonhazardous position, the sixty-fifth birthday 5
of a member; 6
(b) For a member with service in a hazardous position who begins participating 7
before September 1, 2008, the first day of the month following a member's 8
fifty-fifth birthday; or 9
(c) For a member with service in a hazardous position who begins participating 10
on or after September 1, 2008, the first day of the month following a 11
member's sixtieth birthday; 12
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 13
following June 30, which shall also be the plan year. The "fiscal year" shall be the 14
limitation year used to determine contribution and benefits limits as set out in 26 15
U.S.C. sec. 415; 16
(20) "Agency reporting official" means the person designated by the participating 17
employer who shall be responsible for forwarding all employer and employee 18
contributions and a record of the contributions to the system and for performing 19
other administrative duties pursuant to KRS 78.510 to 78.852; 20
(21) "Regular full-time positions," as used in subsection (6) of this section, shall mean 21
all positions that average one hundred (100) or more hours per month, determined 22
by using the number of hours actually worked in a calendar or fiscal year, or eighty 23
(80) or more hours per month in the case of noncertified employees of school 24
boards, determined by using the number of hours actually worked in a calendar or 25
school year, unless otherwise specified, except: 26
(a) Seasonal positions, which although temporary in duration, are positions which 27 UNOFFICIAL COPY 25 RS BR 109
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coincide in duration with a particular season or seasons of the year and that 1
may recur regularly from year to year, in which case the period of time shall 2
not exceed nine (9) months, except for employees of school boards, in which 3
case the period of time shall not exceed six (6) months; 4
(b) Emergency positions which are positions utilized by the employer during: 5
1. An emergency as determined by the employer for a period not 6
exceeding thirty (30) working days and are nonrenewable; or 7
2. A state of emergency declared by the President of the United States or 8
the Governor of the Commonwealth of Kentucky that are created or 9
filled specifically for addressing the employer's needs during and as a 10
result of the declared emergency; 11
(c) Temporary positions that are positions of employment with a participating 12
agency for a period of time not to exceed twelve (12) months and not 13
renewable; 14
(d) Probationary positions which are positions of employment with a participating 15
employer that do not exceed twelve (12) months and that are used uniformly 16
by the participating agency on new employees who would otherwise be 17
eligible for participation in the system. Probationary positions shall not be 18
renewable by the participating employer for the same employee, unless the 19
employee has not been employed with the participating employer for a period 20
of at least twelve (12) months; or 21
(e) Part-time positions that are positions that may be permanent in duration, but 22
that require less than a calendar or fiscal year average of one hundred (100) 23
hours of work per month, determined by using the number of months actually 24
worked within a calendar or fiscal year, in the performance of duty, except in 25
case of noncertified employees of school boards, the school term average shall 26
be eighty (80) hours of work per month, determined by using the number of 27 UNOFFICIAL COPY 25 RS BR 109
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months actually worked in a calendar or school year, in the performance of 1
duty; 2
(22) "Alternate participation plan" means a method of participation in the system as 3
provided for by KRS 78.530(3); 4
(23) "Retired member" means any former member receiving a retirement allowance or 5
any former member who has on file at the retirement office the necessary 6
documents for retirement benefits and is no longer contributing to the system; 7
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 8
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 9
pay. The rate shall be certified by the employer; 10
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 11
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 12
in the event of the member's death. As used in KRS 78.5536, beneficiary shall not 13
mean an estate, trust, or trustee; 14
(26) "Recipient" means the retired member, the person or persons designated as 15
beneficiary by the member and drawing a retirement allowance as a result of the 16
member's death, or a dependent child drawing a retirement allowance. An alternate 17
payee of a qualified domestic relations order shall not be considered a recipient, 18
except for purposes of KRS 61.623; 19
(27) "Person" means a natural person; 20
(28) "School term or year" means the twelve (12) months from July 1 through the 21
following June 30; 22
(29) "Retirement office" means the Kentucky Public Pensions Authority office building 23
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 24
Authority; 25
(30) "Vested" for purposes of determining eligibility for purchasing service credit under 26
KRS 61.552 means the employee has at least forty-eight (48) months of service if 27 UNOFFICIAL COPY 25 RS BR 109
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age sixty-five (65) or older or at least sixty (60) months of service if under the age 1
of sixty-five (65). For purposes of this subsection, "service" means service in the 2
systems administered by the Kentucky Retirement Systems and County Employees 3
Retirement System; 4
(31) "Participating" means an employee is currently earning service credit in the system 5
as provided in KRS 78.615; 6
(32) "Month" means a calendar month; 7
(33) "Membership date" means the date upon which the member began participating in 8
the system as provided in KRS 78.615; 9
(34) "Participant" means a member, as defined by subsection (8) of this section, or a 10
retired member, as defined by subsection (23) of this section; 11
(35) "Qualified domestic relations order" means any judgment, decree, or order, 12
including approval of a property settlement agreement, that: 13
(a) Is issued by a court or administrative agency; and 14
(b) Relates to the provision of child support, alimony payments, or marital 15
property rights to an alternate payee; 16
(36) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 17
participant, who is designated to be paid retirement benefits in a qualified domestic 18
relations order; 19
(37) "Accumulated employer credit" means the employer pay credit deposited to the 20
member's account and interest credited on such amounts as provided by KRS 21
78.5512 and 78.5516; 22
(38) "Accumulated account balance" means: 23
(a) For members who began participating in the system prior to January 1, 2014, 24
the member's accumulated contributions; or 25
(b) For members who began participating in the system on or after January 1, 26
2014, in the hybrid cash balance plan as provided by KRS 78.5512 and 27 UNOFFICIAL COPY 25 RS BR 109
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78.5516, or a member who makes an election under subsection (3) of 1
Section 1 of this Act, or who, prior to the effective date of this Act, made an 2
election under Section 7 of this Act, the combined sum of the member's 3
accumulated contributions and the member's accumulated employer credit; 4
(39) "Volunteer" means an individual who: 5
(a) Freely and without pressure or coercion performs hours of service for an 6
employer participating in one (1) of the systems administered by Kentucky 7
Retirement Systems or the County Employees Retirement System without 8
receipt of compensation for services rendered, except for reimbursement of 9
actual expenses, payment of a nominal fee to offset the costs of performing 10
the voluntary services, or both; and 11
(b) If a retired member, does not become an employee, leased employee, or 12
independent contractor of the employer for which he or she is performing 13
volunteer services for a period of at least twelve (12) months following the 14
retired member's most recent retirement date; 15
(40) "Nominal fee" means compensation earned for services as a volunteer that does not 16
exceed five hundred dollars ($500) per month with each participating employer. 17
Compensation earned for services as a volunteer from more than one (1) 18
participating employer during a month shall not be aggregated to determine whether 19
the compensation exceeds the five hundred dollars ($500) per month maximum 20
provided by this subsection; 21
(41) "Nonhazardous position" means a position that does not meet the requirements of 22
KRS 78.5520 or has not been approved by the board as a hazardous position; 23
