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 2024 Regular Session of the Kentucky General Assembly adjourned sine die on April 15, 2024, establishing contribution rates effective July 1, 2024.
CERS Employer Contribution Rates
| System | Fiscal Year 2024 | Fiscal Year 2025 |
| | Effective July 1, 2023 | Effective July 1, 2024 |
| CERS Nonhazardous | 23.34% | 19.71% |
| CERS Hazardous | 43.69% | 38.61% |
The CERS Board of Trustees met on December 4, 2023 and adopted CERS employer contribution rates for Fiscal Year (FY) 2025. These rates are effective July 1, 2024 and were set in accordance with KRS 61.565(5) which caps CERS employer contribution rate increases up to 12% over the prior fiscal year for the period of July 1, 2018 to June 30, 2028.
KERS & SPRS Employer Contribution Rates
| System | Fiscal Year 2025 | Fiscal Year 2026 |
| | Effective July 1, 2024 | Effective July 1, 2025
|
| KERS Nonhazardous | 8.44%** plus a monthly amount as defined by the system's actuary | 8.44%** plus a monthly amount as defined by the system's actuary
|
| KERS Hazardous | 23.74% | |
| SPRS | 68.10% | |
The KRS Board of Trustees is required by law to determine the employer contribution rates for KERS and SPRS based on an annual actuarial valuation.
The June 30, 2023 actuarial valuation established the contribution requirements for FY 2025 and FY 2026. At the December 5, 2023 meeting, the KRS Board of Trustees approved the recommended contribution rates for Fiscal Years 2024-2025 and 2025-2026.
**Pursuant to KRS 61.565, each participating KERS Nonhazardous employer is required to pay off its own portion of the total KERS Nonhazardous unfunded liability over a set period regardless of covered payroll. Each KERS Nonhazardous employer will pay the normal cost contribution rate and pay a dollar amount each month representing their share of the unfunded liability.
Executive Branch Nonhazardous employees: Please see this correspondence from State Budget Director John Hicks. The employer contribution rate effective July 1, 2024 shall be 48.75%, comprising the normal cost contribution rate of 8.44% and the actuarially accrued liability contribution of 40.31%.
KERS Nonhazardous Actuarial Accrued Liability Contribution Payments
Pursuant to Kentucky Revised Statute (KRS) 61.565, the method of calculating the KERS Nonhazardous employer contribution changed from a percentage of pay to a two-part calculation. Beginning with Fiscal Year 2022, the law requires that each KERS Nonhazardous employer pay its own portion of the total KERS Nonhazardous unfunded pension liability, regardless of covered payroll, and that the employer complete an annual certification of non-contributing service providers. Read more here.
The documents in the section below show the total Annual Accrued Liability Contribution payment for each KERS employer by fiscal year.