The Kentucky Public Pension Oversight Board, established under KRS 6.755, is tasked with overseeing the administration and financial health of the Commonwealth’s public retirement systems. A critical aspect of this oversight involves ensuring compliance with statutory requirements and sound financial practices. When a public agency within Kentucky, such as a county fiscal court or a municipal government, proposes to establish a new pension plan or significantly amend an existing one, the Board’s review is paramount. This review process is not merely procedural; it is designed to safeguard the long-term solvency of the retirement systems and protect the interests of both active members and retirees. KRS 6.755(2)(a) explicitly mandates that any proposed new pension plan or amendment to an existing plan for any political subdivision or agency of the Commonwealth must be submitted to the Board for review and recommendation prior to implementation. The Board’s role is to assess the actuarial soundness, financial impact, and adherence to legal provisions, including those related to funding levels and benefit structures, as outlined in various Kentucky Revised Statutes governing public employee retirement. This ensures that any new or modified benefit structure does not unduly burden the state’s financial resources or violate established pension principles. The Board’s recommendation, while advisory in nature for certain entities, carries significant weight and is a prerequisite for many governmental actions related to pension plan establishment or modification, aligning with the state’s overarching responsibility to manage its public employee benefits prudently.

The Kentucky Public Pension Oversight Board, established under KRS 6.785, is tasked with reviewing and analyzing the funding status, investment performance, and actuarial assumptions of the Commonwealth’s major retirement systems. These systems include the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). The Board’s mandate is to provide recommendations to the General Assembly and the Governor regarding the fiscal health and sustainability of these plans. KRS 6.788 specifically outlines the powers and duties of the Board, including the authority to request actuarial valuations, review investment policies, and hold public hearings. The Board’s analysis is crucial for informing legislative decisions on contribution rates, benefit adjustments, and overall pension reform efforts in Kentucky. Its role is advisory and oversight, aiming to ensure transparency and responsible management of public employee retirement assets.

The scenario presented involves a public employee in Kentucky who participated in a defined benefit pension plan. Upon separation from service, the employee elected to receive a refund of their contributions. Kentucky Revised Statutes (KRS) Chapter 161 governs the retirement system for educators, which includes provisions for refunds. Specifically, KRS 161.530 outlines the conditions and consequences of withdrawing accumulated contributions. When a member withdraws their contributions, they forfeit all credited service and any future rights to a retirement allowance from that service. The refund typically includes the member’s contributions plus any accumulated interest, as specified by the Kentucky Teachers’ Retirement System (KTRS) statutes and administrative regulations. The calculation of the refund amount is based on the total contributions made by the member during their service, and the interest credited is determined by the KTRS board of trustees, as permitted by statute. The question asks about the consequence of this action, which is the forfeiture of service credit. This forfeiture is a critical aspect of pension law, as it means the individual cannot later claim retirement benefits based on the service for which they received a refund. This principle is consistent across most public pension systems, ensuring that benefits are only paid for service that was not “cashed out.” The concept of forfeiture is a key element in understanding the trade-offs involved in choosing a refund versus a deferred retirement benefit.

The scenario involves the Kentucky Public Employees’ Retirement System (KYFARS). Specifically, it addresses the concept of a “member with less than five years of service” who is also a “contributing member” at the time of separation from service. Under KRS 61.5591(1), a member who has accrued at least five years of service credit and is a contributing member at the time of separation is entitled to a service retirement allowance. However, the question pertains to a member with less than five years of service. For such members, the primary entitlement upon separation from service, if they are a contributing member, is the refund of their accumulated contributions, plus any accumulated interest earned on those contributions. The interest rate applied to these refunds is determined by the retirement system’s investment performance and is typically outlined in the system’s administrative regulations and statutes. KRS 61.575 outlines the refund of contributions and the interest to be paid. The interest rate is not a fixed percentage but is variable, reflecting the actual earnings of the retirement fund. For the purpose of this question, we are to consider the standard entitlement for this specific scenario. The key is that a member with less than five years of service does not qualify for a service retirement allowance, but rather a refund of their contributions. The refund includes the member’s contributions and the interest earned on those contributions, as per KRS 61.575. The interest rate for refunds is determined by the Board of Trustees of the Kentucky Retirement Systems, based on the system’s investment performance, and is not a static percentage. The question asks about the *entitlement* for a member with less than five years of service who is a contributing member at separation. This entitlement is the refund of their contributions with accrued interest.