(42) "Hazardous position" means a position that meets the requirements of KRS 78.5520 24
and has been approved by the board as hazardous; 25
(43) "Level-percentage-of-payroll amortization method" means a method of determining 26
the annual amortization payment on the unfunded actuarial accrued liability as 27 UNOFFICIAL COPY 25 RS BR 109
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expressed as a percentage of payroll over a set period of years. Under this method, 1
the percentage of payroll shall be projected to remain constant for all years 2
remaining in the set period and the unfunded actuarially accrued liability shall be 3
projected to be fully amortized at the conclusion of the set period; 4
(44) "Increment" means twelve (12) months of service credit which are purchased. The 5
twelve (12) months need not be consecutive. The final increment may be less than 6
twelve (12) months; 7
(45) "Last day of paid employment" means the last date employer and employee 8
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 9
78.615 to the retirement office in order for the employee to receive current service 10
credit for the month. Last day of paid employment does not mean a date the 11
employee receives payment for accrued leave, whether by lump sum or otherwise, 12
if that date occurs twenty-four (24) or more months after previous contributions; 13
(46) "Objective medical evidence" means reports of examinations or treatments; medical 14
signs which are anatomical, physiological, or psychological abnormalities that can 15
be observed; psychiatric signs which are medically demonstrable phenomena 16
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 17
or contact with reality; or laboratory findings which are anatomical, physiological, 18
or psychological phenomena that can be shown by medically acceptable laboratory 19
diagnostic techniques, including but not limited to chemical tests, 20
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 21
(47) "Hazardous disability" as used in KRS 78.510 to 78.852 means a disability which 22
results in an employee's total incapacity to continue as an employee in a hazardous 23
position, but the employee is not necessarily deemed to be totally and permanently 24
disabled to engage in other occupations for remuneration or profit; 25
(48) "Act in line of duty" means, for employees in hazardous positions under KRS 26
78.5520: 27 UNOFFICIAL COPY 25 RS BR 109
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(a) A single act occurring which was required in the performance of the principal 1
duties of the hazardous position as defined by the job description; or 2
(b) A single act of violence committed against the employee that is found to be 3
related to his or her job duties, whether or not it occurs at his or her job site; 4
(49) "Dependent child" means a child in the womb and a natural or legally adopted child 5
of the member who has neither attained age eighteen (18) nor married or who is an 6
unmarried full-time student who has not attained age twenty-two (22). Solely in the 7
case of a member who dies as a direct result of an act in line of duty as defined in 8
this section, dies as a result of a duty-related injury as defined in KRS 61.621, 9
becomes totally and permanently disabled as a direct result of an act in the line of 10
duty as defined in this section, or becomes disabled as a result of a duty-related 11
injury as defined in KRS 61.621 and is eligible for the benefits provided by KRS 12
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 13
child of the member, regardless of the child's age, if the child has been determined 14
to be eligible for federal Social Security disability benefits or is being claimed as a 15
qualifying child for tax purposes due to the child's total and permanent disability; 16
(50) "Normal retirement age" means the age at which the member meets the 17
requirements for his or her normal retirement date as provided by subsection (18) of 18
this section; 19
(51) "Disability retirement date" means the first day of the month following the last day 20
of paid employment; 21
(52) "Monthly average pay" means: 22
(a) In the case of a member who dies as a direct result of an act in line of duty as 23
defined in KRS 16.505 or who dies as a result of a duty-related injury as 24
defined in KRS 61.621, the higher of the member's monthly final rate of pay 25
or the average monthly creditable compensation earned by the deceased 26
member during his or her last twelve (12) months of employment; or 27 UNOFFICIAL COPY 25 RS BR 109
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(b) In the case where a member becomes totally and permanently disabled as a 1
direct result of an act in line of duty as defined in KRS 16.505 or becomes 2
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 3
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 4
member's monthly final rate of pay or the average monthly creditable 5
compensation earned by the disabled member during his or her last twelve 6
(12) months of employment prior to the date the act in line of duty or duty-7
related injury occurred; 8
(53) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 9
61.505; 10
(54) "Executive director" means the executive director of the Kentucky Public Pensions 11
Authority; and 12
(55) "Gainful employment" means work in any capacity that is or may be performed 13
with regularity and is or may be usually done for pay, whether pay is received or 14
not received, including seasonal, volunteer, part-time, and on-call work. 15
Section 21. KRS 78.545 is amended to read as follows: 16
The following matters shall be administered for the County Employees Retirement 17
System in the same manner subject to the same limitations and requirements as provided 18
for the Kentucky Employees Retirement System as follows: 19
(1) Statement of member and employer, as provided for by KRS 61.540; 20
(2) Beneficiary to be designated by member, change, rights, as provided for by KRS 21
61.542; 22
(3) Service credit determination, as provided for by KRS 61.545; 23
(4) Retirement application procedure, effective retirement date, as provided for by KRS 24
61.590; 25
(5) Refund of contributions, conditions, as provided for by KRS 61.625; 26
(6) Refund of contributions, death after retirement, as provided for by KRS 61.630; 27 UNOFFICIAL COPY 25 RS BR 109
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(7) Recontribution and delayed contribution payments, purchase of service credit, 1
interest, and installment payments, as provided for by KRS 61.552; 2
(8) Optional retirement plans, as provided for by KRS 61.635; 3
(9) Board of trustees, conflict of interest, as provided for by KRS 61.655; 4
(10) Custodian of funds, payments made, when, as provided for by KRS 61.660; 5
(11) Medical examiners and hearing procedures, as provided for by KRS 61.665; 6
(12) Correction of errors in records, as provided for by KRS 61.685; 7
(13) Exemptions of retirement allowances, and qualified domestic relations orders, as 8
provided for by KRS 61.690; 9
(14) Credit for service prior to membership date, as provided for by KRS 61.526; 10
(15) Members' account, confidential, as provided for by KRS 61.661; 11
(16) Consent of employees to deductions and reciprocal arrangement between systems, 12
as provided for by KRS 61.680; 13
(17) Reinstated employee, contributions on creditable compensation, as provided for by 14
KRS 61.569; 15
(18) Statement to be made under oath, good faith reliance, as provided for in KRS 16
61.699; 17
(19) Direct deposit of recipient's retirement allowance as provided for in KRS 61.623; 18
(20) Death or disability from a duty-related injury as provided in KRS 61.621; 19
(21) Payment of small accounts upon death of member, retiree, or recipient without 20
formal administration of the estate as provided in KRS 61.703; 21
(22) Employer payment of increases in creditable compensation and adjustments to 22
creditable compensation during the last five (5) years of employment as provided 23
by KRS 61.598; 24
(23) Calculation of retirement allowance, as provided by KRS 61.599;[ and] 25
(24) Benefit election for members of the Kentucky Retirement Systems as provided by 26
KRS 61.5955; and 27 UNOFFICIAL COPY 25 RS BR 109
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(25) Benefit change for members of the State Police Retirement System, members in a 1
hazardous position in the Kentucky Employees Retirement System, and members 2
in a hazardous position in the County Employees Retirement System, as provided 3
by Section 1 of this Act. 4
Effective April 1, 2021, as it relates to KRS 61.590, 61.598, 61.655, 61.665, and 61.703, 5
references to "Kentucky Retirement Systems" or "systems administered by Kentucky 6
Retirement Systems" as it relates to benefit eligibility shall include the County 7
