Kentucky Statutes 61.597 – Hybrid cash balance plan for certain members of Kentucky Employees Retirement System in nonhazardous duty positions — Member contributions and employer pay credits — Interest credits — Termination of employment — Option…
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(1) A member of the Kentucky Employees Retirement System who is participating in a nonhazardous position, whose participation in the systems begins on or after January 1, 2014, and those members making an election pursuant to KRS § 61.5955, shall receive the retirement benefits provided by this section in lieu of the retirement benefits provided under KRS § 61.559 and KRS § 61.595. The retirement benefit provided by this section shall be known as the hybrid cash balance plan and shall operate as another benefit tier within the Kentucky Employees Retirement System.
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the member’s accumulated account balance, which shall include:
(a) Contributions made by the member as provided by KRS § 16.505 to KRS § 16.652 and
61.510 to 61.705, except for employee contributions prescribed by KRS
61.702(3)(b);
(b) An employer pay credit of four percent (4%) of the creditable compensation earned by the employee for each month the employee is contributing to the hybrid cash balance plan provided by this section; and
(c) Interest credits added annually to the member’s accumulated account balance as provided by this section.
(3) (a) Member contributions and employer pay credits as provided by subsection (2)(a) and (b) of this section shall be credited to the member’s account monthly as contributions are reported and posted to the system in accordance with KRS § 61.675.
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be credited to the member’s account annually on June 30 of each fiscal year, as determined by subsection (4) of this section.
(4) (a) On June 30 of each fiscal year, the system shall determine if the member contributed to the hybrid cash balance plan or the County Employees Retirement System during the fiscal year.
(b) If the member contributed to the hybrid cash balance plan or the County Employees Retirement System during the fiscal year, the interest credit added to the member’s account for that fiscal year shall be determined by multiplying the member’s accumulated account balance on June 30 of the preceding fiscal year by a percentage increase equal to:
1. Four percent (4%); plus
2. Seventy-five percent (75%) of the system’s geometric average investment return in excess of the four percent (4%) rate of return.
(c) If the member did not contribute to the hybrid cash balance plan or the County Employees Retirement System during the fiscal year, the interest credit added to the member’s account for that fiscal year shall be determined by multiplying the member’s accumulated account balance on June 30 of the
preceding fiscal year by a percentage increase equal to four percent (4%).
(d) For purposes of this subsection, “system’s geometric average net investment return”:
1. Means the annual average geometric investment return, net of administrative and investment fees and expenses, over the last five (5) fiscal years as of the date the interest is credited to the member’s account; and
2. Shall be expressed as a percentage and based upon the system in which the member has an account.
(e) No employer pay credits or interest credits shall be provided to a member who has taken a refund of contributions as provided by KRS § 61.625 or who has retired and annuitized his or her accumulated account balance as prescribed by this section.
(5) (a) Upon termination of employment, a member who has less than five (5) years of service credited under KRS § 16.543(1), 61.543(1), and 78.615(1), who elects to take a refund of his or her accumulated account balance as provided by KRS § 61.625, shall forfeit the accumulated employer credit, and shall only receive a refund of his or her accumulated contributions.
(b) Upon termination of employment, a member who has five (5) or more years of service credited under KRS § 16.543(1), 61.543(1), and 78.615(1), who elects to take a refund of his or her accumulated account balance as provided by KRS § 61.625, shall receive a full refund of his or her accumulated account balance.
(6) A member participating in the hybrid cash balance plan provided by this section may retire:
(a) At his or her normal retirement date, provided he or she has earned five (5) or more years of service credited under KRS § 16.543(1), 61.543(1), 78.615(1), or another state-administered retirement system; or
(b) If the member is at least age fifty-seven (57) and has an age and years of service total of at least eighty-seven (87) years. The years of service used to determine eligibility for retirement under this paragraph shall only include years of service credited under KRS § 16.543(1), 61.543(1), 78.615(1), or another state-administered retirement system.
(7) A member eligible to retire under subsection (6) of this section may elect to:
(a) Receive a monthly retirement allowance payable for life by having his or her accumulated account balance annuitized by the retirement systems in accordance with the actuarial assumptions and actuarial methods adopted by the board and in effect on the member’s retirement date;
(b) Receive the actuarial equivalent of his or her retirement allowance calculated under paragraph (a) of this subsection payable under one (1) of the options set forth in KRS § 61.635, except for the option provided by KRS § 61.635(11); or
(c) Take a refund of his or her account balance as provided by KRS § 61.625.
(8) The provisions of this section shall not apply to members who began participating
in the Kentucky Employees Retirement System prior to January 1, 2014, except for those members who make an election pursuant to KRS § 61.5955.
Effective: April 1, 2021
History: Repealed, reenacted, and amended 2021 Ky. Acts ch. 102, sec. 59, effective April 1, 2021. — Amended 2018 Ky. Acts ch. 107, sec. 19, effective July 14, 2018. — Amended 2017 Ky. Acts ch. 125, sec. 7, effective March 27, 2017. — Created 2013
Ky. Acts ch. 120, sec. 9, effective July 1, 2013.
2020-2022 Budget Reference. See State/Executive Branch Budget, 2021 Ky. Acts ch.
169, Pt. IV, 5 at 1155.
Legislative Research Commission Note (12/13/2018). On December 13, 2018, the
Kentucky Supreme Court ruled that the passage of 2018 SB 151 (2018 Ky. Acts ch.
107), did not comply with the three-readings rule of Kentucky Constitution Section
46 and that the legislation is, therefore, constitutionally invalid and declared void. That ruling applies to changes made to this statute in that Act.
