KY pension fund improved slightly in 2022 to 18% funded and a $13.5 billion deficit
Kentucky’s primary pension fund for state government employees saw slight gains in Fiscal Year 2022, with a funding level of 18.5 percent as of June 30 and unfunded actuarial accrued liabilities of $13.5 billion, according to a draft valuation report released Tuesday.
That funding level was up from 16.8 percent a year ago, actuarial consultants at Gabriel, Roeder, Smith & Co. of Southfield, Mich., told the Kentucky Retirement Systems Board of Trustees.
Nearly 125,000 people are enrolled in the $3 billion pension fund known as Kentucky Employees Retirement System (Non-Hazardous). It pays more than $1 billion a year in pension benefits.
Overall, the three state pension funds managed by KRS reported an unfunded liability of nearly $14 billion on June 30, down from $14.8 billion one year earlier. They cumulatively held $4.4 billion in assets this year.
“It was close to expectations, which was improvement in all the funds,” David Eager, executive director of the Kentucky Public Pensions Authority, said in an interview after the KRS board meeting.
Most of KRS’ investments did poorly in the first six months of 2022 as global markets sagged. Also, the number of state government retirees (more than 50,000) continued to rise far above the dwindling number of state workers contributing to KERS (Non-Hazardous) with their salaries (fewer than 30,000).
Kentucky long has had one of the worst-funded public pension systems in the country due in large part to two decades of under-funding by governors and legislators. But in more recent years, state leaders have committed billions of dollars to full annual funding of KRS, with a gradual plan to pay off its huge deficit by the late 2040s.
In the two-year state budget that lawmakers passed last winter, the legislature included an additional $695 million for the three different pension funds managed by KRS, above and beyond the annual required funding.
Most of that extra money won’t be received until this fiscal year and next. But the State Police Retirement System, which covers about 2,700 Kentucky State Police, collected an extra $215 million from legislators in June. Largely as a result, the SPRS funding level jumped in 2022, up to 52.5 percent from 30.7 percent a year ago.
The third pension fund managed by KRS is KERS (Hazardous), covering roughly 13,600 hazard-duty state workers. On June 30, it was 63.2 percent funded, up from 60.4 percent a year earlier, according to the actuarial report.