Employees Retirement System and references to "Kentucky Retirement Systems" or the 8
"Kentucky Retirement Systems board of trustees" as it relates to administrative decisions, 9
duties, requirements, or conflict of interest provisions shall for purposes of the County 10
Employees Retirement System mean the County Employees Retirement System or 11
County Employees Retirement System board of trustees, as applicable. 12
Section 22. KRS 78.5512 is amended to read as follows: 13
(1) A member of the County Employees Retirement System who is participating in a 14
nonhazardous position and who began participating in the system on or after 15
January 1, 2014, or a member who makes an election pursuant to KRS 61.5955, 16
shall receive the retirement benefits provided by this section in lieu of the 17
retirement benefits provided under KRS 78.5510. The retirement benefit provided 18
by this section shall be known as the hybrid cash balance plan and shall operate as 19
another benefit tier within the County Employees Retirement System. 20
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the 21
member's accumulated account balance, which shall include: 22
(a) Contributions made by the member as provided by KRS 78.510 to 78.852, 23
except for employee contributions prescribed by KRS 78.5536(3)(b); 24
(b) An employer pay credit of four percent (4%) of the creditable compensation 25
earned by the employee for each month the employee is contributing to the 26
hybrid cash balance plan provided by this section; and 27 UNOFFICIAL COPY 25 RS BR 109
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(c) Interest credits added annually to the member's accumulated account balance 1
as provided by this section. 2
(3) (a) Member contributions and employer pay credits as provided by subsection 3
(2)(a) and (b) of this section shall be credited to the member's account 4
monthly as contributions are reported and posted to the system in accordance 5
with KRS 78.625. 6
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be 7
credited to the member's account annually on June 30 of each fiscal year, as 8
determined by subsection (4) of this section. 9
(4) (a) On June 30 of each fiscal year, the system shall determine if the member 10
contributed to the hybrid cash balance plan or the Kentucky Retirement 11
Systems during the fiscal year. 12
(b) If the member contributed to the hybrid cash balance plan or the Kentucky 13
Retirement Systems during the fiscal year, the interest credit added to the 14
member's account for that fiscal year shall be determined by multiplying the 15
member's accumulated account balance on June 30 of the preceding fiscal 16
year by a percentage increase equal to: 17
1. Four percent (4%); plus 18
2. Seventy-five percent (75%) of the system's geometric average net 19
investment return in excess of a four percent (4%) rate of return. 20
(c) If the member did not contribute to the hybrid cash balance plan or the 21
Kentucky Retirement Systems during the fiscal year, the interest credit added 22
to the member's account for that fiscal year shall be determined by 23
multiplying the member's accumulated account balance on June 30 of the 24
preceding fiscal year by four percent (4%). 25
(d) For purposes of this subsection, "system's geometric average net investment 26
return": 27 UNOFFICIAL COPY 25 RS BR 109
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1. Means the annual average geometric investment return, net of 1
administrative and investment fees and expenses, over the last five (5) 2
fiscal years as of the date the interest is credited to the member's 3
account; and 4
2. Shall be expressed as a percentage and based upon the system in which 5
the member has an account. 6
(e) No employer pay credits or interest credits shall be provided to a member who 7
has taken a refund of contributions as provided by KRS 61.625 or who has 8
retired and annuitized his or her accumulated account balance as prescribed 9
by this section. 10
(5) (a) Upon termination of employment, a member who has less than five (5) years 11
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 12
elects to take a refund of his or her accumulated account balance as provided 13
by KRS 61.625, shall forfeit the accumulated employer credit, and shall only 14
receive a refund of his or her accumulated contributions. 15
(b) Upon termination of employment, a member who has five (5) or more years 16
of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who 17
elects to take a refund of his or her accumulated account balance as provided 18
by KRS 61.625, shall receive a full refund of his or her accumulated account 19
balance. 20
(6) A member participating in the hybrid cash balance plan provided by this section 21
may retire: 22
(a) At his or her normal retirement age, provided he or she has earned five (5) or 23
more years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), 24
or another state-administered retirement system; or 25
(b) If the member is at least age fifty-seven (57) and has an age and years of 26
service total of at least eighty-seven (87) years. The years of service used to 27 UNOFFICIAL COPY 25 RS BR 109
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determine eligibility for retirement under this paragraph shall only include 1
years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or 2
another state-administered retirement system. 3
(7) A member who has hazardous service credit presumed under Section 1 of this Act 4
to be service credit earned immediately prior to January 1, 2014, and 5
nonhazardous service credit earned on or after January 1, 2014, in the hybrid 6
cash balance plan or the Kentucky Employees Retirement System, who is eligible 7
for a reduced or unreduced benefit under Sections 2 and 3 of this Act when his or 8
her hazardous service credit and nonhazardous service credit are consolidated 9
pursuant to Section 19 of this Act, shall be eligible to retire from the hybrid cash 10
balance plan at the same time with a benefit amount calculated by the board's 11
actuary to reflect the earlier commencement of benefits. The actuarial calculation 12
of benefits shall not apply if the member satisfies the requirements provided in 13
subsection (6) of this section. 14
(8)[(7)] A member eligible to retire under subsection (6) of this section may elect to: 15
(a) Receive a monthly retirement allowance payable for life by having his or her 16
accumulated account balance annuitized by the system in accordance with the 17
actuarial assumptions and actuarial methods adopted by the board and in 18
effect on the member's retirement date; 19
(b) Receive the actuarial equivalent of his or her retirement allowance calculated 20
under paragraph (a) of this subsection payable under one (1) of the options set 21
forth in KRS 61.635, except for the option provided by KRS 61.635(11); or 22
(c) Take a refund of his or her account balance as provided by KRS 61.625. 23
(9)[(8)] The provisions of this section shall not apply to members who began 24
participating in the Kentucky Employees Retirement System, County Employees 25
Retirement System, or the State Police Retirement System prior to January 1, 2014, 26
except as provided by KRS 61.5955. 27 UNOFFICIAL COPY 25 RS BR 109
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Section 23. KRS 78.5520 is amended to read as follows: 1
(1) For purposes of this section: 2
(a) "Hazardous position" for employees who began participating in the County 3
Employees Retirement System prior to September 1, 2008, means any 4
position whose principal duties involve active law enforcement, including the 5
positions of probation and parole officer, active fire suppression or 6
prevention, correctional officers with duties that routinely and regularly 7
require face-to-face contact with inmates, or other positions, including but not 8
limited to paramedics and emergency medical technicians, with duties that 9
require frequent exposure to a high degree of danger or peril and also require 10
a high degree of physical conditioning; and 11
(b) "Hazardous position" for employees who begin participating in the County 12
Employees Retirement System on or after September 1, 2008, means police 13
officers and firefighters as defined in KRS 61.315(1), paramedics, 14
correctional officers with duties that routinely and regularly require face-to-15
face contact with inmates, and emergency medical technicians, if: 16
1. The employee's duties require frequent exposure to a high degree of 17
danger or peril and a high degree of physical conditioning; and 18
2. The employee's duties are not primarily clerical or administrative. 19
(2) (a) Each employer may request of the board hazardous coverage for those 20
positions as defined in subsection (1) of this section. Upon request, each 21
employer shall certify to the system, in the manner prescribed by the board, 22
