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Contribution Rates

Recommended employer contribution rates are determined by KPPA's independent actuary based on data in the annual actuarial valuation. The County Employees Retirement System (CERS) and the Kentucky Retirement Systems (KRS) Boards of Trustees adopt employer contribution rates necessary for the actuarial soundness of the systems governed by the respective boards as required by state law. The Kentucky Employees Retirement System (KERS) and State Police Retirement System (SPRS) employer rates are subject to approval by the Kentucky General Assembly through the adoption of the biennial Executive Branch Budget. The CERS Board 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 the systems operated by KPPA. KERS Nonhazardous employer contributions include an additional amount based on unfunded liability.

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 2021 Regular Session of the Kentucky General Assembly adjourned sine die on March 30, 2021, establishing contribution rates effective July 1, 2021. Due to the COVID-19 crisis, the legislature passed a one-year budget during the 2020 Regular Session rather than the customary two-year budget. Therefore, the General Assembly passed House Bill 192 during the 2021 Session that will cover Fiscal Year 2022.

CERS Employer Contribution Rates
SystemFiscal Year 2021Fiscal Year 2022
 Effective July 1, 2020Effective July 1, 2021
CERS Nonhazardous24.06%26.95%
CERS Hazardous39.58%44.33%

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.

During the 2021 Regular Session, House Bill 8 was passed and requires each participating KERS Nonhazardous employer to pay off its own portion of the total KERS Nonhazardous unfunded pension liability over a set period regardless of covered payroll. Each KERS Nonhazardous employer will pay the normal cost contribution rate of 10.10% and pay a dollar amount each month representing their share of the unfunded liability. Learn more about these changes:

House Bill 8 overview and actuarial analysis

KERS & SPRS Employer Contribution Rates
SystemFiscal Year 2021Fiscal Year 2022
 Effective July 1, 2020Effective July 1, 2021
KERS Nonhazardous84.43%*

plus an employer-specific,
monthly unfunded liability payment

KERS Hazardous36.00%




*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 year 2021. Click here to view a list of agencies authorized to pay the reduced KERS Nonhazardous rate.

**House Bill 8, passed during the 2021 Regular Session, provides that all KERS Nonhazardous employers will pay the normal cost contribution rate plus their actuarially-calculated portion of the unfunded liability beginning July 1, 2021. These employers will receive a monthly invoice for their unfunded liability cost.


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