Employers contribute a percentage of gross payroll recommended by the actuarial valuation. Kentucky Employees Retirement System non-hazardous employers contribute normal cost plus an additional flat amount based on their assigned percentage of the total unfunded liability calculated within the annual valuation. Pursuant to KRS 61.565 the General Assembly shall pay the full actuarially required contribution rate. Employees contribute at a fixed rate set in the statutes. The assets of the system are considered trust funds. All expenses are paid from the trust.

Restricted Funds providing for the operations of the Kentucky Public Pensions Authority are transferred from trust funds held by the System for the benefit of members and beneficiaries. The trust funds include investment earnings, employee contributions, and employer contributions from agencies supported by the General Fund, the Road Fund, Federal Funds, and Restricted Funds.

The Governor's budget includes additional funding in the amount of $644,900 in fiscal year 2027 and $1,320,700 in fiscal year 2028 to fund a 2% salary increment in fiscal year 2027 and an additional 2% in fiscal year 2028.

The Governor's budget includes additional Restricted Funds in the amount of $750,000 in fiscal year 2027 and $1,500,000 in fiscal year 2028 to fund ancillary costs associated with the planned modernization of the Kentucky Public Pension Authority's Pension Administration System.

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