the names of all employees working in a hazardous position as defined in 23
subsection (1) of this section for which coverage is requested. The 24
certification of the employer shall bear the approval of the agent or agency 25
responsible for the budget of the employer indicating that the required 26
employer contributions have been provided for in the budget of the employer. 27 UNOFFICIAL COPY 25 RS BR 109
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The system shall determine whether the employees whose names have been 1
certified by the employer are working in positions meeting the definition of a 2
hazardous position as provided by subsection (1) of this section. 3
(b) Each employer shall also certify, under penalty of perjury in accordance with 4
KRS Chapter 523, that each employee's actual job duties are accurately 5
reflected in the job description provided to the system. The system shall 6
determine whether the employees whose names have been certified by the 7
employer are working in positions meeting the definition of a hazardous 8
position as defined in subsection (1) of this section. 9
(c) The board shall have the authority to remove any employee from hazardous 10
coverage if the board determines the employee is not working in a hazardous 11
position or if the employee is classified in a hazardous position but has 12
individual job duties that do not meet the definition of a hazardous position or 13
are not accurately reflected in the job descriptions filed by the employer with 14
the system. 15
(3) (a) If the employer participated in the system prior to electing hazardous 16
coverage, the employer may pay to the system the cost of converting the 17
nonhazardous service to hazardous service from the date of participation to 18
the date the payment is made, or the employer may establish a payment 19
schedule for payment of the cost of the hazardous service above that which 20
would be funded within the existing employer contribution rate. The employer 21
may extend the payment schedule to a maximum of thirty (30) years. 22
Payments made by the employer under this subsection shall be deposited to 23
the retirement allowance account of the proper retirement or retiree health 24
fund and shall not be considered accumulated contributions of the individual 25
members. 26
(b) If the employer elects not to make the additional payment as provided by 27 UNOFFICIAL COPY 25 RS BR 109
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paragraph (a) of this subsection, the employee may pay the cost of converting 1
the service and provide payment for the cost as provided by KRS 61.552(9). 2
Payments made by the employee under this subsection shall not be picked up, 3
as described in KRS 78.610(4), by the employer. 4
(c) If neither the employer nor employee makes the payment, the service prior to 5
hazardous position coverage shall remain nonhazardous. 6
(d) The provisions of this subsection shall not apply to members who begin 7
participating in the system on or after January 1, 2014, but prior to January 8
1, 2026, who make an election under subsection (3) of Section 1 of this Act, 9
or who, prior to the effective date of this Act, made an election under 10
Section 7 of this Act. 11
(4) Any person employed in a hazardous position shall be required to undergo a 12
thorough medical examination by a licensed physician, and a copy of the medical 13
report of the physician shall be retained on file by the person's employer and made 14
available to the system upon request. 15
(5) If doubt exists regarding the benefits payable to a hazardous position employee 16
under this section, the board shall determine the benefits payable under KRS 78.510 17
to 78.852. 18
Section 24. KRS 78.5528 is amended to read as follows: 19
(1) (a) The Authority may contract for the services of one (1) or more vocational 20
experts upon terms and conditions it prescribes to: 21
1. Review and investigate all employment information and forms 22
submitted by a disability recipient under this section and KRS 78.5526; 23
and 24
2. Report in writing to the Authority the conclusions and recommendations 25
upon all matters referred for review and investigation. 26
(b) A vocational expert providing services to the Authority shall have a master's 27 UNOFFICIAL COPY 25 RS BR 109
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degree or higher degree in counseling or rehabilitation, an American Board of 1
Vocational Experts certification, or a certification as a Certified Rehabilitation 2
Counselor, Certified Disability Management Specialist, Associate Disability 3
Case Manager, Licensed Rehabilitation Counselor, or Certified Case 4
Manager. 5
(2) (a) Each recipient of a disability retirement allowance who is engaged in gainful 6
employment shall notify the Authority upon beginning the employment. If the 7
member fails to notify the Authority of the gainful employment, the Authority 8
may recover the payments of a disability retirement allowance made during 9
the gainful employment. 10
(b) The system may reduce or discontinue a recipient's disability allowance if the 11
Authority's medical examiner selected under KRS 61.665 or vocational expert 12
selected under this section determines that: 13
1. A recipient of a disability retirement allowance is, prior to his or her 14
normal retirement date, gainfully employed in a position with the same 15
or similar duties, or in a position with duties requiring greater residual 16
functional capacity and physical exertion, as the position from which he 17
or she was disabled, except where the recipient has returned to work on 18
a trial basis not to exceed nine (9) months; or 19
2. A recipient of a disability retirement allowance resulting solely from 20
mental illness is, prior to his or her normal retirement date, employed in 21
a position with the same or similar duties, or in a position with duties 22
requiring greater residual functional capacity, as the position from which 23
he or she was disabled. 24
(3) The system may reduce or discontinue a recipient's disability allowance if the 25
Authority's medical examiner determines that a recipient of a disability retirement 26
allowance is, prior to his or her normal retirement date, no longer incapacitated by 27 UNOFFICIAL COPY 25 RS BR 109
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the bodily injury, mental illness, or disease for which he or she receives a disability 1
retirement allowance. 2
(4) (a) The system shall have full power and authority to reduce or discontinue a 3
disability retirement allowance and the Authority shall utilize the services of a 4
medical examiner as provided in KRS 61.665 or a vocational expert selected 5
under this section, in determining whether to continue, reduce, or discontinue 6
a disability retirement allowance under this section. 7
(b) The Authority shall select one (1) medical examiner to evaluate the forms and 8
employment and medical information submitted by the person. If only 9
employment information is submitted, the Authority may select one (1) 10
vocational expert to evaluate the forms and employment information 11
submitted by the person. If there is objective medical evidence of a mental 12
impairment, the medical examiner may request the Authority's licensed 13
mental health professional to assist in determining the level of the mental 14
impairment. 15
(c) The medical examiner or vocational expert shall be paid a reasonable amount 16
by the Authority for each case evaluated. 17
(d) 1. The medical examiner or vocational expert shall recommend that the 18
disability retirement allowance be continued, reduced, or discontinued. 19
2. If the medical examiner or vocational expert recommends that the 20
disability retirement allowance be continued, the system shall make 21
retirement payments in accordance with the retirement plan selected by 22
the person. 23
3. a. If the medical examiner or vocational expert recommends that the 24
disability retirement allowance be reduced or discontinued, the 25
Authority shall send notice of the recommendation by United 26
States first-class mail to the person's last address on file in the 27 UNOFFICIAL COPY 25 RS BR 109
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retirement office, by electronic mail to the person's last electronic 1
mail address on file in the retirement office, or by other electronic 2
means. 3
b. The person shall have sixty (60) days from the day that the 4
Authority sent the notice to file at the retirement office additional 5
supporting employment or medical information and certify to the 6
Authority that the forms and additional supporting employment 7
information or medical information are ready to be evaluated by 8
the medical examiner or vocational expert or to appeal the 9
recommendation of the medical examiner or vocational expert to 10
