Kentucky Employees Retirement System (KERS)
public plan · State of Kentucky · Frankfort, KY
Kentucky Employees Retirement System (KERS) is severely underfunded at 20%, with $28.1B in unfunded liability. Plans in this bracket face significant solvency risk and are typically on regulatory funding-improvement plans, with active intervention from PBGC for private plans or state pension boards for public ones.
State of Kentucky runs Kentucky Employees Retirement System (KERS) as a public-sector defined-benefit plan. The plan operates outside the ERISA framework; oversight comes from state pension boards and the sponsor's legislative body rather than the federal Department of Labor or PBGC. The plan is in critical or declining status — formally recognized as having insufficient assets to meet projected obligations. Plans in this bucket face mandatory funding-improvement plans and, for private plans, potential PBGC intervention.
On scale: $7.2B in plan assets across 142,000 covered participants. With 55,000 workers still accruing and 87,000 drawing benefits, the plan has the size to support institutional asset management and full-time actuarial staff. Participant mix skews toward retirees (87,000 retired vs 55,000 active) — a mature plan paying out more than it accrues. Mature plans need stable investment returns plus sponsor contributions to keep the funded ratio steady; the cash-flow profile is increasingly net-negative. Annual cash flows: $1.5B in sponsor contributions versus $1.8B in benefit payments. Investment performance over the most recent year ran 4.1%, against the plan's assumed long-term return of 6.0%.
PBGC risk classification: critical. The plan faces mandatory rehabilitation under PBGC rules; participants should monitor benefit guarantees carefully. Public plans like Kentucky Employees Retirement System (KERS) are not PBGC-insured. The benefit guarantee rests on the sponsoring government's ability and willingness to make required contributions, which interacts with state and local tax-base dynamics.
Source: DOL EFAST2 Form 5500 filings and Boston College CRR Public Plans Database.
Funding History
What This Means for You
Kentucky Employees Retirement System (KERS) is significantly underfunded at 20%, with $28.1B in unfunded liabilities affecting 142,000 participants. Plans at this funding level face difficult choices: raising contributions substantially, reducing future benefit accruals, or in extreme cases, applying for benefit suspensions. The PBGC has flagged this plan as critical status. Public plans cannot declare bankruptcy, but severe underfunding may lead to reduced cost-of-living adjustments or increased employee contributions. If you are a participant, it is important to understand your options and consider diversifying your retirement income sources.
Year-by-Year Funding
| Year | Assets | Liabilities | Funding Ratio | Contributions |
|---|---|---|---|---|
| 2023 | $7.2B | $35.3B | 20.4% | $1.5B |
| 2022 | $7.0B | $36.8B | 19.0% | $1.5B |
| 2021 | $6.8B | $32.2B | 21.0% | $1.4B |
| 2020 | $6.6B | $43.7B | 15.0% | $1.4B |
| 2019 | $6.3B | $39.6B | 16.0% | $1.3B |
Frequently Asked Questions
Kentucky Employees Retirement System (KERS) is 20% funded, meaning it has 20 cents in assets for every dollar in future benefit obligations. This is significantly underfunded and participants should monitor the situation closely.
Kentucky Employees Retirement System (KERS) has 142,000 total participants, including 55,000 active employees and 87,000 retirees currently receiving benefits.
Kentucky Employees Retirement System (KERS) is not covered by the PBGC. Benefits depend entirely on the plan's assets and the sponsor's ability to fund it.
The Pension Health Score (0-100, A-F) measures a pension plan's financial strength based on funding ratio (50%), funding trend over 3 years (30%), and PBGC risk level (20%). Higher scores indicate more secure retirement benefits.
Pension Health Score is calculated from funding ratio, 3-year funding trend, and PBGC risk classification.