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Benefit Calculation

How Benefits are Calculated

Formula
Accumulated Account Balance / Actuarial Factor = Monthly Life Annuity Amount

Your accumulated account balance is divided by an actuarial factor to produce the monthly life Annuity option.  Your age at retirement and type of service (hazardous or nonhazardous) determine the actuarial factor.  Upon retirement, a member is eligible for a fixed monthly annuity until death.

Accumulated Account Balance  
Formula
Employer Pay Credits + Employee Contributions + Base Interest + Upside Sharing Interest
Actuarial Factor

Actuarial Factor is based upon Age at Retirement.

KRS provides various payment options so that a retiring member can select a monthly benefit option best suited to his or her particular retirement needs.  One payment option that differs from the defined benefit plan and the defined contribution plan is the fixed life annuity.  The fixed life annuity is a feature of a defined benefit plan.  This is in contrast to a defined contribution plan where there is a risk of outliving your retirement savings. 

Examples for the Monthly Life Annuity Option

The following examples illustrate how the monthly life annuity option is calculated when a member is eligible to retire.  Your age at retirement and type of service (hazardous or non-hazardous) determine the actuarial factor.   You have a number of payment options to choose from upon retirement; however, the following examples depict the Monthly Life Annuity option. 

Formula
Accumulated Account Balance / Actuarial Factor = Monthly Life Annuity Amount

Examples

Non-Hazardous: Rule of 87
Service at RetirementAccumulated Account BalanceActuarial FactorMonthly Life Annuity Amount
30 Years$176,667.5557 Years Old - 137.092488$1,299.67
Non-Hazardous : Age 65
Service at RetirementAccumulated Account BalanceActuarial FactorMonthly Life Annuity Amount
20 Years$93,800.9565 Years Old - 121.004940$775.18
15 Years$63,074.3065 Years Old - 121.004940$521.25
10 Years$37,819.2465 Years Old - 121.004940$312.54
Hazardous: 25 Years
Service at RetirementAccumulated Account BalanceActuarial FactorMonthly Life Annuity Amount
25 Years$225,929.0560 Years Old - 150.608352$1,500.11
Hazardous: Age 60
Service at RetirementAccumulated Account BalanceActuarial FactorMonthly Life Annuity Amount
20 Years$161,546.0860 Years Old - 128.510100$1,257.07
15 Years$108,627.9660 Years Old - 128.510100$845.29
10 Years$65,133.1360 Years Old - 128.510100$506.83

Example of Upside Sharing Interest

The following examples illustrate how the monthly life annuity option is calculated when a member is eligible to retire.  Your age at retirement and type of service (hazardous or non-hazardous) determine the actuarial factor.  You have a number of payment options to choose from upon retirement; however, the following examples depict the monthly life Annuity option.

Formula
Accumulated Account Balance / Actuarial Factor = Monthly Life Annuity Amount

Nonhazardous: This example is a nonhazardous member whose participation date began at 30 years old.  You can see how the monthly benefit increased when the member works longer.  ​ ​

Non-Hazardous: Base Interest 4% without Upside Sharing Interest
Service at RetirementAccumulated Account BalanceMonthly Life Annuity Amount
20 Years$93,800.95$637.93
25 Years$131,184.61$934.93
30 Years$176,667.55$1,341.88
Non-Hazardous: Base Interest 4% +2.63% Upside Sharing Interest
Service at RetirementAccumulated Account BalanceMonthly Life Annuity Amount
20Years$123,696.19$843.11
25 Years$188,827.41$1,345.74
30 Years$278,211.51$2,113.15

Hazardous: This example is a hazardous member whose participation date began at 25 years old.  You can see how the monthly benefit increase when the member works longer. 

Hazardous: Base Interest 4% Without Upside Sharing Interest
Service at RetirementAccumulated Account BalanceMonthly Life Annuity Amount
20 Years$161,546.08$1,072.72
25 Years$225,929.05$1,557.36
30 Years$304,260.79$2,208.65
Hazardous: Base Interest 4% +2.63% Upside Sharing Interest
Service at RetirementAccumulated Account BalanceMonthly Life Annuity Amount
20 Years$213,502.50$1,417.60
25 Years$325,202.77$2,241.67
30 Years$479,142.05$3,478.13

For Tier 3 members, service credit is used to determine retirement eligibility, but is not used to dertermine your monthly life annuity amount.  See below for your Actuarial factor based on your age at retirement. 

Notice: Actuarial Factors Could Change In The Future

Accrued benefits are protected but the General Assembly could change future benefits in fiscal circumstances call for it.  Check back here for up-to-date information. 

Non-Hazardous Actuarial Factors
Age at RetirementActuarial Factor
57137.092488
58​135.364728
59​133.553124
60​131.657064
61​129.677556
62​127.616868
63​125.480760
64​123.276648
65​121.004940
66​118.660464
67​116.246988
68​113.762472
69​111.195372
70​108.548856
71105.832656
72​103.059396
73​100.222008
74​97.330272
75​94.391196
76​91.408068
77​88.380612
7885.308852​
79​82.195644
8079.047132
Hazardous Actuarial Factors
Age at RetirementActuarial Factor
43​152.409012
44151.534824
45​150.608352
46​149.627136
47148.586484
48147.483156
49​146.312856
50​145.071504
51143.754360
52142.374648
53​140.917824
54139.380348
55​137.758668
56​136.062012
57​134.301180
58​132.455748
59​130.525296
60​128.510100
61​126.413556
62​124.238436
63​121.989684
64​119.673708
65​117.281868
66​114.815688
67​112.280052
68109.662180
69​106.954128
70​104.167644
71​101.323236
72​98.410524

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