Recommended employer contribution rates are determined by KPPA's independent actuary based on data in the annual actuarial valuation. The Board of Trustees adopts employer contribution rates necessary for the actuarial soundness of KPPA as required by Kentucky Revised Statutes 61.565 and 61.702. KERS and SPRS employer rates are subject to approval by the Kentucky General Assembly through the adoption of the biennial Executive Branch Budget. The Board also sets CERS contribution rates, unless altered by legislation enacted by the General Assembly. Each employer is required to contribute at the rate set by law. Employer contributions are paid on creditable compensation earned by each employee eligible for membership in a KPPA system.

KPPA provides information for GASB 68 and GASB 75 reporting, including the pension and insurance components of employer contributions. Learn more on the GASB Overview page.

Employee Contributions

All employees meeting the requirements for membership are required to contribute a percentage of their gross wages, referred to as creditable compensation, to KPPA. The percentage contributed is set by state law based on the member’s benefit tier. 

When mandatory employee contributions are deducted from an employee's check, the contributions are tax deferred. This means the contributions are withheld from employees' gross pay before Federal and State Income Tax. Mandatory employee contributions have been exempt from Federal and State Income Tax withholdings since August 1, 1982.  

From January 1, 1987 through December 31, 2016, Federal Social Security withholdings were also exempt. This changed January 1, 2017 under a Memorandum of Agreement between the Commonwealth of Kentucky and the Internal Revenue Service. As of January 1, 2017, the employee contribution is still based on the total gross salary for the pay period, but should be deducted after Federal Social Security is withheld.

Employer Contributions

The 2020 Regular Session adjourned Sine Die on April 15, establishing contribution rates effective July 1, 2020. Please note that the General Assembly would typically approve a State Executive Branch budget for the two-year period beginning on July 1, 2020 and extending through June 30, 2022 (fiscal years 2021 and 2022). However, due to the COVID-19 crisis, the legislature only proposed a one-year budget. A budget for fiscal year 2022, establishing contribution rates effective July 1, 2021, will have to be introduced in a later Session. The General Assembly will convene in January 2021 for the 2021 Regular Session. The rates listed below for fiscal year 2022 are the rates recommended by KPPA's actuary, which were adopted by the Board of Trustees at its meeting on December 3, 2020.

*House Bill 1 passed during the 2019 Special Session, and House Bill 352 passed during the 2020 Regular Session,  reduced the employer contribution rate for KERS quasi-governmental agencies, keeping the rate at 49.47% for fiscal years 2020 and 2021. Click here to view a list of agencies authorized to pay the reduced KERS Nonhazardous rate. 

KRS 61.565(5) caps CERS employer contribution rate increases up to 12% per year over the prior fiscal year for the period of July 1, 2018 to June 30, 2028. During the 2020 Regular Session, Senate Bill 249 froze the CERS employer rate phase-in for one year.