The Kentucky Public Pension Oversight Board, established under KRS 6.785, is tasked with a broad mandate to oversee the state’s retirement systems. This includes reviewing the financial condition, actuarial soundness, and investment performance of the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS), among others. The board’s responsibilities encompass analyzing actuarial valuations, monitoring investment strategies and returns, and making recommendations to the General Assembly and the Governor regarding the management and funding of these systems. KRS 6.786 outlines the board’s membership, which includes legislative appointees, the State Treasurer, and the Secretary of the Finance and Administration Cabinet, ensuring a diverse representation of stakeholders. The board’s advisory role is crucial in shaping policy and ensuring the long-term viability of public employee pensions in Kentucky, particularly in light of actuarial challenges and funding deficits that have been a persistent concern. The board’s authority extends to recommending changes to contribution rates, benefit structures, and administrative practices to promote fiscal responsibility and the security of pension benefits for Kentucky’s public servants.

The scenario describes a situation involving a Kentucky public employee’s pension benefit calculation. The relevant Kentucky Revised Statute (KRS) for calculating the pension benefit for a member of the Kentucky Employees Retirement System (KERS) is KRS 61.565. This statute outlines the formula for determining the annuity. The calculation involves the member’s final compensation, multiplied by a service factor, and then multiplied by a factor representing the percentage of final compensation for each year of service. For a member who retired in 2023 with 25 years of service and a final average salary of $75,000, and assuming the applicable service factor for their retirement date under KERS is 2.5%, the calculation would be as follows: Annual Pension Benefit = Final Average Salary × Service Factor × Years of Service Annual Pension Benefit = $75,000 × 2.5% × 25 Annual Pension Benefit = $75,000 × 0.025 × 25 Annual Pension Benefit = $1,875 × 25 Annual Pension Benefit = $46,875 This calculation determines the annual annuity payable to the member. The question tests the understanding of how KRS 61.565 is applied in practice for a KERS member, focusing on the statutory framework for benefit computation rather than complex actuarial or investment returns. The key is to correctly identify the relevant statute and apply its prescribed formula using the provided data. Understanding the components of the formula—final average salary, service factor, and years of service—is crucial. The service factor is a statutorily defined percentage that varies based on the member’s hire date and retirement date. For this example, a typical factor for a member retiring in 2023 would be used.

The Kentucky Public Pension Oversight Board, established under KRS 6.788, is tasked with reviewing and evaluating the actuarial soundness and financial condition of the Commonwealth’s major retirement systems. This board plays a crucial role in recommending legislative and administrative actions to ensure the long-term solvency of these systems. KRS 6.792 outlines the board’s responsibilities, including the review of actuarial valuations, investment performance, and benefit structure changes. The board’s recommendations are vital for maintaining the integrity of pension benefits for state employees, teachers, and other public servants in Kentucky. Its oversight extends to ensuring compliance with statutory requirements and best practices in public pension management, thereby safeguarding the financial security of beneficiaries and the fiscal health of the Commonwealth. The board’s analytical function is key to identifying potential funding shortfalls and proposing corrective measures, often involving complex actuarial assumptions and economic forecasts.

The scenario involves a scenario governed by Kentucky Revised Statutes (KRS) Chapter 61, which pertains to the Kentucky Employees Retirement System (KERS). Specifically, the question touches upon the concept of service credit accrual and the impact of different employment statuses on retirement benefits. When an employee transitions from a full-time, contributing member to a part-time, non-contributing position within the same state agency, their service credit accrual for the part-time period is typically calculated based on the actual hours worked, prorated against the standard full-time work year. KRS 61.510(13) defines “part-time employment” as employment where an employee works less than twenty (20) hours per week. For members participating in KERS, service credit for part-time employment is generally awarded on a pro-rata basis, meaning a fraction of a year of service is credited based on the ratio of hours worked to the hours required for full-time service. However, the critical aspect here is that if the part-time position is explicitly designated as non-contributing, then no service credit is awarded for that period, regardless of the hours worked. This is a key distinction in Kentucky’s public retirement system, differentiating between service that builds towards a pension and service that does not. The question tests the understanding that non-contributing service, even if performed for a state agency, does not count towards the accrual of retirement benefits under KERS. Therefore, despite working 15 hours per week, if the position is classified as non-contributing, no service credit is earned for that duration.

