Public pensions in Kentucky

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Kentucky information (2020)
Total contributions:
$3,587,734,000
Employee contributions:
$691,229,000
Government contributions:
$2,896,505,000
Total payments:
$4,487,408,000
Total cash and investment holdings:
$34,968,886,000
Number of state and local pension systems:
31
Active membership:
199,963
Inactive membership:
199,581
Key terms
Actuarial value of assets (AVA)
Unfunded actuarial accrued liability (UAAL)
Annual required contribution (ARC)
Discount rate • Funded ratio
Rate of return • Active member
Inactive member • OPEB
Hover over the above
terms for definitions.
Note: This page utilizes information from a variety of sources. The information presented on this page reflects the most recent data available as of March 2022.

Kentucky public pensions are the state mechanism by which state and many local government employees in Kentucky receive retirement benefits.

There were 31 public pension systems in Kentucky as of 2020. Of these, six were state-level programs. Membership in Kentucky's various pension systems totaled 573,485, as of fiscal year 2020. Of these, 199,963 were active members.[1]

HIGHLIGHTS
  • Total contributions of $3.6 billion were made to Kentucky's state and local pension systems, in fiscal year 2020. Of this amount, $691.2 million came from employees.
  • Kentucky's state and local pension systems made payments totaling $4.5 billion, in fiscal year 2020.
  • Kentucky's state and local pension systems held $35.0 billion in total cash and investment holdings, as of fiscal year 2020.

    • See the sections below for specific information on pension systems in Kentucky:

    1. General information: This section outlines the different types of pensions systems available in the state, as well as membership information.
    2. Contributions: This section details the contributions made to state-level pension systems, and the source of the contributions.
    3. Payments: This section details the payments made by the pensions systems, and details what kinds of payments were made.
    4. Cash and investment holdings: This section provides information about the total amount of cash and investments the state's pension systems have, and what kinds of investments they have made.
    5. Pension health: This section outlines the findings of two reports regarding pension health, including how many liabilities the state pension systems have and how funded they are.

    General information

    See also: Pension data, U.S. Census

    Kentucky had six state pension plans listed as of 2020, according to different State webpages:

    1. Kentucky County Employees Retirement System (CERS)
    2. Kentucky Employees Retirement System (KERS)
    3. Kentucky State Police Retirement System (SPRS)
    4. Kentucky Judicial Retirement Plan
    5. Kentucky Legislators Retirement Plan
    6. Teachers' Retirement System Kentucky

    In addition to the aforementioned state-level pension systems, there were 25 locally administered pension systems in Kentucky.[2][3][4]

    The table below provides general pension system information for Kentucky.

    General pension system information in Kentucky
    Year Systems Total members* Active members Inactive members
    State Local Members Percent of total Members Percent of total
    2020[1] 6 25 573,485 199,963 34.87% 199,581 34.80%
    2016[5] 6 26 391,735 209,401 53.45% 182,334 46.55%
    *This total also includes beneficiaries receiving periodic benefit payments who are not considered ‘active’ or ‘inactive.’

    Source: United States Census Bureau

    Contributions

    See also: Pension contribution and payment data, U.S. Census

    Pension contributions are the funds paid into pension systems. These contributions come from the employer (in the case of public pensions, the government) and employees. Investment earnings are the main source of increases in the fund and are listed separately in the rightmost column in the below table.

    In the fiscal year 2020, total contributions of $3.6 billion were made to Kentucky's state and local pension systems. Of this amount, $691.2 million came from employees. The remainder came from state and local governments. The table below provides information about pension contributions in Kentucky and surrounding states in the fiscal year 2020. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).[1]

    Pension contributions in Kentucky (dollars in thousands)
    Year Total contributions from employees and employers Employee contributions Government contributions Earnings on investments
    Contributions Percentage of total Contributions Percentage of total
    2020[1] $3,587,734 $691,229 19.27% $2,896,505 80.73% $764,440
    2016[5] $2,209,661 $632,865 28.64% $1,576,796 71.36% -$167,010
    Source: United States Census Bureau

    Payments

    See also: Pension contribution and payment data, U.S. Census

    Payments are the amounts paid to pension recipients by their pension plans. Pension payments include benefits and withdrawals. Benefits are the regular payments made by a pension plan to the plan's recipients. Pension beneficiaries may also withdraw funds if they leave the system before they receive regular benefits.

