KRS 21.525: Contributions by state -- Normal cost and actuarially accrued liability

contributions -- Employer costs for hybrid cash balance plan.

(1) The state, by appropriation to the Judicial Retirement Board, shall contribute

annually to the Judicial Retirement System an amount equal to the percent as

computed under subsection (2)(a) of this section of the creditable compensation of

active members of the Judicial Retirement System, to be known as the "normal cost

contribution," and an additional amoun t computed under subsection (2)(b) of this

section, to be known as the "actuarially accrued liability contribution."

(2) (a) The normal cost contribution shall be determined using:

1. The entry age normal cost funding method;

2. An asset smoothing method t hat smooths investment gains and losses

over a five (5) year period; and

3. Other funding methods and assumptions established by the board.

(b) The actuarially accrued liability contribution shall be computed as follows:

1. The total unfunded actuarially accrued liability shall be amortized over a

closed period of twenty (20) years beginning with the 2023 actuarial

valuation;

2. Any increase or decrease in the unfunded actuarially accrued liability

occurring after the completion of the 2023 actuarial valuation shall be

amortized over a closed period of twenty (20) years beginning with the

actuarial valuation in which the increase or decrease in the unfunded

actuarially accrued liability is recognized. An increase or decrease in the

unfunded actuarially accrued liability may result from, but not be

limited to, legislative changes to benefits, changes in actuarial methods

or assumptions, or actuarial gains or losses;

3. If the annual valuation determines that the plan has surplus actuarial

assets, the prior amortization bases established under subparagraph 2. of

this paragraph shall be eliminated, and one (1) base equal to the amount

of surplus actuarial assets shall be established and amortized over an

open period of twenty (20) years; and

4. The actuarially accrued liability contribution shall be determined by

actuarial methods consistent with the methods prescribed for

determining the normal cost contribution, except that beginning with the

2023 actuarial valuation the level dollar amortization method shall be

utilized.

(c) The board shall adopt the actuarial assumptions that are to be used in making

the determinations.

(3) The normal cost contribution and the actuarially accrued liability contribution for

each fiscal biennium shall be determined on the basis of the actuarial valuation last

preceding the commencement of the biennium.

(4) Employer costs for the hybrid cash balance plan as provided by KRS 21.402 shall

be incorporated into the employer contribution rate of the Legislators' Retirement

Plan and the Judicial Retirement Plan as a new benefit tier within the plans.