The Kentucky Public Pension Oversight Board, established under KRS 6.750, plays a crucial role in monitoring and advising on the state’s public retirement systems, including the Kentucky Employees Retirement System (KERS), the Kentucky Teachers’ Retirement System (KTRS), and the County Employees Retirement System (CERS). The board’s responsibilities include reviewing actuarial reports, investment performance, and proposed legislative changes affecting these systems. KRS 6.753 outlines the composition of the board, which includes members from both the legislative and executive branches, as well as public members with relevant expertise. The board’s mandate is to ensure the fiscal health and sustainability of Kentucky’s public pension plans, thereby protecting the benefits of current and future retirees. Its oversight function is critical for transparency and accountability in the management of these significant public trust funds. The board’s authority does not extend to directly administering or managing the daily operations of the individual retirement systems, but rather to providing a layer of governance and strategic review.

The Kentucky Public Employees’ Retirement System (KYPERS) is governed by specific statutes and administrative regulations that dictate how service credit is purchased and applied. KRS 61.552 outlines the provisions for purchasing service credit for periods of non-membership service. This statute specifies that an employee may purchase service credit for periods of employment in a non-member position with a Kentucky state agency or a political subdivision participating in the retirement system. The cost of purchasing this service credit is actuarially determined, meaning it is calculated based on the projected cost to the system to provide benefits for that additional service. This actuarial cost is typically a combination of the employee’s contribution rate at the time of purchase and the employer’s contribution rate, plus interest. The statute also sets limits on the types of non-membership service that can be purchased and the conditions under which it can be applied. Specifically, KRS 61.552(1) states that the cost shall be the actuarial cost as determined by the board of trustees. This actuarial cost is not a fixed percentage but is calculated periodically to ensure the solvency of the retirement system. For the purpose of this question, we are asked to determine the cost for an employee to purchase 10 years of non-member service. The statute clearly states this cost is the actuarial cost. Therefore, the correct answer is the actuarial cost as determined by the board of trustees.

The Kentucky Public Employees’ Retirement System (KyPERS) provides retirement, disability, and survivor benefits to eligible public employees in Kentucky. When a member of KyPERS retires, their benefit amount is determined by a formula that typically involves their final average salary, credited service, and a retirement factor. The question concerns the statutory provisions governing the calculation of retirement benefits for members who have elected a specific payment option. Kentucky Revised Statute (KRS) Chapter 61.635 outlines the various retirement allowance options available to members. Option 1, often referred to as the “life annuity” or “single life annuity,” provides the highest monthly benefit during the retiree’s lifetime but ceases upon their death, with no further payments to beneficiaries. Other options, such as Option 2 (joint and survivor with full benefit to spouse), Option 3 (joint and survivor with two-thirds benefit to spouse), or Option 4 (certain period certain), involve a reduction in the retiree’s monthly benefit to provide for continued payments to a beneficiary after the retiree’s death. The scenario describes a retiree who selected an option that guarantees payments for a specified period, even if they die before that period concludes. This aligns with the definition of a “period certain” option. The calculation of the benefit under such an option involves actuarial adjustments to the single life annuity amount to account for the probability of payments continuing beyond the retiree’s lifespan. The specific percentage reduction depends on the chosen period certain and the retiree’s age at retirement, as determined by KyPERS actuarial tables and regulations. Therefore, the benefit is calculated based on the retiree’s accrued service and final compensation, adjusted by the actuarial reduction factor for the chosen “period certain” option.

The scenario describes a situation involving a Kentucky public employee’s retirement benefit calculation. The Kentucky Public Employees’ Retirement System (KyPERS) uses a formula that considers the member’s final average salary (FAS) and a service factor. The FAS is typically the average of the highest 36 consecutive months of service. The service factor is a percentage that increases with years of service. For a member with 25 years of service, the service factor is 2.10%. The annual retirement benefit is calculated by multiplying the FAS by the service factor. In this case, the member’s FAS is $60,000. Therefore, the annual retirement benefit is \( \$60,000 \times 2.10\% \). To calculate this, we convert the percentage to a decimal: \( 2.10\% = 0.0210 \). The annual benefit is then \( \$60,000 \times 0.0210 = \$1,260 \). This calculation is fundamental to understanding how KyPERS benefits are determined for members who meet the criteria for retirement. It’s important to note that this calculation represents the annual benefit and would typically be paid out in monthly installments. The specific rules and service factors can vary based on the member’s hire date and the plan provisions in effect at that time, but the general principle of FAS multiplied by a service factor remains consistent for many defined benefit plans.

