Kentucky Statutes 78.5512 – Hybrid cash balance plan for members in nonhazardous positions who began participating on or after January 1, 2014, and for members who make election under KRS 61.5955
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(1) A member of the County Employees Retirement System who is participating in a nonhazardous position and who began participating in the system on or after January 1, 2014, or a member who makes 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 § 78.5510. 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 County 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 § 78.510 to
78.852, except for employee contributions prescribed by KRS
78.5536(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 § 78.625.
(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 Kentucky Retirement Systems during the fiscal year.
(b) If the member contributed to the hybrid cash balance plan or the Kentucky Retirement Systems 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 net investment return in excess of a four percent (4) rate of return.
(c) If the member did not contribute to the hybrid cash balance plan or the Kentucky Retirement Systems 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 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 age, provided he or she has earned five
(5) or more years of service credited under KRS § 16.543(1), 61.543(1), or
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), or
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 system 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, County
Employees Retirement System, or the State Police Retirement System prior to
January 1, 2014, except as provided by KRS § 61.5955.
Effective:April 1, 2021
History: Created 2021 Ky. Acts ch. 102, sec. 2, effective April 1, 2021.
61.5955, shall receive the retirement benefits provided by this section in lieu of the retirement benefits provided under KRS § 78.5510. 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 County Employees Retirement System.
Terms Used In Kentucky Statutes 78.5512
- 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
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Year: means calendar year. See Kentucky Statutes 446.010
(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 § 78.510 to
78.852, except for employee contributions prescribed by KRS
78.5536(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 § 78.625.
(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 Kentucky Retirement Systems during the fiscal year.
(b) If the member contributed to the hybrid cash balance plan or the Kentucky Retirement Systems 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 net investment return in excess of a four percent (4) rate of return.
(c) If the member did not contribute to the hybrid cash balance plan or the Kentucky Retirement Systems 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 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 age, provided he or she has earned five
(5) or more years of service credited under KRS § 16.543(1), 61.543(1), or
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), or
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 system 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, County
Employees Retirement System, or the State Police Retirement System prior to
January 1, 2014, except as provided by KRS § 61.5955.
Effective:April 1, 2021
History: Created 2021 Ky. Acts ch. 102, sec. 2, effective April 1, 2021.