Kentucky Retirement Systems votes for tighter pension projection, lowering assumed investment rates
Kentucky Retirement Systems votes for tighter pension projection, lowering assumed investment rates for county pension funds to 6.25 percent from 7.5 percent
Local government employers in Franklin County may soon be pinching a few more pennies after the Kentucky Retirement Systems (KRS) board of directors voted on Wednesday to tighten their investment assumptions for county pension funds.
Board members voted to lower their assumed investment rate of return to a more conservative 6.25 percent from 7.5 percent for the two County Employees Retirement System (CERS) funds. They also lowered their assumption for payroll growth in the funds to 2 percent from 4 percent.
Combined, the changes will likely increase the amount entities like the City of Frankfort, the Franklin County Fiscal Court and even the Frankfort Plant Board must contribute to the funds. Currently, members of the CERS Non-Hazardous fund — the larger by far of the two CERS funds — must contribute 19.18 percent of employee salaries. But with less expected now from investments and payroll growth, KRS actuaries will likely say county employers must contribute a larger share of employee salaries when the full board reconvenes in September.
County employers, in turn, may start to think twice about hiring or granting raises. Just last month, the Frankfort Plant Board opted for a freeze in January on the usual 2 percent raise that employees below the midpoint of their salary grade typically receive every July 1 and Jan. 1, over concerns about potential hikes in contributions that the plant board will have to make to CERS.
Read more: http://www.state-journal.com/2017/07/13/kentucky-retirement-systems-votes-for-tighter-pension-projection-lowering-assumed-investment-rates-for-county-pension-funds-to-6-25-percent-from-7-5-percent/