The Kentucky School Board Association has released a summary document outlining the significant changes to state retirements and pensions.
KASA SUMMARY OF KEY PROVISIONS OF SB 1 - PENSION BILL
Section 43 – Establishes “hybrid cash retirement plan” for those who become a member of TRS on or after January 1, 2019. This plan is a combination of a defined benefit plan and a defined contribution plan. It guarantees a minimum retirement benefit, but at lower levels than a true DB plan. The retirement benefit can fluctuate like a DC plan, above the minimum level. Plan will be managed by TRS. Retirement eligibility will be based on “Rule of 87” – age plus years of service must equal at least 87, with minimum retirement age of 57; or, age 65 with at least 5 years of service. Retirees may elect a monthly annuity or lump sum distribution.
Section 44 – TRS members will retain accumulated sick leave and will continue to accumulate sick leave. Only the amount of sick leave accumulated prior to July 1, 2018 will be calculated into retirement benefit.
Section 45 – TRS members retiring after January 1, 2019 may return to employment as a retiree but will not initiate a second retirement account. High three years of compensation may continue to be used for retirement calculation for TRS members who have 20 or more years of service as of July 31, 2018. Those with less than 20 years of service may qualify for high-three calculation if they retire after age 60 with at least 35 years of service (currently applies after age 55 with 27 years of service).
Section 57 – TRS members will have their contribution for retiree health insurance (currently 3.75% of salary) increased by up to 1% in any year in which the actuarial valuation of the retiree health fund falls below 25%, or declines for 3 consecutive valuation cycles, or declines by more than 10% in two cycles.
Section 73 – The 3% factor for service credit for years of service beyond 30 will apply to current TRS members who have at least 20 years of service by July 31, 2018. Those with less than 20 years of service may receive the 3% factor if they retire after age 60 with more than 35 years of service. Cuts cost of living adjustments (COLA’s) for current retirees and active members from 1.5% to .75% annually so long as TRS remains under 90% funded. New hires after January 1, 2019 are not eligible for COLA’s.
Section 80 – Eliminates the “inviolable contract” after July 1, 2018.