|
Pension and insurance funds for state and local government employees and the State Police collectively earned an investment return of 25% net of fees for the fiscal year ended June 30, 2021. The strong performance pushed total Kentucky Public Pensions Authority (KPPA) assets to $22.7 billion. Last year’s performance also marks the highest single-year investment return in the history of the organization, surpassing the 24% return recorded in 1997. The pension and insurance fund returns also beat their respective Investment Policy Statement Benchmarks by 68 (0.68%) basis points and 24 (0.24%) basis points for the fiscal year.
Also last year, KPPA received a refund of $18.3 million from Humana, the Authority’s Medicare Plan administrator, in recognition of lower-than-expected healthcare costs incurred during 2020. With the most recent refund, KPPA has received more than $68 million in refunds since 2017.
Learn More.
Actuarial Valuation Results
Actuarial valuations conducted by KPPA’s actuary, GRS, show that the funded status of each of the 10 pension and insurance funds operated by KPPA improved in Fiscal Year (FY) 2021. Record investment returns well in excess of long-term expected rates of return across all funds helped drive asset growth. As a result, the recommended actuarially determined employer contribution rates for Fiscal Years 2023 and 2024 will be lower than the prior year for all systems except CERS Hazardous.
Learn More.
Annual Reports Now Available
KPPA has released its Annual Comprehensive Financial Report (ACFR) and Summary Annual Financial Report (SAFR) for FY 2021.
The ACFR is a detailed resource for understanding the structure, financial status, investments, and governance of the funds operated by KPPA. The SAFR emphasizes key points from the ACFR in an engaging, readable format. Other highlights not mentioned above include:
- KPPA paid a total of $2.3 billion in monthly pension payments in FY 2021, 93% of which went to Kentucky residents. These payments represent a consistent revenue stream for local economies across the Commonwealth.
- Continued declining employment compared to the prior year:
-KERS Hazardous fell 7.4% (the largest decline)
-KERS Nonhazardous workforce shrunk by 4.7%
-CERS Nonhazardous employment was down 3.7%
-SPRS employment fell 2.9%
-CERS Hazardous employment was down 2.3%.
Employer Contribution Rates
Employer contribution rates are recommended to the boards of trustees by KPPA’s actuary, GRS, based on data in the annual actuarial valuation. The CERS and KRS Boards of Trustees adopted the actuary's recommended rates at their respective December 2021 meetings. The KERS and SPRS employer rates are subject to approval by the General Assembly through the adoption of the biennial Executive Branch Budget. The CERS Board sets CERS contribution rates, unless altered by legislation enacted by the General Assembly. Learn More
The FY 2023 rates established during the 2022 Regular Session will be effective July 1, 2022. KPPA will notify participating employers when rates are set.
House Bill 8 Implementation
Contribution Rates: House Bill 8 (2021 Regular Session) changed the calculation method for KERS Nonhazardous employer contributions from a percent of payroll to normal cost plus a dollar amount. The dollar amount represents each employer's assigned percentage of the unfunded liability for the KERS Nonhazardous fund over a closed period. The assigned percentage is based on the liability attributable to each employer’s current and former employees as of June 30, 2019.
This legislation established a window for employers to submit an appeal for three specific scenarios based on the members associated with their assigned liability percentage. The appeals window closed July 1, 2021. Of the 178 employers eligible to appeal, 47 submitted appeals to KPPA.
 An overview of the appeals process was presented to the KRS Board of Trustees at its December 2021 meeting. Following the meeting, KPPA notified employers regarding the status of their appeal.
General Assembly Subsidies: House Bill 8 also provides that for Fiscal Year 2023 and after, the General Assembly intends to provide subsidies to KERS Nonhazardous employers who meet the required ratio of employees to contract non-participating employees. These employers are required to report non-participating contracted employees to KPPA on a form along with any additional documentation that may be required. KPPA compiles this information for the consideration of the General Assembly and the State Budget Director, but is not involved in determining the allocation of any subsidies.
Vote Now in the KERS Election
Voting is under way in the election to fill two vacancies on the KERS Board due to the term ending. The 9-member KRS board is composed of six trustees appointed by the governor, two elected by KERS members, and one elected by SPRS members. The election under way now is to fill the two KERS spots.
Through KPPA’s partnership with YesElections, KERS members with a valid email address on file with KPPA received an email from YesElections with instructions on how to cast their vote. Members who requested to vote by mail, or who do not have a valid email address on file with KPPA received their ballot in the mail. Voting closes at 11:59 p.m. ET on March 1, 2022. Learn more.
1099-R Tax Forms
KPPA issued 148,014 1099Rs in January representing $2.3 billion in total payments during the 2021 Tax Year. Members can access their 1099R as soon as it is available using our Self Service website.
Open Enrollment Recap
During the 2021 Open Enrollment period, KPPA processed 11,398 enrollments, while taking 14,942 phone calls. This was not a mandatory Open Enrollment for our retirees, meaning the retiree did not have to submit a form unless they were making a change for the 2022 Plan Year. In addition to supporting our retired population as they made important decisions regarding their health care options, KPPA staff was proactive in achieving significant print and postage savings for the non-Medicare group, moving to a hybrid online and direct mailing approach to disseminate plan information. This change resulted in a 51% decrease in mailing costs compared to the prior year.
Did You Know?
90% of CERS, KERS, and SPRS retirees receive $40,000 per year or less in pension benefits. Of the $2.3 billion in total pension benefit payments KPPA pays out, 93% – or about $2.1 billion – went to Kentucky residents, meaning most of the pension benefits KPPA pays out each year stay in Kentucky and benefit local economies.
The average age of retired members across hazardous systems (CERS, KERS, and SPRS) is 63.77 years, while the average age of retired nonhazardous members is 70.45 years.
100,231 plan holders and dependents are covered on the insurance plans offered through KPPA. Learn more.
In 2021, KPPA’s Procurement and Office Services Division scanned over 989,000 pages, indexed more than 647,000 documents and handled 77,572 cyber faxes.
|
