SB 196 — AN ACT relating to optional retirement benefits for hazardous duty employees participating in the County Employees Retirement System's hybrid cash balance plans.

Summary

Create a new section of KRS 78.510 to 78.852 to create an elective alternative benefit program that employers participating in the County Employees Retirement System (CERS) may adopt for employees in hazardous positions with a membership date after January 1, 2014, in the hybrid cash balance plan (Tier 3 benefits); provide that, if an employer participating in CERS makes a one-time election to provide an alternative benefit program, those eligible employees in hazardous positions may elect, in lieu of Tier 3 benefits, to participate in the alternative benefit program within one year of attaining or otherwise having 10 or more years in a hazardous position; provide that employees opting into the alternative benefit program who meet the requirements of a career hazardous employee receive Tier 3 benefits up to entering the alternative benefit program and an annual lifetime retirement benefit calculated as 2.25% of final compensation for each year of service in the alternative benefit program for participation between 20 and 25 years or 2.5% of final compensation for each year of service in the alternative benefit program for participation for 25 years or more; require that the annual actuarial valuation conducted by the CERS board include an assessment of the funding levels, unfunded liability, and actuarially required employer contribution rates for the alternative benefit program and require the CERS board to make adjustments to the alternative benefit program if it falls below 90% funded or if the employer contribution rate for the program is projected to exceed 16% of pay; require employers opting into the alternative benefit program to pay any additional actuarial costs to fund the program without any funding from employers who do not participate in the alternative benefit program; limit the alternative benefit program to Tier 3 members in CERS; provide that the General Assembly may alter the alternative program benefits, define terms for purposes of the alternative benefit program; amend KRS 78.5516 to provide that eligible employees who elect to participate in the alternative benefit program shall not contribute or be considered as contributing to the hybrid cash balance plan or receive employer pay credits, but shall receive interest credits based on their accumulated account balance in the hybrid cash balance plan; amend KRS 78.635 to require CERS employers participating in the alternative benefit program to pay an additional employer contribution to fund the program; amend KRS 78.510, 78.640, and 78.784 to conform; EFFECTIVE July 1, 2025.

Bill Text

• Introduced View text Current pdf

Compared against the Kentucky Revised Statutes as published AI-generated reading aid — verify against the official bill.

The bill creates a new section establishing an alternative benefit calculation for eligible hazardous duty employees in the County Employees Retirement System.

• KRS 78.510 to 78.852

  Notwithstanding any provision of KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852 to the contrary: (1) As used in this section: (a) "Alternative benefit calculation service" means service in a hazardous position accrued after the employee's effective election date as provided by subsection (3) of this section with an employer who participates in the alternative benefit program; (b) "Alternative benefit program" means the benefit calculated under subsection (4) of this section; (c) "Career hazardous employee" means an employee who: 1. Makes an election as provided by subsection (3) of this section; 2. Has thirty (30) or more years of service credited in a hazardous position under KRS 16.543(1), 61.543(1), or 78.615(1), except as adjusted by subsection (6) of this section; and 3. Has twenty (20) years or more years of alternative benefit calculation service credited under KRS 78.615(1), except as adjusted by subsection (6) of this section; (d) "Final compensation" shall mean, except as adjusted by subsection (6) of this section, the creditable compensation of the member during the five (5) complete fiscal years immediately preceding retirement divided by five (5). Each fiscal year used to determine final compensation must contain twelve (12) months of service credit. If the member does not have five (5) complete fiscal years that each contain twelve (12) months of service credit, then one (1) or more additional fiscal years, which may contain less than twelve (12) months of service credit, shall be added until the number of months in the final compensation calculation is at least sixty (60) months; and (e) "Funding level" means the actuarial value of assets divided by the actuarially accrued liability expressed as a percentage that is determined and reported by the system's actuary in the system's actuarial valuation for the alternative benefit program.

  This establishes a new framework for calculating benefits for hazardous duty employees in the retirement system.

• KRS 78.510

  Section 2. KRS 78.510 is amended to read as follows: As used in KRS 78.510 to 78.852, unless the context otherwise requires: (1) "System" means the County Employees Retirement System; (2) "Board" means the board of trustees of the system as provided in KRS 78.782; (3) "County" means any county, or nonprofit organization created and governed by a county...

  This is an addition that incorporates references necessary for the framework of the new alternative benefit program.

Action History

1. March 22, 2024

   to State & Local Government (S)

2. February 12, 2024

   to Committee on Committees (S)

3. February 12, 2024

   introduced in Senate

Sponsors

• Christian McDaniel · Primary

Subjects