KRS 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 --

Options upon retirement.

(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 reti rement benefits provided by this section in lieu of the

retirement benefits provided under KRS 61.559 and 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 16.6 52 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 s ection 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 ye ar, 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, exce pt for

those members who make an election pursuant to KRS 61.5955.