78.635 Employer's annual contribution to system -- Computation -- Limitation
642 words·~3 min read·
/ky/78-635A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
on annual increase of employer contribution rate -- Notification of rate
change.
(a)Except as provided by subsection
(4)of this section, each employer
participating in the County Employees Retirement System as provided for
in KRS 78.510 to 78.852 shall contribute annually to the system an
amount determined by the actuarial valuation completed in accordance
with KRS 78.784 and as specified by this section. Employer contributions
for the system shall be equal to the sum of the "normal cost contribution"
and the "actuarially accrued liability contribution."
(b)For purposes of this section, the normal cost contribution shall be
computed as a percentage of pay and shall be an annual amount that is
sufficient when combined with employee contributions to fund benefits
earned during the year in the system. The amount shall be:
1. Paid as a percentage of creditable compensation reported for each
employee participating in the system and accruing benefits; and
2. The same percentage of pay for all employees who are participating
in the system, except that separate percentage rates shall be
developed in each system for those employers whose employees
are participating in hazardous duty retirement coverage as provided
by KRS 78.5520.
(c)For purposes of this section, the actuarially accrued liability contribution
shall be:
1. Computed by amortizing the total unfunded actuarially accrued
liability of the system over a closed period of thirty
(30)years
beginning with the 2019 actuarial valuation using the level
percentage of payroll amortization method, except that any increase
or decrease in the unfunded actuarially accrued liability occurring
after the completion of the 2019 actuarial valuation shall be
amortized over a closed period of twenty
(20)years beginning with
the actuarial valuation in which the increase or decrease in the
unfunded actuarially accrued liability is recognized. An increase or
decrease in the unfunded actuarially accrued liability may result
from, but not be limited to, legislative changes to benefits, changes
in actuarial methods or assumptions, or actuarial gains or losses;
2. Paid as a percentage of payroll on the creditable compensation
reported for each employee participating in the system and accruing
benefits; and
3. The same percentage of pay for all employees who are participating
in the system, except that separate percentage rates shall be
developed in each system for those employers whose employees
are participating in hazardous duty retirement coverage as provided
by KRS 78.5520.
(d)The employer contributions computed under this section shall be
determined using:
1. The entry age normal cost funding method;
2. An asset smoothing method that smooths investment gains and
losses over a five
(5)year period; and
3. Other funding methods and assumptions established by the board in
accordance with KRS 78.784.
(2)Normal contribution and the actuarially accrued liability contribution rates shall
be determined by the board on the basis of the annual actuarial valuation last
preceding the July 1 of a new fiscal year.
(3)Employer contribution rates as provided by this section shall include an
employer contribution rate to fund pension benefits and an employer
contribution rate to fund retiree health benefits.
(4)The employer contribution rate established by the board for the County
Employees Retirement System that is payable on or after July 1, 2018, and
until June 30, 2028, for the pension and retiree health insurance funds,
including the normal cost contribution and the actuarially accrued liability
contribution for each fund, shall not increase by more than a factor of one and
twelve one hundredths (1.12) over the prior fiscal year's employer contribution
rate as determined by the system's consulting actuary.
(5)The system shall advise each employer prior to the beginning of each fiscal
year of any change in the employer contribution rate. Based on the employer
contribution rate, each employer shall include in the budget sufficient funds to
pay the employer contributions as determined by the board under this section.