    In the fiscal year 2020, Kentucky's state and local pension systems made payments totaling $4.5 billion. The table below provides pension payment information for Kentucky and surrounding states in the fiscal year 2020. The columns labeled "Benefits," and "Withdrawals," are subsets of total payments. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).[1]

    Pension payments in Kentucky (dollars in thousands)
    Year Total payments Benefits Withdrawals Administrative costs
    2020[1] $4,487,408 $4,487,408 $62,549 $170,924
    2016[5] $4,077,013 $3,833,078 $61,872 $182,067
    Source: United States Census Bureau

    Unfunded liabilities

    See also: Other post-employment benefits, data

    In addition to standard pension payments, some plans may offer pensioners additional benefits. These benefits, sometimes referred to as other post-employment benefits, or OPEBs, consist of health insurance, life insurance, or other benefits that the pensioner may have received while employed. The cost of these benefits can prove complicated for actuaries to calculate because of the changes in fields like medicine, which can result in large changes in spending year to year. This, coupled with the normal challenges in calculating and meeting pension requirements, can result in funding shortages—or unfunded liabilities—for pension plans.

    According to Pew Charitable Trust, unfunded liabilities totaled nearly $1.3 trillion throughout the country in 2019. Kentucky was reported to have about $29.7 billion in unfunded liabilities. Kentucky's funding ratio (total liabilities: total assets) was 44.60%.[6]

    The chart below displays the unfunded liabilities for Kentucky. All dollar amounts displayed should be multiplied by 1,000. For instance, $300 translates to $300,000.

    Unfunded liabilities in Kentucky (dollars in thousands)
    Year Unfunded liabilities Funding ratio
    2019[6] $29,742,516 44.60%
    2016[7] $43,418,000 31.00%
    Source: The Pew Charitable Trusts

    Cash and investment holdings

    See also: Pension data, U.S. Census

    Investments are a crucial part of the pension process. The goal is that, by investing pension contributions, the pensioner will receive more money when he or she retires than he or she and the employer were able to contribute. These investments are made in cash, short-term investments, securities like equities and bonds, or other assets. Cash investments are usually low-risk, short-term investments that have a lower rate of return than other types of investments. Other short-term investments are riskier than cash investments, but have the potential for greater returns. Securities can refer to stocks, bonds, or other types of financial certificates that hold some sort of financial value. As the values of these securities change, they can be traded to make a profit. While there are other applications of securities investments, this represents one of the most common practices.[8][9][10]

    As of the fiscal year 2020, Kentucky's state and local pension systems held $35.0 billion in total cash and investment holdings. The table below summarizes pension system cash and investment holdings for Kentucky and surrounding states. The columns labeled "Total cash and short-term investments" and "Total other investments" are subsets of the grand total. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).[1]

    Total cash and investment holdings in Kentucky (dollars in thousands)
    Year Grand total Total cash and short-term investments Total other investments
    2020[1] $34,968,886 $1,699,925 $33,268,961
    2016[5] $28,514,597 $755,688 $27,758,909
    Source: United States Census Bureau

    Pension health

    See also: Pension health in Kentucky and Public pension health by state

    Pension health is a term used to describe the fiscal condition of a pension system. It can be difficult to gauge pension health in each state; studies use a variety of calculations to determine a pension system's average liabilities, unfunded liabilities, funded ratio, and other metrics. To learn more about pension health in Kentucky, click here.

    Recent legislation

    The following is a list of recent pension policy bills that have been introduced in or passed by the Kentucky state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

    'Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, then no legislation pertaining to this topic has been introduced in the legislature recently.

    Recent news

    This section links to a Google news search for the term "Kentucky + public + pensions"

    Kentucky public pensions news feed

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 United States Census Bureau, 2020 Annual Survey of Public Pensions: State & Local Tables accessed February 23, 2022
    2. ↑ Kentucky Public Pensions Authority, "About KPPA" accessed March 25, 2022
    3. ↑ Commonwealth of Kentucky, "Judicial Form Retirement System" accessed March 25, 2022
    4. ↑ Teacher's Retirement System Kentucky, "Home" accessed March 25, 2022
    5. ↑ 5.0 5.1 5.2 5.3 United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2016," accessed August 20, 2017
    6. ↑ 6.0 6.1 The Pew Charitable Trusts, "The State Pension Funding Gap: Plans Have Stabilized in Wake of Pandemic" accessed February 23, 2022
    7. ↑ The Pew Charitable Trusts, "The State Pension Funding Gap: 2016," accessed April 12, 2018
    8. ↑ Investopedia, "Cash investment definition," accessed February 23, 2022
    9. ↑ Investopedia, "Short-term investments definition," accessed February 23, 2022
    10. ↑ Investopedia, "Securities," accessed February 23, 2022
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