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Benefit Calculation

The three systems administered by KRS are qualified defined benefit plans.  A defined benefit plan pays benefits based on a formula.

Formula
Final Compensation * Benefit Factor * Years of Service = Annual Benefit

If there is an early retirement penalty, it will also be used in the formula.

Final Compensation

A Tier One member's Final Compensation, or Salary Average, is determined by dividing the total salary earned (5-High or 3-High) by the total months worked, then multiplying by twelve. 

Non-Hazardous retirement benefits are based upon a 5-High Final Compensation.  When Final Compensation is based on the 5-High, it must include at least 48 months and a minimum of five fiscal years.  The years used do not have to be full (12 month) years. 

Hazardous retirement benefits are based upon a 3-High Final Compensation.   When Final Compensation is based on the 3-High, it must include at least 24 months and a minimum of three fiscal years.  The years used do not have to be full (12 month) years.

Benefit Factor

Tier One Benefit factors are set by statute and vary depending upon the type of service, participation date, service, and retirement system. 

Non-Hazardous Member Benefit Factors

KERS:
  • 1.97% - If you do not have 13 months credit for 1/1/1998 - 1/1/1999 
  • 2.00% - If you have 13 months credit for 1/1/1998 - 1/1/1999
CERS:
  • 2.20% - If began participation prior to August 1, 2004 
  • 2.00% - If began participation on or after August 1, 2004

Hazardous Member Benefit Factors

  • KERS: 2.49% 
  • CERS: 2.50% 
  • SPRS: 2.50% 

Years of Service

The years of service used in a Tier One member's calculation include current service, prior service, purchased service, and sick leave service. 

  • Current Service - Service earned by working in a participating position. 
  • Prior Service - Service earned before the establishment of the Retirement Systems (July 1, 1956, for KERS, July 1, 1958, for CERS and SPRS). 
  • Purchased Service  - Service purchased by the member to enhance the retirement benefit. 
  • Sick Leave Credit   - Accrued sick leave balance at the time of retirement.

What do I Pay and What Does My Employer Contribute? 

Members pay a pre-tax 5% rate based on creditable compensation, if non-hazardous; 8% if hazardous duty.  Employers pay different rates based on the member's system, and non-hazardous vs. hazardous duty.  The employer contributions are paid into the Retirement Allowance Account, and are used for paying monthly benefits.  The CERS employer contribution rate is determined by the Board of Trustees, and the KERS and SPRS rates are approved by the General Assembly during the biennial budgeting process.  View the current Employer Contribution Rates

Am I Eligible for a Refund of My Account if I Quit My Job?

At the time of termination, you are eligible to either take a refund of your accumulated account balance or begin receiving monthly payments, if eligible for retirement.  You can also leave your funds in your account until the time you either become reemployed or are eligible to retire.  If you terminate employment and requests a refund, you are eligible only for your member’s contributions and associated interest.  Learn more on our Refund of Contributions page.


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