(2) The hybrid cash balance plan shall provide a retirement benefit based upon the member’s accumulated account balance, which shall include:
Terms Used In Kentucky Statutes 61.597
- branch budget: means an enactment by the General Assembly which provides appropriations and establishes fiscal policies and conditions for the biennial financial plan for the judicial branch, the legislative branch, and the executive branch, which shall include a separate budget bill for the Transportation Cabinet. See Kentucky Statutes 446.010
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Month: means calendar month. See Kentucky Statutes 446.010
- Statute: A law passed by a legislature.
- Year: means calendar year. See Kentucky Statutes 446.010
(a) Contributions made by the member as provided by KRS § 16.505 to KRS § 16.652 and
61.510 to 61.705, except for employee contributions prescribed by KRS
61.702(3)(b);
(b) An employer pay credit of four percent (4%) of the creditable compensation earned by the employee for each month the employee is contributing to the hybrid cash balance plan provided by this section; and
(c) Interest credits added annually to the member’s accumulated account balance as provided by this section.
(3) (a) Member contributions and employer pay credits as provided by subsection (2)(a) and (b) of this section shall be credited to the member’s account monthly as contributions are reported and posted to the system in accordance with KRS § 61.675.
(b) Interest credits, as provided by subsection (2)(c) of this section, shall be credited to the member’s account annually on June 30 of each fiscal year, as determined by subsection (4) of this section.
(4) (a) On June 30 of each fiscal year, the system shall determine if the member contributed to the hybrid cash balance plan or the County Employees Retirement System during the fiscal year.
(b) If the member contributed to the hybrid cash balance plan or the County Employees Retirement System during the fiscal year, the interest credit added to the member’s account for that fiscal year shall be determined by multiplying the member’s accumulated account balance on June 30 of the preceding fiscal year by a percentage increase equal to:
1. Four percent (4%); plus
2. Seventy-five percent (75%) of the system’s geometric average investment return in excess of the four percent (4%) rate of return.
(c) If the member did not contribute to the hybrid cash balance plan or the County Employees Retirement System during the fiscal year, the interest credit added to the member’s account for that fiscal year shall be determined by multiplying the member’s accumulated account balance on June 30 of the
preceding fiscal year by a percentage increase equal to four percent (4%).
(d) For purposes of this subsection, “system’s geometric average net investment return”:
1. Means the annual average geometric investment return, net of administrative and investment fees and expenses, over the last five (5) fiscal years as of the date the interest is credited to the member’s account; and
2. Shall be expressed as a percentage and based upon the system in which the member has an account.
(e) No employer pay credits or interest credits shall be provided to a member who has taken a refund of contributions as provided by KRS § 61.625 or who has retired and annuitized his or her accumulated account balance as prescribed by this section.
(5) (a) Upon termination of employment, a member who has less than five (5) years of service credited under KRS § 16.543(1), 61.543(1), and 78.615(1), who elects to take a refund of his or her accumulated account balance as provided by KRS § 61.625, shall forfeit the accumulated employer credit, and shall only receive a refund of his or her accumulated contributions.
(b) Upon termination of employment, a member who has five (5) or more years of service credited under KRS § 16.543(1), 61.543(1), and 78.615(1), who elects to take a refund of his or her accumulated account balance as provided by KRS § 61.625, shall receive a full refund of his or her accumulated account balance.
(6) A member participating in the hybrid cash balance plan provided by this section may retire:
(a) At his or her normal retirement date, provided he or she has earned five (5) or more years of service credited under KRS § 16.543(1), 61.543(1), 78.615(1), or another state-administered retirement system; or
(b) If the member is at least age fifty-seven (57) and has an age and years of service total of at least eighty-seven (87) years. The years of service used to determine eligibility for retirement under this paragraph shall only include years of service credited under KRS § 16.543(1), 61.543(1), 78.615(1), or another state-administered retirement system.
(7) A member eligible to retire under subsection (6) of this section may elect to:
(a) Receive a monthly retirement allowance payable for life by having his or her accumulated account balance annuitized by the retirement systems in accordance with the actuarial assumptions and actuarial methods adopted by the board and in effect on the member’s retirement date;
(b) Receive the actuarial equivalent of his or her retirement allowance calculated under paragraph (a) of this subsection payable under one (1) of the options set forth in KRS § 61.635, except for the option provided by KRS § 61.635(11); or
(c) Take a refund of his or her account balance as provided by KRS § 61.625.
(8) The provisions of this section shall not apply to members who began participating
in the Kentucky Employees Retirement System prior to January 1, 2014, except for those members who make an election pursuant to KRS § 61.5955.
Effective: April 1, 2021
History: Repealed, reenacted, and amended 2021 Ky. Acts ch. 102, sec. 59, effective April 1, 2021. — Amended 2018 Ky. Acts ch. 107, sec. 19, effective July 14, 2018. — Amended 2017 Ky. Acts ch. 125, sec. 7, effective March 27, 2017. — Created 2013
Ky. Acts ch. 120, sec. 9, effective July 1, 2013.
2020-2022 Budget Reference. See State/Executive Branch Budget, 2021 Ky. Acts ch.
169, Pt. IV, 5 at 1155.
Legislative Research Commission Note (12/13/2018). On December 13, 2018, the
Kentucky Supreme Court ruled that the passage of 2018 SB 151 (2018 Ky. Acts ch.
107), did not comply with the three-readings rule of Kentucky Constitution Section
46 and that the legislation is, therefore, constitutionally invalid and declared void. That ruling applies to changes made to this statute in that Act.