Actuarial Valuations for CERS, KERS and SPRS Pension and Insurance Funds Shows Funded Status Improvements, Lower Employer Costs

FRANKFORT, KY – Actuarial valuations conducted by KPPA’s actuary, GRS, show that the funded status of each of the 10 pension and insurance funds operated by KPPA improved in Fiscal Year 2021. Record investment returns well in excess of long-term expected rates of return across all funds helped drive asset growth. As a result, the recommended actuarially determined employer contribution rates for Fiscal Years 2023 and 2024 will be lower than the prior year.

The following table shows one-year investment returns across all pension and insurance funds, as well as contribution rates and funded status as of June 30, 2021.

  CERS NH     CERS H     KERS NH     KERS H     SPRS
1-year net return as of June 30, 2021          
Pension 25.7% 25.6% 22.6% 25.2% 21.7%
Insurance 24.8% 25.0% 25.2% 25.0% 25.3%
Actuarially Determined Contribution Rates          
2023 Pension & Insurance (% of Pay) 26.79% 49.59% 9.97%* 31.82% 140.51%
2022 Pension & Insurance (% of Pay) 26.95% 44.33% 10.10%* 33.43% 146.06%
Actuarially Determined Funded Status - Pension          
2021 Pension Funded Status 51.80% 46.69% 16.76% 60.41% 30.69%
2020 Pension Funded Status 49.42% 45.07% 14.21% 55.27% 28.12%
Actuarially Determined Funded Status - Insurance          
2021 Insurance Funded Status 85.42% 84.26% 50.17% 135.47% 81.96%
2020 Insurance Funded Status 78.46% 78.23% 42.73% 126.00% 74.97%

*Percentage of pay plus a monthly amount as defined by the system’s actuary. For more information, see our
Contribution Rates page.

During 2021, total pension unfunded liabilities decreased by $720 million mainly due to strong investment performance. Total insurance unfunded liabilities decreased by $580 million thanks to both investment gains and lower than expected healthcare premium liabilities.

“The results for Fiscal Year 2021 are obviously outstanding and our plans are healthier as a result,” said Keith Peercy, chair of the KRS Board of Trustees and the KPPA Board, and Betty Pendergrass, chair of the CERS Board of Trustees and vice-chair of the KPPA Board. “With full annual contributions and continued prudent investments in future years, the plans will continue the march to full actuarial funding.”

GRS determines recommended employer contribution rates based on data in the annual actuarial valuation. The CERS and KRS boards adopted those rates at meetings in December. The General Assembly then incorporates those recommended rates into the biennial Executive Branch budget or modifies them through legislation.

The rate adopted in the two-year Executive Branch budget will be the rate employers pay for Fiscal Years 2023 and 2024, unless altered by subsequent legislation.

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The Kentucky Public Pensions Authority is responsible for the investment of funds and administration of pension and health insurance benefits for over 401,000 active and retired state and local government employees, state police officers, and nonteaching staff of local school boards and regional universities.

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