reduce or discontinue the disability retirement allowance by filing 11
at the retirement office a request for a formal hearing. 12
c. If the person fails or refuses to file at the retirement office the 13
forms, the additional supporting employment information, and 14
current medical information or to appeal the recommendation of 15
the medical examiner or vocational expert to reduce or discontinue 16
the disability retirement allowance, his or her retirement allowance 17
shall be discontinued on the first day of the month following the 18
expiration of the period of the sixty (60) days from the day the 19
Authority sent the notice of the recommendation to the person's 20
last address on file in the retirement office, by electronic mail to 21
the person's last electronic mail address on file in the retirement 22
office, or by other electronic means. 23
(e) 1. The medical examiner shall make a recommendation based upon the 24
evaluation of additional supporting employment and medical 25
information submitted in accordance with paragraph (d)3.b. of this 26
subsection, or the vocational expert shall make a recommendation based 27 UNOFFICIAL COPY 25 RS BR 109
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upon the additional supporting employment information submitted in 1
accordance with paragraph (d)3.b. of this subsection. 2
2. If the medical examiner or vocational expert recommends that the 3
disability retirement allowance be continued, the system shall make 4
disability retirement payments in accordance with the retirement plan 5
selected by the person. 6
3. a. If the medical examiner recommends that the disability retirement 7
allowance be reduced or discontinued based upon the evaluation of 8
additional supporting employment information and medical 9
information, or if the vocational expert recommends that the 10
disability retirement allowance be reduced or discontinued based 11
upon the evaluation of additional employment information, the 12
Authority shall send notice of this recommendation by United 13
States first-class mail to the person's last address on file in the 14
retirement office, by electronic mail to the person's last electronic 15
mail address on file in the retirement office, or by other electronic 16
means. 17
b. The person shall have sixty (60) days from the day that the 18
Authority sent the notice of the recommendation to appeal the 19
recommendation to reduce or discontinue the disability retirement 20
allowance by filing at the retirement office a request for formal 21
hearing. 22
c. If the person fails or refuses to appeal the recommendation of the 23
medical examiner or vocational expert to reduce or discontinue the 24
disability retirement allowance, his or her retirement allowance 25
shall be discontinued on the first day of the month following the 26
expiration of the period of the sixty (60) days from the day the 27 UNOFFICIAL COPY 25 RS BR 109
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Authority sent the notice of the recommendation to the person's 1
last address on file in the retirement office, by electronic mail to 2
the person's last electronic mail address on file in the retirement 3
office, or by other electronic means. 4
(f) Any person whose disability benefits have been reduced or discontinued, 5
pursuant to paragraph (d)3.a. or (e)3.a. of this subsection, may file at the 6
retirement office a request for formal hearing to be conducted in accordance 7
with KRS Chapter 13B. The right to demand a formal hearing shall be limited 8
to a period of sixty (60) days after the person had notice, as described in 9
paragraph (d) or (e) of this subsection. The request for formal hearing shall be 10
filed with the Authority, at the retirement office in Frankfort. The request for 11
formal hearing shall include a short and plain statement of the reasons the 12
reduction, discontinuance, or denial of disability retirement is being contested. 13
(g) Failure of the person to request a formal hearing within the period of time 14
specified shall preclude the person from proceeding any further with 15
contesting the reduction or discontinuation of disability retirement allowance, 16
except as provided in subsection (7)(d) of this section. This paragraph shall 17
not limit the person's right to appeal to a court. 18
(h) A final order of the board shall be based on substantial evidence appearing in 19
the record as a whole and shall set forth the decision of the board and the facts 20
and law upon which the decision is based. If the board orders that the person's 21
disability retirement allowance be discontinued or reduced, the order shall 22
take effect on the first day of the month following the day the Authority sent 23
the order to the person's last address on file in the retirement office, by 24
electronic mail to the person's last electronic mail address on file in the 25
retirement office, or by other electronic means. Judicial review of the final 26
board order shall not operate as a stay and the system shall discontinue or 27 UNOFFICIAL COPY 25 RS BR 109
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reduce the person's disability retirement allowance as provided in this section. 1
(i) Notwithstanding any other provisions of this section, the system may require 2
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 provided 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) All requests for a hearing pursuant to this section shall be made in writing. 12
(5) The board may establish an appeals committee whose members shall be appointed 13
by the chair and who shall have the authority to act upon the recommendations and 14
reports of the hearing officer pursuant to this section on behalf of the board. The 15
board may also establish a joint appeals committee with the Kentucky Retirement 16
Systems. 17
(6) Any person aggrieved by a final order of the board may seek judicial review after 18
all administrative appeals have been exhausted by filing a petition for judicial 19
review in the Franklin Circuit Court in accordance with KRS Chapter 13B. 20
(7) If a disability retirement allowance is reduced or discontinued for a person who 21
began participating prior to January 1, 2014, or a person in a hazardous position 22
who began participating on or after January 1, 2026, or a person who is 23
presumed under Section 1 of this Act to have begun participating in a hazardous 24
position immediately prior to January 1, 2014, the person may apply for early 25
retirement benefits as provided under KRS 78.5510 or 78.5514, as applicable, 26
subject to the following provisions: 27 UNOFFICIAL COPY 25 RS BR 109
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(a) The person may not change his or her beneficiary or payment option; 1
(b) If the person has returned to employment with an employer participating in 2
the County Employees Retirement System, Kentucky Employees Retirement 3
System, or State Police Retirement System, the service and creditable 4
compensation shall be used in recomputing his or her benefit, except that the 5
person's final compensation shall not be less than the final compensation last 6
used in determining his or her retirement allowance; 7
(c) The benefit shall be reduced as provided by KRS 78.5510(4) or 78.5514(4); 8
(d) 1. The person shall remain eligible for reinstatement of his or her disability 9
allowance upon reevaluation until his or her normal retirement age. The 10
person shall apply for reinstatement of disability benefits in accordance 11
with the provisions of this paragraph. 12
2. An application for reinstatement of disability benefits shall be 13
administered as an application under KRS 78.5524 or 78.5526, as 14
applicable, except: 15
a. Only the bodily injuries, mental illnesses, diseases, or conditions 16
for which the person was originally approved for disability 17
benefits shall be considered. Bodily injuries, mental illnesses, 18
diseases, or conditions that came into existence after the person's 19
last day of paid employment shall not be considered as a basis for 20
reinstatement of disability benefits. Bodily injuries, mental 21
illnesses, diseases, or conditions alleged by the person as being 22
incapacitating, but which were not the basis for the award of 23
disability retirement benefits, shall not be considered; 24
b. A person whose disability allowance was discontinued under 25
subsection (2) of this section, who is still employed in the same 26
position on which his or her disability allowance was 27 UNOFFICIAL COPY 25 RS BR 109
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discontinued, shall submit with the application employment 1
information detailing the changes to the position evidencing cause 2
for reinstatement; 3
c. A person whose disability allowance was discontinued under 4
