KRS § 161.634 — KY Code / Title XIII / Chapter 161 / Section 161.634
161.634 Foundational component for persons who became university members on or after January 1, 2022 -- Valuation assessment -- Adjustments to maintain funding level and contain costs -- Construction
Status: in_force

161.634 Foundational component for persons who became university members on

or after January 1, 2022 -- Valuation assessment -- Adjustments to maintain

funding level and contain costs -- Construction.

(1) Individuals who become university members of the Teachers' Retirement System on

or after January 1, 2022, shall be provided a foundational plan, which shall be

known as the foundational benefit component, a supplemental benefit component

established by KRS 161.636, and retiree health benefits as provided by KRS

161.675. For purposes of this section, the foundational benefit component includes

all benefits provided by KRS 161.220 to 161.716 for individuals who become

university members of the Teachers' Retirement System on or after January 1, 2022,

with the exception of the supplemental benefit component established by KRS

161.636 and retiree health benefits established by KRS 161.675.

(2) Notwithstanding KRS 161.220 to 161.716, the actuary designated by the board of

trustees under KRS 161.400 shall, as part of the annual valuation of the pension

fund, assess the funding levels, unfunded liabilities, and the actuarially required

employer contribution rates payable solely on behalf of individuals who first

become university members on or after January 1, 2022. Computation of the

employer contribution rate payable shall be based upon amortizing unfunded

liabilities using the level-dollar amortization method.

(3) If, on the basis of the valuation assessment required under subsection (2) of this

section, the funding level for the foundational benefit component payable on behalf

of individuals who first become university members on or after January 1, 2022,

falls below ninety percent (90%), the board shall, notwithstanding any other

provision of KRS 161.220 to 161.716 to the contrary, make one (1) or more of the

following changes to maintain the funding level and to contain pension and life

insurance benefit costs within the maximum statutory employer contribution rate for

the foundational benefit component of five and seven hundred seventy-five

thousandths percent (5.775%) of annual compensation as provided by KRS

161.550(1)(e)1.:

(a) Utilize moneys from the stabilization reserve account for university

membership and employers established by KRS 161.420(10)(b);

(b) Utilize prospective mandatory employee and employer contributions to the

supplemental benefit component as provided by KRS 161.636 to provide

funding for the foundational benefit component; or

(c) Prospectively adjust for individuals who become university members on or

after January 1, 2022, one (1) or more of the following parts of the

foundational benefit component:

1. Regular interest rate established by KRS 161.220(13)(c);

2. The retirement factors established by KRS 161.620(1)(g);

3. The age and service requirements to retire as established by KRS

161.600(2);

4. The cost-of-living adjustment established by KRS 161.620(2); or

5. The age and service requirements and the retirement allowance provided

during the entitlement period under KRS 161.661.

Notwithstanding any other provision of KRS 161.220 to 161.716 to the

contrary, the board of trustees may utilize any and all of the above adjustments

at any time on all individuals who become university members on or after

January 1, 2022, in order to maintain the funding level of the foundational

benefit component and employer costs as provided by this subsection.

(4) For purposes of this section, "funding level" means the actuarial value of assets

divided by the actuarially accrued liability expressed as a percentage that is

determined and reported by the system's actuary in the system's actuarial valuation.

(5) This section shall only apply to individuals who became university members of the

Teachers' Retirement System on or after January 1, 2022.

(6) The provisions of this section shall not be construed to authorize the board to

retroactively restore benefits or eligibility for benefits in the foundational benefit

component or supplemental benefit that were previously reduced by the board

pursuant to subsection (3)(b) and (c) of this section.