A legislative change to the statutes governing your retirement plan could directly affect your retirement benefits. Accordingly, you are urged to personally keep abreast of any developments as they unfold should the General Assembly be called into Special Session, or during a Regular Session. The next Regular Session will convene on January 2, 2018.
Governor Bevin, in his January 26, 2016 State of the Commonwealth’s Budget Address, reviewed the state’s pension obligations and funding requirements. He stated: We are going to start by auditing every single one of the pension systems. … upon auditing, we’ll fully know the scope and scale of the problem. To that end, the Commonwealth entered into a contract with PFM Group Consulting on September 15, 2016, to prepare a Pension Performance and Best Practice Analysis of Kentucky’s retirement systems. The analysis includes the Judicial Retirement Plan and the Legislators Retirement Plan. PFM’s Report 1 (Governance and Transparency). Report 2 (Historical and Current Assessments) and Report 3 (Recommended Options) are posted on the website of the State Budget Director.
Public Pension Oversight Board meeting, August 28, 2017: All 113 pages of PFM's Report 3 (Recommended Options) contain valuable information; however, the following pages set forth the key recommendations applicable to the members/retirees of the Judicial Form Retirement System (KJFRS). KJFRS administers the Judicial Retirement Plan (KJRP) and the Legislators Retirement Plan (KLRP).
Key Policy Principles & Goals, page 5
Benefit Level and Risk Exposure, pages 11-12
Recommended Options for future KJFRS participants, pages 13-14
Recommended Options for current KJFRS participants, pages 18-20
Recommended Options for KJFRS retirees, pages 19-20 and page 24
Summary of Recommendations, pages 36-40, and Table on pages 55-56
Impact of Recommendations as to future funding as a percentage of payroll, pages 101-104
Before adjourning the Public Pension Oversight Board meeting, Chairman Bowen stated, "I want to remind everyone here and those following by other means, that what we heard today, again, is a third party analysis, and while very useful it will be up to us [the General Assembly] as policy makers to ultimately craft an effective and fair plan going forward. PFM is an analyst, not a law making body. That responsibility lies with us."
October 19, 2017
Yesterday, Governor Bevin, President Stivers and Speaker Hoover released a summary of the proposed changes to the various state retirement systems, including the Judicial Retirement Plan (JRP) and the Legislators Retirement Plan (LRP). You can access the highlights here and the details here.
Immediately upon receipt of the proposed legislation, this office will update this site to include a summary of the provisions of the bill. We are prepared at this time to submit the following as our understanding of the details released thus far – since no proposed bill has been produced, our analysis is fluid and could change.
KRS 21.402, which created a Hybrid Cash Balance plan, refers to that plan as a new tier within JRP and LRP; however, neither JRP nor LRP differentiates benefit structures by tiers. In both retirement plans, there is a Defined Benefit Plan (members electing participation prior to January 1, 2014), and a Hybrid Cash Balance Plan (members electing participation after January 1, 2014).
It appears that on July 1, 2018, JRP Hybrid Cash Balance Plan members will be moved to a defined contribution plan. On or after that date, JRP Defined Benefit Plan members will be moved to a defined contribution plan after reaching 27 years of service (the defined benefit earned on 27 years will be frozen at the date of the transition to the defined contribution plan). All new JRP members will participate in the defined contribution plan. The member’s contribution for all JRP participants will increase by 3.00%.
We are not prepared at this time (based on the information at hand) to provide a similar analysis for LRP.
October 27, 2017
On October 27 at 4:45 p.m., the General Assembly, through the Legislative Research Commission, made public a draft of the Pension Reform legislation, a section by section summary and a side-by-side comparison of the proposed legislation. You can access those documents below.
In reviewing enacted legislation, please note that the summary is not intended to be a full and complete description of new law or how it may impact individual plan members. If you have specific questions about how new laws may affect your retirement benefit, you should contact the System's office.