The scenario describes a situation involving a vested participant in the Kentucky Employees Retirement System (KERS) who has elected a lump-sum distribution of their accumulated contributions and interest. The question hinges on understanding the specific provisions within Kentucky Revised Statutes (KRS) that govern the tax treatment of such distributions for state income tax purposes. Specifically, KRS 18A.230 addresses the taxability of retirement allowances and benefits. For vested members who have accumulated contributions and interest, and who elect a lump-sum distribution upon separation from service, these distributions are generally considered a return of contributions and earnings, not taxable income for Kentucky state income tax purposes at the time of distribution. This is because the contributions were made from post-tax income, and the interest earned on those contributions also represents a return on an after-tax investment. The key distinction is between a distribution of contributions and interest versus a distribution of employer contributions or earnings on employer contributions, which might be taxed differently. In this case, the participant is receiving their own contributions plus the interest earned thereon, which is a return of their own funds.

Kentucky Revised Statute (KRS) 61.559 defines “creditable service” for members of the Kentucky Employees Retirement System (KERS). This statute outlines various types of service that can be counted towards retirement benefits. Specifically, KRS 61.559(1) states that a member shall receive credit for service rendered as a contributing member of the system, or for service rendered as a member of any of the retirement systems administered by the board of trustees of the Teachers’ Retirement System of the State of Kentucky, the County Employees Retirement System, or the County Judges/Executives Retirement System, provided the member pays to the system the member’s contributions for such service, plus interest. Furthermore, KRS 61.559(2) addresses the purchase of prior service. For service rendered prior to July 1, 1973, a member may purchase such service by paying the actuarial cost of the service. For service rendered after July 1, 1973, a member may purchase such service by paying the accumulated contributions for such service plus interest. The scenario presented involves a member of KERS who previously worked for the Commonwealth of Kentucky in a position covered by the Kentucky Public Employees’ Health Insurance Program, but not as a contributing member of a state-administered retirement system. This type of service, where an individual was employed by the state but did not participate in a retirement plan, is generally not considered creditable service unless specifically allowed by statute for purchase. KRS 61.559 does not provide a mechanism for purchasing service rendered in a non-contributing capacity for state employment that was not part of a state-administered retirement system. Therefore, this service would not be creditable for KERS purposes. The correct answer reflects this limitation.

The Kentucky Public Pension Oversight Board, established under KRS 61.645, is responsible for the oversight of public retirement systems in Kentucky, including the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). Its mandate includes reviewing actuarial valuations, investment performance, and proposed changes to retirement plans. The board’s role is to ensure the fiscal integrity and sound management of these systems for the benefit of current and future retirees. KRS 61.645(2) specifically outlines the composition and duties of the board, emphasizing its advisory and oversight functions. The board’s actions are crucial in safeguarding the financial health of Kentucky’s public pension obligations, which are a significant component of the state’s fiscal landscape. The board does not administer the day-to-day operations of the individual retirement systems; that function is handled by the respective boards of trustees for each system, such as the Teachers’ Retirement System of Kentucky (TRS) or the Kentucky Retirement Systems (KRS) itself. Therefore, the primary responsibility for the strategic direction and solvency of these systems lies with the Public Pension Oversight Board in its oversight capacity.

