Determining Benefits

 

Tier3overview.jpg
 

 

How is my benefit calculated?

Accumulated Account Balance ÷ Actuarial Factor = Your 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

What is Accumulated Account Balance? 

Employer Pay Credits + Employee Contributions + Base Interest + Upside Sharing Interest

What is the Actuarial Factor?
It 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 nonhazardous) 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.

The Formula:

Accumulated Account Balance ÷ Actuarial Factor = Your Monthly Life Annuity Amount

Nonhazardous:  Rule of 87 Example 

Service at Retirement ​Accumulated Account Balance ​Actuarial Factor 57 years old

​ Monthly Life Annuity Amount

​30 yrs​ ​$176,667.55 ​137.092488 ​$1,299.67
 

Nonhazardous: Age 65 Example

Service at Retirement ​Accumulated Account Balance ​Actuarial Factor 65 years old

​Monthly Life AnnuityAmount

​20 yrs ​$93,800.95 ​121.004940 ​$775.18
15 yrs​ ​$63,074.30 ​121.004940

​521.25​

10 yrs

​$37,819.24 ​121.004940 ​$312.54
 

Hazardous: 25 Years Example

​Service at Retirement ​Accumulated Account Balance ​Actuarial Factor 60 years old

​Monthly Life Annuity Amount

25yrs​ ​$225,929.05 ​150.608352 ​$1,500.11
 

Hazardous: Age 60 Example

​Service at Retirement ​Accumulated Account Balance ​Actuarial Factor 60 years old ​Monthly Life Annuity Amount
​20yrs ​$161,546.08 ​128.510100 ​$1,257.07
15yrs​ ​$108,627.96 ​128.510100 ​$845.29
10 yrs​ ​$65,133.13 ​128.510100 ​$506.83
    

​Example of Upside Sharing Interest

In this Example, the Base 4% gives a baseline to demonstrate the least amount of Upside Sharing Interest compared to a very healthy market in a best case scenario.  While no one can predict the future, this gives an illustrated range of top and bottom figures.

Base Interest 4%

without Upside Sharing Interest​ ​

Base Interest 4%

+2.63% Upside Sharing Interest​ ​

Service At Retirement​ Accumulated Account Balance ​Monthly Life Annuity Amount VS​                              Accumulated Account Balance​ Montlhy 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.  ​ ​
20 yrs​ ​$93,800.95 ​$637.93 ​$123,696.19 ​$843.11
​25 yrs ​$131,184.61 ​$934.93 ​$188,827.41 ​$1,345.74
30 yrs​ ​$176,667.55 ​$1,341.88 ​$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 increases when the member works longer​. 
​20 yrs ​$161,546.08 ​$1,072.62 ​$213,502.50 ​$1,417.60
25 yrs​ ​$225,929.05 ​$1,557.36 ​$325,202.77 $2,241.67​
​30 yrs ​$304,260.79 ​$2,208.65                    ​$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. 

Nonhazardous

 

Age at Retirement

Actuarial Factor

57​ ​137.092488
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
71​ ​105.832656
72​ ​103.059396
73​​ ​100.222008
74​ ​97.330272
75​ ​94.391196
​76 ​91.408068
77​ ​88.380612
​78 85.308852​
79​ ​82.195644
80​ ​79.047132
 

Hazardous 

Age at Retirement

Actuarial Factor

​43 ​152.409012
44​ ​151.534824
45​ ​150.608352
​46 ​149.627136
​47 ​148.586484
​48 ​147.483156
​49 ​146.312856
50​ ​145.071504
51​ ​143.754360
52​ ​142.374648
​53 ​140.917824
54​ ​139.380348
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
68​ ​109.662180
69​ ​106.954128
70​ ​104.167644
71​ ​101.323236
72​ ​98.410524
73​ ​95.434344
74​ 92.405796​
​75 ​89.334240
76​ ​86.227068
77​ ​83.087640