FRANKFORT, KY (December 22, 2020): The Kentucky Retirement Systems (KRS) has released its Annual Report for the Fiscal Year (FY) Ended June 30, 2020. The report serves as a detailed resource for understanding the structure, financial status, and governance of the plans that are administered by KRS. As such it is a critical component of KRS’ effort to maintain transparency for all stakeholders.
The FY 2020 Annual Report shows that nine of the ten pension and insurance plans managed by KRS saw their funded ratios increase during the fiscal year. The combined fiduciary net position for all pension and insurance plans decreased to $18.39 billion from $18.41 billion at the start of the fiscal year. The five pension plans saw their combined fiduciary net position decrease 0.54% in FY 2020 to $12.86 billion, while the net position of the five insurance funds increased by 0.8% to $5.53 billion.
Cash flow for the Kentucky Employees Retirement System (KERS) and State Police Retirement System (SPRS) plans remained positive for FY 2020. For the second year in a row and the third year out of the past four, KRS’ most financially troubled plan, the KERS Non-Hazardous pension, had positive cash flow, which helped its funded status increase to 14.2% from 13.4% the prior year. The CERS plans should continue to improve next year, as the phase-in of higher employer contributions continues into its third year.
KRS’ actuaries, GRS Consulting, project that all of the pension and insurance plans will be fully funded in Fiscal Year 2049, provided KRS receives the full Actuarially Determined Contribution (ADC) each year and all actuarial assumptions are met.
Investment performance for the fiscal year was positive, with the KRS pension funds earning a combined net return of 1.15% versus a benchmark of 0.5% and the insurance funds earning a combined net return of 0.48% compared with a benchmark of 0.13%. The plans fell short, however, of their assumed rates of return, which for all of the insurance and pension plans except the KERS Non-Hazardous and SPRS pension plans is 6.25%. For the KERS Non-Hazardous and SPRS pension plans the assumed rate of return is 5.25%.
KRS paid out more than $2 billion in monthly pension payments in FY 2020, 93% of which went to recipients living in Kentucky. Those payments ranged from $1.1 million in Robertson County to $358.2 million in Jefferson County, $197.1 million in Franklin County, and $119.4 million in Fayette County.
The number of covered employees participating in KERS continued its long decline, reaching 35,948 in FY 2020, down 5.4% from the prior year. The number of CERS covered employees also fell in FY 2020 by 1.5% to 93,341. State police covered employment fell in FY 2020 by 14.4% from the year before to 798 employees.
The FY 2020 report can be found on KRS’ Annual Reports page under Publications & Forms.
Note: As of March 10, following guidance from the Government Finance Officers Association of the United States and Canada, we are prospectively ending use of the common acronym for the Comprehensive Annual Financial Report. According to the GFOA, "This recommendation is the result of increasing professional awareness that the acronym, when pronounced aloud, sounds the same as a derogatory term historically used in other parts of the world. Most concerningly, South Africa where this term has ties to Apartheid and was used as a racial slur towards Black South Africans."
Accordingly, we have removed such references from the website, and renamed the report the Annual Report. We have also renamed the summary report the Summary Annual Report.
For further information on the GFOA's guidance, visit its page discussing the matter.
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Kentucky Retirement Systems is responsible for the investment of funds and administration of pension and health insurance benefits for over 394,000 active and retired state and local government employees, state police officers, and nonteaching staff of local school boards and regional universities.
Visit our website at
https://kyret.ky.gov