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How CERS & KERS pensions will change

Christie Dutton
4/27/2018

The Pension Reform Bill (SB151) is expected go into effect on July 1, 2018. Here are some changes in Kentucky's public pensions from SB 151.


The Pension Reform Bill (SB151) is expected go into effect on July 1, 2018. The bill passed the House and Senate on March 29th, and the governor signed it into law April 10th.

Here are some changes in Kentucky's public pensions from SB 151:

*Only applies to CERS & KERS

  1. Tier 1 & 2: Accumulated sick days can’t be used to determine retirement eligibility (or retire early) for those who retire on or after 7-1-23. (Already applies to Tier 3.)
  2. Tier 3 Non-Haz: No longer guaranteed 4% base interest on investment; however, account won’t decrease during a market downturn. Receive 85% of the average rate of return over a 10 year period.
  3. Creditable compensation excludes uniform, equipment and expense allowances paid on or after 1-1-19.
  4. Non-Haz Tier 1: Creditable compensation excludes lump sum payment for compensation time for those who retire on or after 7-1-23. (Already excluded for Tier 2 or 3.)
  5. Final compensation will be calculated using complete fiscal years (High 3 for Haz, High 5 for Non-Haz) for those retiring on or after 1-1-19.
  6. Reemployment for Non-Haz: Must have 3 month break. Return full-time (100 hours/month or more) with 12 month suspension in pension payments from date of retirement. Return part-time with no pension payment suspension.
  7. Reemployment for Haz: Must have 1 month break. Return to full or part-time with no pension suspension.
  8. Tier 1 hired on or after 7-1-03 will contribute 1% of pay for KRS medical insurance fund.
  9. Tier 3 will not receive $5,000 death benefit.
  10. Legislative changes occurring on or after 7-1-18 will be excluded from the inviolable contract allowing the General Assemble the right to amend, reduce or suspend these and future changes.

Here are some things that DO NOT change:

  • No change to current retirees
  • Current and future workers can opt into the new 401 (a) plan, a.k.a. Money Purchase Plan, but it isn't mandatory.
  • No second retirement can be earned upon re-employment
  • Non-Haz Tier 1: May retire with full benefits after 27 years of service.
  • Non-Haz Tier 2, 3 & 4: May retire with full benefits at 65 with 5 years service or Rule of 87 with a minimum age of 57.
  • Haz Tier 1: Retire with full benefits after 20 years or at age 55 with 5 years of service.
  • Haz Tier 2 & 3: Retire with full benefits after 25 years or at age 60 with 5 years of service.