KRS 65.156: Actuarial valuation requirement for local government pension systems --

Exemptions -- Copy to Legislative Research Commission -- Contributions by

cities, municipal agencies, urban -county governments, or consolidated local

governments -- Payment of lawf ul expenses -- Prohibition against creation or

maintenance of defined benefit retirement system susceptible of unfunded

liability -- Exceptions.

(1) The governing board of any local government retirement system created pursuant to

KRS 67A.320, 67A.340, 6 7A.360 to 67A.690, 79.080, 90.400, 90.410, 95.290,

95.520 to 95.620, 95.621 to 95.629, 95.767 to 95.784, 95.851 to 95.884, or KRS

Chapter 96 shall submit the retirement system to an actuarial valuation, if the

system provides a defined benefit, at least:

(a) Once every three (3) years if the system has six (6) or more active and retired

members; or

(b) Once every five (5) years if the system has less than six (6) active and retired

members.

The valuation shall be prepared by an actuary who is a fellow of t he Society of

Actuaries, a member of the American Academy of Actuaries, or an enrolled actuary

under the Employees' Retirement Income Security Act of 1975. The board shall

send a copy of the most recent valuation to the librarian of the Legislative Researc h

Commission by September 1, 1982, and thereafter the board shall send a copy of

each new valuation within ten (10) days of receipt. If all liabilities to all individuals

entitled to benefits from the local government retirement system have been

satisfied, no actuarial valuation shall be required.

(2) Actuaries performing valuations pursuant to this section shall use the entry age

normal cost funding method. Their reports shall include a definition of each

actuarial term and an explanation of each actuarial assumption used. Assumptions

shall be reasonably related to the experience of the system and represent the

actuary's best estimate of anticipated experience.

(3) Any city or municipal agency with a retirement system created pursuant to KRS

79.080, 90.400, 90.410, 95.520 to 95.620, 95.621 to 95.629, 95.767 to 95.784,

95.851 to 95.884, or KRS Chapter 96 which is closed to new members pursuant to

KRS 78.530, 95.520, 95.621, or 95.852 shall, if its local pension system provides a

defined benefit, contribute an nually to the pension system, for the benefit of the

retirees of the system and the active participants who choose to remain in the

system, and for the benefit of members who have completed at least twenty (20)

years' service and withdrawn from service pur suant to KRS 95.857, an amount

equal to that which would be required pursuant to the funding standards of KRS

95.868, plus so much of the principal amount of any unfunded prior service liability

as the actuary states is necessary to maintain cash flow adeq uate to pay retiree and

beneficiary payments until financial obligations to all retirees and beneficiaries are

fully satisfied.

(4) All lawful expenses for general administration, performance bonds, medical,

actuarial, accounting, auditing, legal, and investment services of a retirement system

listed in subsection (1) of this section shall be paid from the pension fund. Actuaries

performing valuations pursuant to this section shall include estimates of the

expenses in their recommendations for pension syste m funding, and local

governments shall add payments for the expenses to their annual contributions to

their respective retirement systems.

(5) A city or city agency, consolidated local government, or urban -county government

may, pursuant to KRS 67A.340, 79 .080, 90.410, or KRS Chapter 96 as applicable,

provide for the retirement security of its employees through the creation of a money

purchase or defined contribution plan qualified under Section 401(a) of the Internal

Revenue Code of 1954 as amended. City e mployee deferred compensation plans

created pursuant to KRS 18A.270, or money purchase or defined contribution plans,

qualified under Section 401(a) of the Internal Revenue Code of 1954 as amended,

which by their nature cannot have an unfunded liability, s hall not be subject to the

actuarial valuation requirements of this section, and shall not be subject to

termination for purposes of employee entry into the County Employees Retirement

System, as required by KRS 78.530, 79.080, 90.410, and 96.180.

(6) No c ity or county, except an urban -county, or special district, nor any agency or

instrumentality of a city or county or special district shall create or maintain for its

officers or employees a defined benefit retirement system, which by its nature can

have a n unfunded liability. The provisions of this subsection shall not preclude

employer contributions for city managers or other appointed local government

executives who participate, pursuant to KRS 78.540, in a retirement system which

operates in more than o ne (1) state, nor the continuation of a local government

defined benefit retirement system which has been closed to new members but which

must fulfill its obligations to current active members, retirees, and beneficiaries.

Notwithstanding any provision to the contrary, the provisions of this subsection

shall not apply to length of service awards programs established for the benefit of

volunteer firefighters and volunteer life squad and volunteer rescue personnel.

(7) Notwithstanding any provision to the con trary, any city or county may establish

awards programs that recognize the length of service to the community by volunteer

firefighters, volunteer life squads, and volunteer rescue personnel.