subsection (3) of this section shall provide with the application 5
new objective medical evidence not previously considered by the 6
Authority's medical examiner; and 7
d. The application for reinstatement shall be reviewed by one (1) 8
medical examiner or vocational expert. 9
3. If the person establishes that the disability benefits should be reinstated, 10
the system shall pay disability benefits effective from the first day of the 11
month following the month in which the person applied for 12
reinstatement of the disability benefits; and 13
(e) Upon attaining normal retirement age, the person shall receive the higher of 14
either his or her disability retirement allowance or his or her early retirement 15
allowance. 16
(8) If a disability retirement allowance is reduced or discontinued for a person who 17
began participating in the system on or after January 1, 2014, or a member who 18
makes an election under subsection (3) of Section 1 of this Act, or who, prior to 19
the effective date of this Act, made an election under Section 7 of this Act, the 20
person shall remain eligible for reinstatement of his or her disability allowance as 21
provided under subsection (7)(d) of this section. 22
(9) No disability retirement allowance shall be reduced or discontinued by the system 23
after the person's normal retirement date except in case of reemployment as 24
provided for by KRS 78.5540. If a disability retirement allowance has been reduced 25
or discontinued, except if the person is reemployed as provided for by KRS 26
78.5540, the retirement allowance shall be reinstated upon attainment of the 27 UNOFFICIAL COPY 25 RS BR 109
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person's normal retirement date to the retirement allowance prior to adjustment. No 1
reinstated payment shall be less than the person is receiving upon attainment of the 2
person's normal retirement date. 3
Section 25. KRS 78.5524 is amended to read as follows: 4
The disability retirement provisions contained in this section shall apply to a person 5
whose last date of paid employment was in a hazardous position. 6
(1) (a) For purposes of this section: 7
1. "Total and permanent disability" means a disability which results in the 8
member's incapacity to engage in any occupation for remuneration or 9
profit. Loss by severance of both hands at or above the wrists, or both 10
feet at or above the ankles, or one (1) hand above the wrist and one (1) 11
foot above the ankle, or the complete, irrevocable loss of the sight of 12
both eyes shall be considered as total and permanent; and 13
2. "Hazardous disability" means a disability which results in an employee's 14
total incapacity to continue as an employee in a hazardous position, but 15
the employee is not necessarily deemed to be totally and permanently 16
disabled to engage in other occupations for remuneration or profit. 17
(b) In determining whether the disability meets the requirement of this section, 18
any reasonable accommodation provided by the employer as provided in 42 19
U.S.C. sec. 12111(9) and 29 C.F.R. pt. 1630 shall be considered. 20
(c) If the board determines that the total and permanent disability of a member 21
receiving a retirement allowance under this section has ceased, then the board 22
shall determine if the member has a hazardous disability as defined by KRS 23
78.510. 24
(2) Any person may qualify to retire on disability, subject to the following: 25
(a) The person shall have sixty (60) months of service, twelve (12) of which shall 26
be current service credited under KRS 16.543(1), 61.543(1), or 78.615(1). The 27 UNOFFICIAL COPY 25 RS BR 109
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service requirement shall be waived if the disability is a total and permanent 1
disability or a hazardous disability and is a direct result of an act in line of 2
duty; 3
(b) For a person whose membership date is prior to August 1, 2004, the person 4
shall not be eligible for an unreduced retirement allowance; 5
(c) The person's application shall be on file in the retirement office no later than 6
twenty-four (24) months after the person's last day of paid employment, as 7
defined in KRS 78.510, in a regular full-time position that has been approved 8
as a hazardous position in accordance with KRS 78.5520; 9
(d) The person shall receive a satisfactory determination pursuant to KRS 61.665; 10
and 11
(e) A person's disability application based on the same claim of incapacity shall 12
be accepted and reconsidered for disability if accompanied by new objective 13
medical evidence. The application shall be on file in the retirement office no 14
later than twenty-four (24) months after the person's last day of paid 15
employment in a regular full-time hazardous position. 16
(3) Upon the examination of the objective medical evidence by licensed physicians 17
pursuant to KRS 61.665, it shall be determined that: 18
(a) The incapacity results from bodily injury, mental illness, or disease. For 19
purposes of this section, "injury" means any physical harm or damage to the 20
human organism other than disease or mental illness; 21
(b) The incapacity is deemed to be permanent; and 22
(c) The incapacity does not result directly or indirectly from: 23
1. Injury intentionally self-inflicted while sane or insane; or 24
2. Bodily injury, mental illness, disease, or condition which pre-existed 25
membership in the system or reemployment, whichever is most recent, 26
unless: 27 UNOFFICIAL COPY 25 RS BR 109
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a. The disability results from bodily injury, mental illness, disease, or 1
a condition which has been substantially aggravated by an injury 2
or accident arising out of or in the course of employment; or 3
b. The person has at least sixteen (16) years' current or prior service 4
for employment with employers participating in the County 5
Employees Retirement System or the Kentucky Retirement 6
Systems. 7
For purposes of this subparagraph, "reemployment" shall not mean a 8
change of employment between employers participating in the County 9
Employees Retirement System or the Kentucky Retirement Systems 10
with no loss of service credit. 11
(4) (a) 1. An incapacity shall be deemed to be permanent for the purpose of 12
hazardous disability if it is expected to result in death or can be expected 13
to last for a continuous period of not less than twelve (12) months from 14
the person's last day of paid employment in a hazardous position. 15
2. The determination of a permanent incapacity for the purpose of 16
hazardous disability shall be based on the medical evidence contained in 17
the member's file and the member's residual functional capacity and 18
physical exertion requirements. 19
3. The determination of a total and permanent incapacity shall be based on 20
the medical evidence contained in the member's file and the member's 21
residual functional capacity. 22
(b) The person's residual functional capacity shall be the person's capacity for 23
work activity on a regular and continuing basis. The person's physical ability 24
shall be assessed in light of the severity of the person's physical, mental, and 25
other impairments. The person's ability to walk, stand, carry, push, pull, reach, 26
handle, and other physical functions shall be considered with regard to 27 UNOFFICIAL COPY 25 RS BR 109
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physical impairments. The person's ability to understand, remember, and carry 1
out instructions and respond appropriately to supervision, coworkers, and 2
work pressures in a work setting shall be considered with regard to mental 3
impairments. Other impairments, including skin impairments, epilepsy, visual 4
sensory impairments, postural and manipulative limitations, and 5
environmental restrictions, shall be considered in conjunction with the 6
person's physical and mental impairments to determine residual functional 7
capacity. 8
(c) The person's physical exertion requirements shall be determined based on the 9
following standards: 10
1. Sedentary work shall be work that involves lifting no more than ten (10) 11
pounds at a time and occasionally lifting or carrying articles such as 12
large files, ledgers, and small tools. Although a sedentary job primarily 13
involves sitting, occasional walking and standing may also be required 14
in the performance of duties. 15
2. Light work shall be work that involves lifting no more than twenty (20) 16
pounds at a time with frequent lifting or carrying of objects weighing up 17
to ten (10) pounds. A job shall be in this category if lifting is 18
infrequently required but walking and standing are frequently required, 19
or if the job primarily requires sitting with pushing and pulling of arm or 20
leg controls. If the person has the ability to perform substantially all of 21
