What Types of Kentucky State Pensions are offered?
State public employees within Kentucky have two main pension programs available depending on their line of work.
- The Kentucky Retirement System (KYERT) consists of six separate programs:
- Kentucky Employee Retirement System for state employees (KERS)
- County Employee Retirement System (CERS) for local government and school board members
- The State Police Retirement System (SPRS) for state police officers.
- Kentucky Teachers Retirement System (KTRS) is for all public schools, community college and university teachers specifically
- Judicial and Legislators Retirement Systems
KYERT Benefits Descriptions
Benefits within each of the three state pension divisions are earned through employer, employee contributions and return on investments percentages. While some aspects of each division are similar, a few items such as retirement age may differ depending on the field in which the employee works.
- Non-hazardous participants hired before September 1, 2008 contribute 5% of payroll while hazardous employee members pay 8%.
- Non-hazardous employees hire after September 1, 2008 contribute 6% of pre-tax payroll. 5% of these funds are placed in KRS retirement funds while 1% is distributed into the employee’s health care fund. Hazardous members contribute 9% of payroll in which 8% is contributed to retirement while 1% is placed in health care fund.
Once the employee retires, funds in the KRS individual accounts transfer to the Retirement Allowance Account to be distributed to the retiree. Interest is acquired yearly on all funds in the KRS account. Pre-September 1, 2008 employees receive a minimum of 2% interest while those hired after September 1rst receive no less that 2.5%. Service credit years in employment determine both retirement age and the amount of benefits that will be received for each employee.
Vesting is based on the type of employment as some hazardous fields may need to retire earlier and there are over 30 ways in which employees can earn service credits for their work. General vesting periods for all three divisions are age 65 with at least 60 months of continuous service or age 65 with a minimum of 48 months. For a detailed listing of all service credits and purchased credits refer to the KRS Employee Guidelines.
Retirement age and benefits are determined by several factors; age, service credit, member start date and type of service which defines hazardous and non-hazardous classes. If an employee has both hazardous and non-hazardous benefits they will not be combined the employee will receive two separate retirement benefits based on each divisions separate factors. The following are individual general retirement factors:
Non-hazardous employee members:
Full benefit retirement age is:
- 65 years with at least 48 months of service credit receives life time benefits equal to salary and service credit
- A Retiree with over 27 year’s service credit may retire at any time with full benefits
- Reduced benefits retirements can be completed when a member reaches between 25 and 27 service credit years before age 65 or at least age 55 with a minimum of 5 years service credit.
- Those employed after Sep. 1, 2008 may retire with full benefits at age 57 when service credit added to age equals 87 in addition to prior requirements.
Benefits are based on the highest 5 year consecutive average annual pay, years of service combined with any purchased credits and multiplied by a retirement percentage determined by the board. Interest is calculated yearly and members will receive an annual statement.
Hazardous employee members:
- Full benefit retirement can be received with 20 or more years of service credit at any age
- Age 55 with at least 60 months of hazardous duty service credit may retire with full benefits
- Reduced benefit retirement begins at age 50 with at least 15 years of hazardous service credit
Benefits are calculated based on the average 3 year highest consecutive wages, years of service credit combined with purchased credits and multiplied by a retirement percentage determined by the board. Interest is calculated yearly during the employee pre-retirement and annual statements keep members informed.
Additional Benefits Available
All retirement members of any division may also chose several survivor options depending on personal preferences include pre-retirement death benefits options. The retiree will elect from the many options upon applying for benefits once vesting has been reached. A list of benefit options is provided in the employee handbook.
In addition, all retirement divisions offer disability benefits both permanent and temporary. Disability benefits depend on the type of work and differ for hazardous and non-hazardous employees.
Within each division, employees also have the options to purchase additional service credits that will increase the monthly benefit amounts after retirement. If an employee with 25 years of service credit purchases an additional 5 years, the benefit amounts at retirement will be based on 30 years of credit. Purchased credit can be paid through pre-tax payroll in additional to normal contribution rates that apply.
In addition, all divisions participating in the medical coverage plans after retirement, the state will pay a portion of coverage depending on type of work and age. Benefit amounts will depend on the employee’s enrollment date and percentages vary based on pre and post July 1, 2003 enrollment as well as retirement age and line of work.
Cost of Living and inflation protection and what is the level for 2012, 2013 and 2014
COLA increases are determined by the board on an “as-needed” basis and if applicable apply in July of each year for all KPRS employees.