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Kentucky Public Pension Authority releases annual financial statement showing improvement in status


By Tom Latek
Kentucky Today

Despite losses in investments on Wall Street, the Kentucky Public Pension Authority (KPPA) released its annual financial statement showing improvement in the funded status of the state’s 10 pension systems that serve more than 300,000 employees and retirees in the state.

Record investment returns in Fiscal Year 2021 gave way to negative returns across the board in FY 2022, which ended on June 30, 2022. Collectively, all funds operated by KPPA earned an investment return of -5.7% net of fees for the Fiscal Year.

The returns for each of the 10 pension and insurance funds were below their actuarial assumptions, which are 5.25% for the Kentucky Employees Retirement System (KERS) Nonhazardous and State Police Retirement System (SPRS) pension funds and 6.25% for all other pension and insurance funds.

Nevertheless, thanks to increased contributions compared with the previous fiscal year and additional appropriations granted by the General Assembly, actuarial valuations conducted by KPPA’s actuary, GRS, show that the funded status of each of the plans improved in FY 2022.

Specifically, in addition to providing full funding for KERS and SPRS actuarially determined pension and insurance contributions, the General Assembly during the 2022 Regular Session approved additional appropriations totaling $695 million, including $215 million in FY 2022 for the SPRS pension.

The SPRS appropriation was particularly significant, increasing the plan’s funded status to 52.5% from 30.7%.  The bulk of the additional appropriations to the KERS Nonhazardous pension plan will be allocated in FY 2023 and FY 2024, and the positive effects will be seen in the June 30, 2023, actuarial valuation.

The report also shows that the systems operated by KPPA paid out $2.3 billion in monthly pension payments in FY 2022, 93% of which went to Kentucky residents. These payments represent a consistent revenue stream for all local economies.

GRS projects that all pension and insurance plans will be fully funded in Fiscal Year 2049, provided KPPA receives the full Actuarially Determined Contribution (ADC) each year and all actuarial assumptions are met.

The FY 2022 report can be found on the Annual Reports page on the KPPA website. The FY 2022 Summary Annual Financial Report, which highlights key points from the ACFR, can be found on the Summary Annual Reports page.


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