The Kentucky Public Employees’ Health Insurance (KPEHI) program, administered by the Commonwealth of Kentucky’s Department for Employee Insurance, offers various health benefit plans to eligible public employees and retirees. When a participating employee separates from service, their eligibility for KPEHI benefits continues under specific conditions. Generally, an employee who retires from a participating employer and meets the eligibility criteria for retirement benefits under a Kentucky-codified retirement system, such as the Kentucky Employees Retirement System (KERS), Teachers’ Retirement System of Kentucky (TRSK), or County Employees Retirement System (CERS), remains eligible for KPEHI coverage. This eligibility is typically contingent upon the employee not being eligible for Medicare at the time of retirement and electing to receive a retirement annuity. The plan documents and administrative rules of KPEHI, often referencing KRS Chapter 18A, detail the precise requirements for continued coverage post-separation, including any waiting periods or enrollment windows. The concept of “bridge coverage” or continued participation is a key feature designed to ensure a seamless transition for retirees into Medicare or other coverage options. Therefore, an employee retiring from the Commonwealth of Kentucky who is not yet eligible for Medicare and is receiving a retirement annuity from a state-recognized system is generally eligible to continue their KPEHI coverage.

The scenario involves a vested member of the Kentucky Employees Retirement System (KERS) who has accumulated service credit and is considering their options upon leaving service. The core concept being tested is the treatment of accumulated service credit for members who separate from service before reaching full retirement age. Under Kentucky Revised Statutes (KRS) Chapter 61, particularly KRS 61.559, a member who has vested in the system but has not reached the age requirement for unreduced retirement benefits may elect to receive a deferred retirement allowance. This allowance is calculated based on the member’s service credit and final compensation at the time of separation, with the benefit commencing at the earliest age the member could have retired had they remained in service. The member retains their accrued service credit, and the benefit is actuarially reduced if taken before the normal retirement age. Importantly, the member is not entitled to a refund of their contributions if they elect to receive a deferred retirement allowance, as this would terminate their membership and forfeit all service credit. Therefore, the most accurate description of the member’s situation is that they retain their vested service credit and will receive a deferred retirement allowance, which will be calculated and paid commencing at their earliest eligibility date for retirement.

The Kentucky Public Employees’ Retirement System (KYPERS) offers various retirement plans, including the County Employees Retirement System (CERS) and the State Employees Retirement System (SERS). The calculation of a member’s retirement annuity typically involves a final average salary (FAS) and a service credit multiplier. For a member who participated in the County Employees Retirement System (CERS) and has 25 years of service, and whose final average salary over the highest consecutive 36 months of earnings is $72,000, the calculation of the monthly annuity is as follows: The CERS multiplier for a member with 25 years of service is 2.25%. The annual annuity is calculated by multiplying the FAS by the service credit and the multiplier. Annual Annuity = FAS * (Years of Service / 100) * Multiplier. However, the question asks for the monthly annuity. The monthly annuity is calculated as: Monthly Annuity = (FAS * Years of Service * Multiplier) / 12. Using the provided figures: FAS = $72,000 Years of Service = 25 Multiplier = 2.25% or 0.0225 Annual Annuity = $72,000 * 25 * 0.0225 = $40,500 Monthly Annuity = $40,500 / 12 = $3,375 This calculation reflects the standard methodology for determining a defined benefit pension annuity in Kentucky’s CERS program, emphasizing the interplay between the member’s earnings history and their tenure with the system. The final average salary is a critical component, representing the average of the highest consecutive months of earnings, typically 36 months. The service credit, measured in years, directly influences the total benefit accrued. The multiplier, specific to the retirement system and the member’s service class, determines the percentage of the final average salary that is earned for each year of service. Understanding these components is essential for members to estimate their future retirement income and for administrators to accurately calculate pension obligations under Kentucky law.

The Kentucky Public Employees’ Deferred Compensation Authority (KPEDCA) administers deferred compensation plans for eligible public employees in Kentucky. These plans are designed to supplement retirement income and are governed by specific state statutes and federal regulations, primarily Internal Revenue Code Section 457. A key aspect of these plans is the treatment of rollovers and distributions. When a participant separates from service, they have several options for their account balance. One option is to leave the funds in the plan, another is to take a distribution, and a third is to roll over the funds into another eligible retirement plan, such as a qualified 401(k) plan, a 403(b) plan, or an Individual Retirement Account (IRA). For rollovers to be considered “eligible,” the distribution must meet specific criteria outlined in both federal and state law. Specifically, for a direct rollover to an IRA or another qualified plan, the trustee or administrator of the receiving plan must accept the funds. Indirect rollovers, where the participant receives the funds directly, are subject to mandatory withholding taxes if not subsequently deposited into an eligible plan within the statutory timeframe, typically 60 days. The KPEDCA, as the administrator, has established procedures to facilitate these rollovers and ensure compliance with all applicable laws, including the timely and accurate processing of distribution requests and rollovers. The authority’s role is to provide participants with clear information about their options and the tax implications of each choice. The question probes the understanding of the specific legal framework governing KPEDCA plan distributions and rollovers within Kentucky. The correct answer reflects the statutory authority and administrative responsibility of KPEDCA in managing these transactions, ensuring that rollovers are permissible and processed according to federal and state guidelines.