these activities, the person shall be deemed capable of light work. A 22
person deemed capable of light work shall be deemed capable of 23
sedentary work unless the person has additional limitations such as the 24
loss of fine dexterity or inability to sit for long periods. 25
3. Medium work shall be work that involves lifting no more than fifty (50) 26
pounds at a time with frequent lifting or carrying of objects weighing up 27 UNOFFICIAL COPY 25 RS BR 109
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to twenty-five (25) pounds. If the person is deemed capable of medium 1
work, the person shall be deemed capable of light and sedentary work. 2
4. Heavy work shall be work that involves lifting no more than one 3
hundred (100) pounds at a time with frequent lifting or carrying of 4
objects weighing up to fifty (50) pounds. If the person is deemed 5
capable of heavy work, the person shall also be deemed capable of 6
medium, light, and sedentary work. 7
5. Very heavy work shall be work that involves lifting objects weighing 8
more than one hundred (100) pounds at a time with frequent lifting or 9
carrying of objects weighing fifty (50) or more pounds. If the person is 10
deemed capable of very heavy work, the person shall be deemed capable 11
of heavy, medium, light, and sedentary work. 12
(5) Upon disability retirement, an employee may receive a disability retirement 13
allowance payable during his or her lifetime which shall be: 14
(a) For a member who began participating in the system prior to August 1, 2004, 15
an annual retirement allowance payable monthly and determined in the same 16
manner as for retirement at his or her normal retirement date with years of 17
service and final compensation being determined as of the date of his or her 18
disability, except that service shall be added beginning with his or her last 19
date of paid employment and continuing to his or her fifty-fifth birthday. The 20
maximum service credit added shall not exceed the total service the member 21
had on his or her last day of paid employment, and the maximum service 22
credit for calculating his or her retirement allowance, including his or her total 23
service and service added under this section, shall not exceed twenty (20) 24
years; 25
(b) For a member who begins participating on or after August 1, 2004, but prior 26
to January 1, 2014, or who begins participating in a hazardous position on 27 UNOFFICIAL COPY 25 RS BR 109
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or after January 1, 2026, or who is presumed under Section 1 of this Act to 1
begin participating in a hazardous position immediately prior to January 1, 2
2014, the higher of twenty-five percent (25%) of the member's monthly final 3
rate of pay or the retirement allowance determined in the same manner as for 4
retirement at his or her normal retirement date with years of service and final 5
compensation being determined as of the date of his or her disability; or 6
(c) For a member who begins participating on or after January 1, 2014, but prior 7
to January 1, 2026, in the hybrid cash balance plan as provided by KRS 8
78.5516, who makes an election under subsection (3) of Section 1 of this 9
Act, or who, prior to the effective date of this Act, made an election under 10
Section 7 of this Act, the disability retirement allowance shall be the higher of 11
twenty-five percent (25%) of the member's monthly final rate of pay or the 12
retirement allowance determined in the same manner as for retirement at his 13
or her normal retirement date under KRS 78.5516. 14
(6) If the member receives a satisfactory determination of hazardous disability pursuant 15
to KRS 61.665 and the disability is the direct result of an act in line of duty as 16
defined in KRS 78.510, the member's retirement allowance shall be calculated as 17
follows: 18
(a) For the disabled member, benefits as provided in subsection (5) of this section 19
except that the monthly retirement allowance payable shall not be less than 20
twenty-five percent (25%) of the member's monthly final rate of pay; and 21
(b) For each dependent child of the member on his or her disability retirement 22
date, who is alive at the time any particular payment is due, a monthly 23
payment equal to ten percent (10%) of the disabled member's monthly final 24
rate of pay; however, total maximum dependent children's benefit shall not 25
exceed forty percent (40%) of the member's monthly final rate of pay. The 26
payments shall be payable to each dependent child, or to a legally appointed 27 UNOFFICIAL COPY 25 RS BR 109
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guardian or as directed by the system. 1
(7) If the member receives a satisfactory determination of total and permanent 2
disability pursuant to KRS 61.665 and the disability is the direct result of an act in 3
line of duty as defined in KRS 78.510, the member's retirement allowance shall be 4
calculated as follows: 5
(a) For the disabled member, the benefits as provided in subsection (5) of this 6
section, except that the monthly retirement allowance payable shall not be less 7
than seventy-five percent (75%) of the member's monthly average pay; and 8
(b) For each dependent child of the member on his or her disability retirement 9
date, who is alive at the time any particular payment is due, a monthly 10
payment equal to ten percent (10%) of the disabled member's monthly 11
average pay, except that: 12
1. Member and dependent children payments under this subsection shall 13
not exceed one hundred percent (100%) of the member's monthly 14
average pay; and 15
2. Total maximum dependent children's benefits shall not exceed twenty-16
five percent (25%) of the member's monthly average pay while the 17
member is living and forty percent (40%) of the member's monthly 18
average pay after the member's death. The payments shall be payable to 19
each dependent child, or to a legally appointed guardian or as directed 20
by the system, and shall be divided equally among all dependent 21
children. 22
(8) No benefit provided in this section shall be reduced as a result of any change in the 23
extent of disability of any retired member who is normal retirement age or older. 24
(9) If a regular full-time member in a hazardous position has been approved for 25
benefits under a hazardous disability, the board shall, upon request of the member, 26
permit the member to receive the hazardous disability allowance while accruing 27 UNOFFICIAL COPY 25 RS BR 109
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benefits in a nonhazardous position, subject to proper medical review of the 1
nonhazardous position's job description by the Authority's medical examiner. 2
Section 26. KRS 78.616 is amended to read as follows: 3
(1) Any employer participating in the County Employees Retirement System which has 4
formally adopted a sick-leave program that is universally administered to its 5
employees may purchase service credit with the retirement system for up to six (6) 6
months of unused sick leave for each retiring employee. 7
(2) Participation under this section shall be at the option of each participating 8
employer. The election to participate shall be made by the governing authority of 9
the participating employer and shall be certified in writing to the system on forms 10
prescribed by the board. The certification shall provide for equal treatment of all 11
employees participating under this section. 12
(3) (a) Upon the member's notification of retirement as prescribed in KRS 61.590, 13
the employer shall certify the retiring employee's unused, accumulated sick-14
leave balance to the system. The member's sick-leave balance, expressed in 15
days, shall be divided by the average number of working days per month in 16
county service and rounded to the nearest number of whole months. A 17
maximum of six (6) months of the member's sick-leave balance, expressed in 18
months, shall be added to his or her service credit for the purpose of 19
determining his or her annual retirement allowance under KRS 78.510 to 20
78.852 and for the purpose of determining whether the member is eligible to 21
receive a retirement allowance under KRS 78.510 to 78.852, except as 22
provided by paragraph (d) of this subsection. Accumulated sick-leave in 23
excess of six (6) months shall be added to the member's service credit if the 24
member or employer pays to the retirement system the value of the additional 25
service credit based on the formula adopted by the board, subject to the 26
restrictions provided by paragraph (d) of this subsection. 27 UNOFFICIAL COPY 25 RS BR 109
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(b) The employer may elect to pay fifty percent (50%) of the cost of the sick 1
leave in excess of six (6) months on behalf of its employees. The employee 2
