KRS 16.583: Hybrid cash balance plan for members of State Police Retirement System

and Kentucky Employees Retirement System in hazardous duty positions --

Member contributions and employer pay credits -- Interest credits --

Termination of employment -- Options upon retirement -- Applicability of

statute.

(1) A member of the State Police Retirement System, a member of the Kentucky

Employees Retirement System in a hazardous duty position covered by this section,

whose participation begins on or after January 1, 2014, or a member 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 16.576 and

16.577. 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 State

Police Retirement System and 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 16.652 and

61.510 to 61.705, except for employee contributions prescribed by KRS

61.702(3)(b);

(b) 1. An employer pay credit of seven and one -half percent (7.5%) 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

2. For members of the State Police Retirement System covered by thi s

section, an employer pay credit for the value of accumulated sick leave

as determined and limited by KRS 16.584; 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)1. 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.

(c) Employer pay credits for accumulated sick leave shal l be credited to the

member's account as determined by KRS 16.584.

(4) (a) On June 30 of each fiscal year, the system shall determine if the member

contributed to the hybrid cash balance plan during the fiscal year.

(b) If the member contributed to the hyb rid cash balance plan 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 increas e 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 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 61.6 25 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 m ember 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 a ccount

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 ), or 78.615(1),

or another state-administered retirement system; or

(b) At any age, provided he or she has earned twenty -five (25) or more 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 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, the County Employees Retirement

System, or the State Police Retirement System prior to January 1, 2014, except for

those members who make an election pursuant to KRS 61.5955.