The Kentucky Public Pension Oversight Board, established under KRS 6.750, plays a crucial role in monitoring and advising on the state’s public retirement systems, including the Kentucky Employees Retirement System (KERS). The board’s responsibilities include reviewing the actuarial soundness of these systems, analyzing investment performance, and making recommendations to the General Assembly and the Governor. KRS 6.755 outlines the composition of the board, which includes legislative members, the Secretary of the Finance and Administration Cabinet, and other appointed members with relevant expertise. The board’s oversight is critical for ensuring the long-term solvency and fairness of Kentucky’s pension obligations, impacting the financial well-being of state employees and the fiscal health of the Commonwealth. Its mandate is to provide an independent assessment of the pension systems’ financial status and operational efficiency, thereby informing policy decisions and safeguarding public funds.

The scenario involves a Kentucky public employee participating in the Kentucky Employees Retirement System (KERS). The employee has elected to purchase service credit for a period of non-contributing service. This purchase is typically made through a lump-sum payment or installment payments, as permitted by KRS 61.552. The critical aspect here is the calculation of the member’s future retirement benefit. Under KERS, the service credit purchased under KRS 61.552 is treated as contributing service for benefit calculation purposes. The benefit is calculated using a formula that multiplies the member’s final average salary by a service factor, and then by a percentage based on the type of service credit. For purchased service credit, the cost is actuarially determined to represent the present value of the future benefit attributable to that service. The employee’s retirement annuity will be based on the total credited service, including the purchased service, and their final average salary. The explanation does not involve a direct calculation of a monetary amount, but rather the conceptual framework of how purchased service impacts the retirement benefit calculation under Kentucky law. The key principle is that purchased service, once paid for, becomes creditable service and is integrated into the standard benefit formula. The cost of this service is determined by actuarial assumptions, but the benefit itself is calculated based on the service years and salary, not directly on the purchase price. The explanation focuses on the statutory basis and the nature of service credit in Kentucky’s public pension system.

The Kentucky Public Pension Oversight Board, established under KRS 6.770, is tasked with reviewing and analyzing the financial condition and management of Kentucky’s public retirement systems. Its responsibilities include monitoring investment performance, actuarial valuations, and the overall fiscal health of these systems. The board plays a crucial advisory role to the General Assembly and the Governor, providing recommendations on pension policy and funding strategies. KRS 6.771 outlines the composition of the board, which includes members of the General Assembly, the Secretary of the Finance and Administration Cabinet, and other appointed individuals with expertise in finance, actuarial science, or public administration. The board’s oversight extends to all state-administered retirement plans, including the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). Its findings and recommendations are vital for ensuring the long-term solvency and fairness of these public benefit programs for Kentucky’s public servants. The board’s mandate is to provide an independent and expert assessment of these systems, informing legislative decisions and public discourse on pension matters.

The Kentucky Public Pension Oversight Board, established under KRS 61.685, is tasked with overseeing the state’s retirement systems, including the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). This board is responsible for reviewing the actuarial soundness of these systems, monitoring their investment performance, and making recommendations to the General Assembly regarding pension policy. KRS 61.685(2) explicitly grants the board the authority to review and approve proposed changes to the retirement plans administered by the state. This includes examining proposed amendments to benefit formulas, contribution rates, and eligibility requirements to ensure they align with actuarial projections and the long-term financial health of the systems. Therefore, any proposed modification to the retirement benefits or contribution structures for members of KERS, CERS, or SPRS would necessitate review and approval by this board. The board’s mandate is to provide a layer of oversight to safeguard the fiscal integrity of Kentucky’s public pension obligations, ensuring that changes are made in a responsible and sustainable manner.