shall pay the remaining fifty percent (50%). The payment by the employer 3
shall not be deposited to the member's account. Service credit shall not be 4
credited to the member's account until both the employer's and employee's 5
payments are received by the retirement system. 6
(c) Once the employer elects to pay all or fifty percent (50%) of the cost on 7
behalf of its employees, it shall continue to pay the same portion of the cost. 8
(d) For a member who begins participating in the retirement system on or after 9
September 1, 2008, but prior to January 1, 2014, or who begins participating 10
in a hazardous position on or after January 1, 2026, or who is presumed 11
under Section 1 of this Act to begin participating in a hazardous position 12
immediately prior to January 1, 2014, whose employer has established a 13
sick-leave program under subsections (1) to (4) and (6) of this section: 14
1. The member shall receive no more than twelve (12) months of service 15
credit upon retirement for accumulated unused sick leave accrued while 16
contributing to the retirement system from which the retirement benefit 17
is to be paid; 18
2. The service added to the member's service credit shall be used for 19
purposes of determining the member's annual retirement allowance 20
under KRS 78.510 to 78.852; 21
3. The service added to the member's service credit shall not be used to 22
determine whether a member is eligible to receive a retirement 23
allowance under KRS 78.510 to 78.852; and 24
4. The cost of the service provided by this paragraph shall be paid by the 25
employer. 26
(4) The system shall compute the cost of the sick-leave credit of each retiring employee 27 UNOFFICIAL COPY 25 RS BR 109
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and bill each employer with whom the employee accrued sick leave accordingly. 1
The employer shall remit payment within thirty (30) days from receipt of the bill. 2
(5) (a) As an alternative to subsections (1), (3), (4), and (6) of this section, any 3
agency participating in the County Employees Retirement System which has 4
formally adopted a sick-leave program that is universally administered to its 5
employees, or administered to a majority of eligible employees in accordance 6
with subsection (6) of this section, shall, at the time of termination, or as 7
provided in KRS 161.155 in the case of school boards, compensate the 8
employee for unused sick-leave days the employee has accumulated which it 9
is the uniform policy of the agency to allow. 10
(b) The rate of compensation for each unused sick-leave day shall be based on the 11
daily salary rate calculated from the employee's current rate of pay. Payment 12
for unused sick-leave days shall be incorporated into the employee's final 13
compensation if the employee and employer make the regular employee and 14
employer contributions, respectively, on the sick-leave payment. 15
(c) The number of sick-leave days for which the employee is compensated shall 16
be divided by the average number of working days per month in county 17
service and rounded to the nearest number of whole months. This number of 18
months shall be added to the employee's total service credit and to the number 19
of months used to determine creditable compensation, pursuant to KRS 20
78.510, but no more than sixty (60) months shall be used to determine final 21
compensation. For an employee who begins participating on or after 22
September 1, 2008, but prior to January 1, 2014, or who begins participating 23
in a hazardous position on or after January 1, 2026, or who is presumed 24
under Section 1 of this Act to begin participating in a hazardous position 25
immediately prior to January 1, 2014, the number of months added to the 26
employee's total service credit under this paragraph shall not exceed twelve 27 UNOFFICIAL COPY 25 RS BR 109
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(12) months, and the additional service shall not be used to determine whether 1
a member is eligible to receive a retirement allowance under KRS 78.510 to 2
78.852. 3
(6) Any city of the first class that has two (2) or more sick-leave programs for its 4
employees may purchase service credit with the retirement system for up to six (6) 5
months of unused sick leave for each retiring employee who participates in the sick-6
leave program administered to a majority of the eligible employees of the city. An 7
employee participating in a sick-leave program administered to a minority of the 8
eligible employees shall become eligible for the purchase of service credit under 9
this subsection when the employee commences participating in the sick-leave 10
program that is administered to a majority of the eligible employees of the city. 11
(7) The provisions of this section shall not apply to: 12
(a) Employees in a nonhazardous position who begin participating in the system 13
on or after January 1, 2014;[,] or 14
(b) Employees making an election under subsection (3) of Section 1 of this Act, 15
or who, prior to the effective date of this Act, made an election under 16
Section 7 of this Act; 17
and no service credit shall be provided for accumulated sick leave balances of those 18
employees described in paragraphs (a) and (b) of this subsection[ who begin 19
participating in the system on or after January 1, 2014]. 20
Section 27. KRS 78.640 is amended to read as follows: 21
(1) The members' 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 78.510 to 78.852 24
shall be credited, except as provided by KRS 78.5536(3)(b); and 25
(b) For members who begin participating in a nonhazardous position in the 26
system on or after January 1, 2014, or a member who makes an election 27 UNOFFICIAL COPY 25 RS BR 109
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under subsection (3) of Section 1 of this Act, or 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 78.5512 3
and 78.5516 shall be credited. 4
Only funds from this account shall be used to return the accumulated contributions 5
or accumulated account balances of a member when required to be returned to him 6
or her by reason of any provision of KRS 78.510 to 78.852. Prior to the member's 7
retirement, death, or refund in accordance with KRS 61.625, no funds shall be made 8
available from the member 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 78.5536(3)(b). 12
(3) (a) Each member shall have his or her individual account credited with interest on 13
June 30 of each year. 14
(b) For a member who begins participating before September 1, 2008, interest 15
shall be credited to his or her individual account at a rate determined by the 16
board but not less than two percent (2%) per annum on the accumulated 17
account balance of the member on June 30 of the preceding fiscal year. 18
(c) For a member who begins participating on or after September 1, 2008, but 19
prior to January 1, 2014, or who begins participating in a hazardous position 20
on or after January 1, 2026, for his or her service in a hazardous position, 21
or who is presumed under Section 1 of this Act to begin participating in a 22
hazardous position immediately prior to January 1, 2014, interest shall be 23
credited to his or her individual account at a rate of two and one-half percent 24
(2.5%) per annum on the accumulated contributions of the member on June 25
30 of the preceding fiscal year. 26
(d) For a member who begins participating in a nonhazardous position on or 27 UNOFFICIAL COPY 25 RS BR 109
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after January 1, 2014, in the hybrid cash balance plan, or a member who 1
makes an election under subsection (3) of Section 1 of this Act, or who, 2
prior to the effective date of this Act, made an election under Section 7 of 3
this Act, interest shall be credited in accordance with KRS 78.5512 and 4
78.5516. 5
(e) The amounts of interest credited to a member's account under this subsection 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 who began participating in a hazardous position on or 9
after January 1, 2026, or who is presumed under Section 1 of this Act to 10
have begun participating in a hazardous position immediately prior to 11
January 1, 2014, his or her accumulated account balance shall be transferred 12
from the members' account to the retirement allowance account. 13
(b) Upon the retirement of a member who began participating in a nonhazardous 14
position in the system on or after January 1, 2014, or a member who makes 15
an election under subsection (3) of Section 1 of this Act, or who, prior to the 16
effective date of this Act, made an election under Section 7 of this Act, who 17
elects to annuitize his or her accumulated account balance as prescribed by 18
KRS 78.5512(8)[(7)](a) or (b) or 78.5516(7)(a) or (b), the member's 19
accumulated account balance shall be transferred to the retirement allowance 20
account. 21