FRANKFORT, Ky. (KT) - There’s some good news for public employees in Kentucky, who began their jobs on or after Jan. 1, 2014.
These so-called Tier 3 employees (Tier 1 and Tier 2 are those who have been on the job for a longer period of time) have seen their earned interest for their pension plans end up above the guaranteed four percent minimum for the fiscal year that ended June 30.
The Kentucky Retirement Systems, or KRS, announced the earnings for five systems on Tuesday:
-Kentucky Employees Retirement System Nonhazardous, 4.58 percent
-Kentucky Employees Retirement System Hazardous, 5.21 percent
-County Employees Retirement System Nonhazardous, 5.13 percent
-County Employees Retirement System Hazardous, 5.34 percent
-State Police Retirement System, 4.79 percent
The KRS Tier 3 Cash Balance Plan is known as a “hybrid” plan because it has characteristics of both a defined contribution plan and a defined benefit plan, in which members and employers contribute a specified amount into the member’s account.
The account earns a guaranteed four percent at the end of each fiscal year, and if investment returns exceed four percent, the member earns “upside” interest sharing based on the 5-year average geometric investment return. The member’s account is credited with 75 percent of the amount of the returns over 4% on the account balance as of June 30 of the previous year.
As of June 30, 2019, KRS had 75,729 members in the Tier 3 Hybrid Cash Balance Plan. This represents nearly 20 percent of the total KRS membership.