The Kentucky Public Employees’ Retirement System (KyPERS) provides retirement, disability, and death benefits to eligible public employees in Kentucky. Understanding the nuances of benefit calculations, particularly concerning service credit and final compensation, is crucial for members. For a member retiring under KyPERS, the calculation of the retirement annuity typically involves a formula that multiplies a service factor by the member’s final average salary. The service factor is derived from the member’s accumulated creditable service, expressed as a percentage based on the member’s hire date and retirement plan. The final average salary is generally calculated as the average of the member’s highest-paid consecutive months of service, as defined by KyPERS statutes and administrative regulations. For instance, if a member has 25 years of creditable service and a final average salary of \$60,000, and their applicable service factor is 2.0% per year, the annual retirement annuity would be calculated as \(25 \text{ years} \times 2.0\%/\text{year} \times \$60,000 = \$30,000\). This question probes the understanding of how different types of service, such as reciprocal service from another Kentucky retirement system, are integrated into the KyPERS benefit calculation, specifically addressing whether such service is always considered “creditable service” for the purpose of determining the benefit amount and the conditions under which it might be. KyPERS operates under KRS Chapter 61 and associated administrative regulations, which govern the treatment of service credit. The integration of reciprocal service is governed by specific provisions that outline the requirements for a member to receive credit for service earned in another Kentucky public retirement system, such as the Kentucky Teachers’ Retirement System (KTRS) or the County Employees Retirement System (CERS). This integration is not automatic and requires the member to meet certain criteria, including potentially making a payment to KyPERS to “buy back” that service. Therefore, not all service from another Kentucky retirement system automatically becomes creditable service without meeting these specific statutory and regulatory conditions. The correct option reflects this requirement for specific action or qualification for reciprocal service to be counted.

The Kentucky Public Employees’ Retirement System (KyPERS) offers various retirement plans. For members who entered service on or after January 1, 2014, the system generally operates under a defined contribution plan structure, often referred to as a hybrid plan, which includes a defined benefit component and a defined contribution component. However, specific rules govern the calculation of retirement benefits, particularly regarding the impact of service purchases. When a KyPERS member purchases creditable service, this purchase typically affects the defined benefit portion of their retirement calculation. The cost of purchasing service is determined by actuarial factors and the member’s age and salary at the time of purchase, as stipulated by KRS 61.552. This purchase increases the member’s creditable service period, which is a key factor in the defined benefit formula. The defined benefit formula in Kentucky generally uses a multiplier applied to the member’s average final compensation over a specified period of service. For members in the hybrid plan, this formula is applied to the defined benefit portion, and the defined contribution account grows based on contributions and investment performance. The question probes the mechanism by which purchasing service impacts the overall retirement benefit, emphasizing the defined benefit aspect. The correct answer reflects the direct influence of increased creditable service on the calculated pension amount, as per the statutory framework governing KyPERS. The cost of the service purchase is a factor in acquiring the benefit, but the benefit itself is directly tied to the increased service years used in the pension calculation.

The Kentucky Public Pension Oversight Board, established under KRS 6.787, is tasked with overseeing the state’s public retirement systems, including the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). This board is responsible for reviewing the actuarial soundness of these systems, monitoring investment performance, and making recommendations to the General Assembly regarding pension policy. KRS 6.787(2) specifically grants the board the authority to review and approve or disapprove proposed changes to the retirement systems’ benefit structures or funding methods. The board’s role is to ensure the long-term financial health and stability of Kentucky’s public pension obligations, acting as a critical oversight body for legislative and administrative actions affecting these significant public trust funds. Its mandate extends to analyzing the impact of proposed legislation on the actuarial integrity and fiscal sustainability of the pension plans.

The scenario involves a former Kentucky county employee who separated from service before becoming vested in the County Employees Retirement System (CERS). Upon separation, the employee elected to withdraw their accumulated contributions, which is a common option for non-vested members. Kentucky Revised Statute (KRS) Chapter 61.635 outlines the procedures and consequences of withdrawing contributions. Specifically, KRS 61.635(1) states that a member who ceases to be an employee of a participating state or county agency may withdraw their accumulated contributions. Upon withdrawal, the member forfeits all rights and benefits to any pension or retirement allowance from the system. The statute also addresses the treatment of interest on withdrawn contributions. For members who withdraw contributions and later seek to re-enter service with a participating agency, KRS 61.635(2) provides a mechanism for re-establishing service credit by repaying the withdrawn contributions with interest, typically at a rate specified by the retirement board. However, the question focuses on the immediate consequence of the withdrawal itself. The withdrawal of contributions by a non-vested member in Kentucky’s public retirement systems, including CERS, results in the forfeiture of all accrued service credit and any future entitlement to retirement benefits based on that service. This is a critical concept in pension law, emphasizing that benefits are contingent upon meeting vesting requirements and, in this case, not withdrawing accumulated funds. Therefore, the employee’s action of withdrawing their contributions extinguishes their right to a retirement allowance from CERS based on their prior service.

