KRS § 16.583 Hybrid cash balance plan for members of State Police Retirement System and Kentucky Employees Retirement System in hazardous duty positions -- Member contributions and employer pay credits -- Interest credits -- Termination of employment -- Options upon retirement -- Applicability of statute.

16.583 Hybrid cash balance plan for members of State Police Retirement System and Kentucky Employees Retirement System in hazardous duty positions -- Member contributions and employer pay credits -- Interest credits -- Termination of employment -- Options upon retirement -- Applicability of statute. (1) A member of the State Police Retirement System, a member of the Kentucky Employees Retirement System in a hazardous duty position covered by this section, whose participation begins on or after January 1, 2014, or a member making an election pursuant to KRS 61.5955, shall receive the retirement benefits provided by this section in lieu of the retirement benefits provided under KRS 16.576 and 16.577. The retirement benefit provided by this section shall be known as the hybrid cash balance plan and shall operate as another benefit tier within the State Police Retirement System and the Kentucky Employees Retirement System. (2) The hybrid cash balance plan shall provide a retirement benefit based upon the member's accumulated account balance, which shall include: (a) Contributions made by the member as provided by KRS 16.505 to 16.652 and 61.510 to 61.705, except for employee contributions prescribed by KRS 61.702(3)(b); (b) 1. An employer pay credit of seven and one-half percent (7.5%) of the creditable compensation earned by the employee for each month the employee is contributing to the hybrid cash balance plan provided by this section; and 2. For members of the State Police Retirement System covered by this section, an employer pay credit for the value of accumulated sick leave as determined and limited by KRS 16.584; and (c) Interest credits added annually to the member's accumulated account balance as provided by this section. (3) (a) Member contributions and employer pay credits as provided by subsection (2)(a) and (b)1. of this section shall be credited to the member's account monthly as contributions are reported and posted to the system in accordance with KRS 61.675. (b) Interest credits, as provided by subsection (2)(c) of this section, shall be credited to the member's account annually on June 30 of each fiscal year, as determined by subsection (4) of this section. (c) Employer pay credits for accumulated sick leave shall be credited to the member's account as determined by KRS 16.584. (4) (a) On June 30 of each fiscal year, the system shall determine if the member contributed to the hybrid cash balance plan during the fiscal year. (b) If the member contributed to the hybrid cash balance plan during the fiscal year, the interest credit added to the member's account for that fiscal year shall be determined by multiplying the member's accumulated account balance on June 30 of the preceding fiscal year by a percentage increase equal to: 1. Four percent (4%); plus 2. Seventy-five percent (75%) of the system's geometric average net investment return in excess of a four percent (4%) rate of return. (c) If the member did not contribute to the hybrid cash balance plan during the fiscal year, the interest credit added to the member's account for that fiscal year shall be determined by multiplying the member's accumulated account balance on June 30 of the preceding fiscal year by four percent (4%). (d) For purposes of this subsection, "system's geometric average net investment return": 1. Means the annual average geometric investment return, net of administrative and investment fees and expenses, over the last five (5) fiscal years as of the date the interest is credited to the member's account; and 2. Shall be expressed as a percentage and based upon the system in which the member has an account. (e) No employer pay credits or interest credits shall be provided to a member who has taken a refund of contributions as provided by KRS 61.625 or who has retired and annuitized his or her accumulated account balance as prescribed by this section. (5) (a) Upon termination of employment, a member who has less than five (5) years of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who elects to take a refund of his or her accumulated account balance as provided by KRS 61.625, shall forfeit the accumulated employer credit, and shall only receive a refund of his or her accumulated contributions. (b) Upon termination of employment, a member who has five (5) or more years of service credited under KRS 16.543(1), 61.543(1), and 78.615(1), who elects to take a refund of his or her accumulated account balance as provided by KRS 61.625, shall receive a full refund of his or her accumulated account balance. (6) A member participating in the hybrid cash balance plan provided by this section may retire: (a) At his or her normal retirement date, provided he or she has earned five (5) or more years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another state-administered retirement system; or (b) At any age, provided he or she has earned twenty-five (25) or more years of service credited under KRS 16.543(1), 61.543(1), or 78.615(1), or another state-administered retirement system. (7) A member eligible to retire under subsection (6) of this section may elect to: (a) Receive a monthly retirement allowance payable for life by having his or her accumulated account balance annuitized by the retirement systems in accordance with the actuarial assumptions and actuarial methods adopted by the board and in effect on the member's retirement date; (b) Receive the actuarial equivalent of his or her retirement allowance calculated under paragraph (a) of this subsection payable under one (1) of the options set forth in KRS 61.635, except for the option provided by KRS 61.635(11); or (c) Take a refund of his or her account balance as provided by KRS 61.625. (8) The provisions of this section shall not apply to members who began participating in the Kentucky Employees Retirement System, the County Employees Retirement System, or the State Police Retirement System prior to January 1, 2014, except for those members who make an election pursuant to KRS 61.5955. Effective: April 1, 2023 History: Amended 2022 Ky. Acts ch. 181, sec. 2, effective April 1, 2023. -- Repealed, reenacted, and amended 2021 Ky. Acts ch. 102, sec. 38, effective April 1, 2021. -- Amended 2018 Ky. Acts ch. 107, sec. 40, effective July 14, 2018. -- Amended 2017 Ky. Acts ch. 125, sec. 8, effective March 27, 2017. -- Created 2013 Ky. Acts ch. 120, sec. 8, effective July 1, 2013. Legislative Research Commission Note (4/1/2023). 2022 Ky. Acts ch. 181, sec. 10, reads as follows: "In the event that budgeted funds in fiscal year 2023-2024 of the executive branch budget are insufficient to fund the program established by subsection (2)(b)2. of Section 2 of this Act [this statute] and Section 3 of this Act for that fiscal year, the program shall, notwithstanding any provision of Section 3 to the contrary, still be provided in fiscal year 2023-2024 and any additional funding needed for the benefits provided in fiscal year 2023-2024 shall be included in the employer contribution rates payable for fiscal years occurring on or after July 1, 2024." Legislative Research Commission Note (12/13/2018). On December 13, 2018, the Kentucky Supreme Court ruled that the passage of 2018 SB 151 (2018 Ky. Acts ch. 107), did not comply with the three-readings rule of Kentucky Constitution Section 46 and that the legislation is, therefore, constitutionally invalid and declared void. That ruling applies to changes made to this statute in that Act.