Signed by Governor Matt Bevin

Vote Smart's Synopsis:

Vote to concur with House amendments and pass a bill that amends the state public pension system.

Highlights:

• Amends the age at which individuals are eligible for retirement benefits under a state-administered retirement plan as follows (Secs. 9, 12, 19, 27, 36 & 43):

• Individuals who are at least 65 years of age and have 5 years of service; or

• Individuals whose combined age and years of service equal at least 87.

• Specifies that a state-administered retirement plan includes, but is not limited to, the Teachers’ Retirement System (TRS), Kentucky Retirement System (KRS), and Legislatures’ Retirement Plan (LRP) (Secs. 1-2).

• Specifies that an inviolable contract, which prevents the General Assembly from reducing or making other changes to future retirement benefits, is only available for “hybrid cash balance accounts” administered by the state (Secs. 1, 2, 5, 6, and 11).

• Specifies that teachers and other state employees will now automatically be placed into “hybrid cash balance accounts,” which share qualities of both a defined-benefit and defined-contribution pension (Sec. 19).

• Authorizes teachers and other state employees to opt for a 401(a) defined contribution account instead of a “hybrid cash balance account” (Sec. 19).

• Specifies that teachers’ retirement payments will reflect both their contributions and those of their employer as follows (Secs. 12, 27 & 38):

• Teachers contribute 9.105% of their salaries;

• The State adds 6%; and

• Local school districts provide 2%.

• Specifies that current teachers and administrators will no longer be able to count payments for sick-leave days accumulated on or after December 31, 2018 toward their lifetime TRS pension payments (Sec. 74).

• Prohibits TRS participants from applying future unused sick days on or after August 1, 2018 toward service credits in a manner that allows them to retire early (Sec. 74).

• Prohibits any state employee who retires on or after January 1, 2019 and returns to a job with an employer that participates in TRS from contributing to or earning benefits from a second retirement account (Sec. 70).

• Reduces the LRP benefit factor from 2.75% to 1.97% for future accruals for members who did not have a hybrid cash balance account prior to January 1, 2014 (Sec. 3).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass with amendment a bill that amends the state public pension system.

Highlights:

• Amends the age at which individuals are eligible for retirement benefits under a state-administered retirement plan as follows (Secs. 9, 12, 19, 27, 36 & 43):

• Individuals who are at least 65 years of age and have 5 years of service; or

• Individuals whose combined age and years of service equal at least 87.

• Specifies that a state-administered retirement plan includes, but is not limited to, the Teachers’ Retirement System (TRS), Kentucky Retirement System (KRS), and Legislatures’ Retirement Plan (LRP) (Secs. 1-2).

• Specifies that an inviolable contract, which prevents the General Assembly from reducing or making other changes to future retirement benefits, is only available for “hybrid cash balance accounts” administered by the state (Secs. 1, 2, 5, 6, and 11).

• Specifies that teachers and other state employees will now automatically be placed into “hybrid cash balance accounts,” which share qualities of both a defined-benefit and defined-contribution pension (Sec. 19).

• Authorizes teachers and other state employees to opt for a 401(a) defined contribution account instead of a “hybrid cash balance account” (Sec. 19).

• Specifies that teachers’ retirement payments will reflect both their contributions and those of their employer as follows (Secs. 12, 27 & 38):

• Teachers contribute 9.105% of their salaries;

• The State adds 6%; and

• Local school districts provide 2%.

• Specifies that current teachers and administrators will no longer be able to count payments for sick-leave days accumulated on or after December 31, 2018 toward their lifetime TRS pension payments (Sec. 74).

• Prohibits TRS participants from applying future unused sick days on or after August 1, 2018 toward service credits in a manner that allows them to retire early (Sec. 74).

• Prohibits any state employee who retires on or after January 1, 2019 and returns to a job with an employer that participates in TRS from contributing to or earning benefits from a second retirement account (Sec. 70).

• Reduces the LRP benefit factor from 2.75% to 1.97% for future accruals for members who did not have a hybrid cash balance account prior to January 1, 2014 (Sec. 3).

Full Bill Text