The scenario describes a situation involving a public employee in Kentucky who has accrued service credit in the Kentucky Employees Retirement System (KERS). The employee is considering a refund of their contributions. Under Kentucky Revised Statutes (KRS) Chapter 61, specifically KRS 61.605, a member who leaves service with less than five years of creditable service is generally entitled to a refund of their contributions, plus any accumulated interest. However, if the member has five or more years of creditable service, they are typically entitled to a retirement benefit, and a refund of contributions would result in the forfeiture of that future retirement benefit. The question hinges on the distinction between a refund for vested members and non-vested members. A member with five or more years of service is vested and has earned a right to a future retirement benefit, making a refund a forfeiture of that right. Therefore, the refund of contributions alone does not automatically grant eligibility for a retirement benefit; rather, it signifies the relinquishment of earned retirement rights. The Kentucky Public Pension Oversight Board, established under KRS 7.410, oversees the administration and financial health of the state’s public pension systems, including KERS, and its regulations would align with these statutory provisions regarding refunds and benefit eligibility. The core concept being tested is the forfeiture of vested retirement rights upon electing a refund of contributions, a critical aspect of public pension law in Kentucky.

The scenario presented involves a hypothetical municipal pension fund in Kentucky that is experiencing significant unfunded liabilities. The fund’s actuary has recommended a change in the actuarial cost method to a projected unit credit method from the current entry age normal method. This shift is proposed to potentially improve the fund’s reported funded status in the short term. However, Kentucky Revised Statute \(KRS\) 61.675 governs the funding and administration of local retirement systems. This statute emphasizes actuarial soundness and the importance of consistent actuarial assumptions and methods to ensure long-term solvency. While a change in cost method can impact the timing of contribution requirements and reported liabilities, the ultimate goal under \(KRS\) 61.675 is to meet the pension obligations. A projected unit credit method, by its nature, generally assigns costs more evenly over an employee’s career compared to entry age normal, which often front-loads costs. This can lead to lower normal costs and a higher unfunded liability in early years of employment under entry age normal, but the total cost over a career is intended to be similar if assumptions are consistent. A change to projected unit credit might reveal a larger unfunded liability sooner if the prior method was masking it through different cost allocation. The statute requires that any changes in actuarial methods or assumptions must be justified and must not compromise the long-term actuarial integrity of the plan. The actuary’s report must clearly disclose the impact of such changes. Therefore, while a change in method is permissible, it must be implemented with a clear understanding of its long-term implications and adherence to the statutory mandate of actuarial soundness. The question asks about the primary legal consideration for the fund’s board when evaluating this recommendation. The core legal obligation is to ensure the plan remains actuarially sound and complies with Kentucky statutes. The projected unit credit method itself is a valid actuarial method, but its adoption must be evaluated against the backdrop of \(KRS\) 61.675’s requirements for funding and solvency. The board must ensure the change does not violate the principle of actuarial soundness.

The Kentucky Public Pension Oversight Board, established under KRS 6.785, plays a crucial role in reviewing and analyzing the financial health and management of Kentucky’s retirement systems, including the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). Its mandate includes evaluating actuarial reports, investment performance, and proposed legislative changes impacting these systems. The Board’s findings and recommendations are vital for informing legislative action and ensuring the long-term solvency and fairness of public pensions in Kentucky. Specifically, KRS 6.785(4)(a) grants the Board the authority to review and report on the actuarial soundness of the state-administered retirement systems. This oversight is not merely procedural but involves a deep dive into the assumptions used in actuarial valuations and the adequacy of funding to meet future obligations. The Board’s work is essential for maintaining public trust and fiscal responsibility in the administration of these significant employee benefits.