KENTUCKY STATE UNIVERSITY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 2021
| Note 9 – DEFINED BENEFIT PENSION PLANS (CONTINUED) | |||
| Reduced Retirement Benefit | Any age with 25 years of service. Age 55 with 5 years of service. | Age 60 with 10 years of service. Excludes purchased service (exception: refunds, omitted, free military). | No reduced retirement benefit. |
|---|---|---|---|
| Hazardous | |||
| Benefit Formula | Final Compensation × Benefit Factor × Years of Service | Cash Balance Plan | |
| Final Compensation | Highest 3 fiscal years (must contain at least 24 months). Includes lumpsum compensation payments (before and at retirement). | 3 highest salaries; each year must contain 12 months. Lumpsum compensation payments (before and at retirement) are not to be included in creditable compensation. | No Final Compensation |
| Benefit Factor | 2.49% | 10 years or less = 1.30% Greater than 10 years, but no more than 20 years =1.50%. Greater than 20 years, but no more than 26 years = 2.25%. Greater than 25 years = 2.50% | No benefit factor. A life annuity can be calculated in accordance with actuarial assumptions and methods adopted by the board based on member's accumulated account balance. |
| Cost of Living Adjustment (COLA) | No COLA unless authorized by the Legislature. If authorized, the COLA is limited to 1.5%. This impacts all retirees regardless of Tier. | ||
| Unreduced Retirement Benefit | Any age with 20 years of service. Age 55 with 60 months of service. | Any age with 25 years of service. Age 60 with 60 months of service. | Any age with 25 years of service. Age 60 with 60 months of service. |
| Reduced Retirement Benefit | Age 50 with 15 years of service. | Age 50 with 15 years of service. | No reduced retirement benefit. |
Contributions - Benefit and contribution rates are established by state statute. Per Kentucky Revised Statute 61.565(3) contribution requirements of the active employees and the participating organizations are established and may be amended by the Kentucky Retirement System (KRS) Board. For the fiscal year ended June 30, 2021, University non-hazardous and hazardous employees were required to contribute 5 percent of their annual covered salary for retirement benefits for the year ended June 30, 2021. Non-hazardous and hazardous employees with a participation date after September 1, 2008 were required to contribute an additional 1 percent of their covered salary for retiree healthcare benefits.
35.