When can I retire?
If you have at least 20 years experience (started teaching in KY at least 1997-98), then you can retire with full benefits at 55/27 years. If you have less than 20 years experience (started teaching in KY after 1997-98), you can retire with full benefits at 60/35 years.
Teacher Talk: It depends on how long you have taught. If you have 20 years in KTRS, nothing changes. Teaching less than 20 years increases age and service requirements to 60 years old and 35 years of service.
What are full benefits for existing teachers?
Retains current high-3 final average salary provisions (age 55 w/27 years service) for those TRS members with 20 or more years of service as of July 31, 2018. Provide that TRS members with less than 20 years of service as of July 31, 2018 may qualify for a high-3 final average salary calculation if he or she is at least age 60 and has at least 35 years of service.
Sick leave payments for retirement purposes are limited to sick leave accruals as of July 31, 2018.
Teacher Talk: A “High-3” final average salary calculation with sick leave pay (through July 31, 2018) added.
Will sick leave accrual go towards my final salary calculation (for existing teachers)?
Sick leave accrual for retirement purposes will freeze on July 31, 2018. Sick leave for school year 2018-2019 will not be added to the total.
Sick leave will still be provided by districts and will add to the totals moving forward for leave purposes only.
Teacher Talk: Only sick leave accruals as of July 31, 2018 (this year’s totals) will go to the final salary calculation.
Will I have to pay more for retiree health care?
The KTRS board will increase employee contribution for retiree health if the fund:
The increase shall be no more than 1% of pay annually.
For reference, the health care fund had a funded ratio of 21.88% in 2016 and 26.71% in 2017.
Teacher Talk: Retiree health care costs for teachers will only go up if the health care fund drops. It can only increase by 1% each year.
How will the existing pension system be funded without new enrollees?
Minimum funding requirement for non-university employers of 13.105% (12.355% pension, 0.75% retiree health) and 13.65% for university employers (10.875% pension, 2.775% retiree health).
Requires employers to fund additional amount required above 1. to pay ARC for pension and life insurance funds. Amount shall be prorated to each employer based upon FY 15, 16, and 17 payrolls to TRS. Amount shall be adjusted by any employer who ceases participation and payments for
school board shall be paid by state appropriation (other employers required to pay additional share).
Require pension and life insurance fund ARCs to be based upon entry age normal cost method, 30 year closed amortization period, level dollar financing of the unfunded liability, 5 year smoothed market asset valuation method, and other assumptions set by TRS board.
What about cost of living allowances?
Current Retirees - If the pension fund is less than 90% funded, COLA will be 1% instead of 1.5%.
New Retirees - IF TRS pension fund is less than 90% upon retirement, COLA will be 1% instead of 1.5%.
For reference, the funded ratio for the pension fund was 54.6% in 2016 and 56.4% in 2017.
Teacher Talk: Unless the pension is funded at least 90%, COLA will be 1%.
Can I retire when I reach 27 years anyway, even if I have less than 20 years of service now? What “penalty” will I pay?
Based on the current language of the bill proposal, there will be no “penalty” incurred if a teacher has at least 27 years of service or is 55 years old. However, if a teacher has less than 20 years of service now, they would be ineligible for a “high 3” salary calculation and would receive a “high 5” calculation instead. The difference in a teacher’s annual benefit would vary based on the salary schedule of each district.
Teacher Talk: There is no penalty to retire at 27 years of service. The drop in benefits comes from a “high 5” salary calculation rather than a “high 3” salary calculation. The exact drop in benefits depends on the district.
Will retired teachers still have to pay the entire cost of their health insurance after retirement as proposed in the new budget bill?
As SB 1 is currently written, there are no provisions that require the state to subsidize health insurance costs for retirees. Employers are only required to contribute 3% of payroll of active employees to fund retiree health benefits. 2% of payroll will be contributed for employees participating in the hybrid cash balance plan.
Teacher Talk: There are no provisions currently that help defray any costs for health insurance. Any change to this issue will be added in the House budget proposal.
What is a “hybrid cash balance” retirement plan?
A hybrid cash balance plan is one which has characteristics of both a defined benefit plan and a defined contribution plan. Employees and employers contribute defined amounts into the employee’s account, which earns guaranteed interest each fiscal year. There is also the possibility of earning additional interest based on employee’s participation in the plan and investment returns. When an employee retires, the retirement benefit is calculated based upon the accumulated account balance. Accounts will be protected from incurring any loss due to investment. Investments will be made by KTRS Board. Teachers will receive a benefit calculated based upon the amount saved in the employee’s account.
Teacher Talk: Teachers and employers (districts+state) will contribute to individual accounts. It is guaranteed to not lose money on investments each year. KTRS will invest fund as a whole group. When a teacher retires, they will receive a benefit amount based upon the amount available in their individual account.
Who will be a part of the new retirement system?
New TRS members on or after January 1, 2019. Teachers with less than 5 years can opt into the new system.
Teacher Talk: New teachers hired for the upcoming fall will still qualify for the old KTRS. Teachers hired after January 1, 2019 will be placed into the new system. Teachers with less than 5 years can choose to be in the new system if they want.
Are there any new costs to employees or districts?
Districts are required to pay an additional 2% for all teachers participating in they hybrid cash plan.
For reference, teachers under the current KTRS pay 12.855% for non-university employees, 8.185% for university employees.
Teacher Talk: 9.105% of a teacher’s salary will be contributed. Districts will have to pay an additional 2% for teachers in the new system, which may impact funding for other programs.
When could new teachers retire?
Teacher Talk: Most teachers will qualify for the Rule of 87 and be eligible to retire at 57 years old with 30 years of service.
Would new teachers lose any other benefits?
Eliminated $2,000 pre-retirement life insurance benefit/$5,000 post-retirement life insurance benefit.
Teacher Talk: Life insurance benefits will be dropped for new teachers.
Will new teachers contribute to Social Security?
Teacher Talk: No. And teachers will not be eligible to collect any Social Security benefits from spouses, in most cases.
Will new teachers also receive the "high-3" calculation or is that changing to "high-5"?
Teacher Talk: New teachers who pay into the new system will get whatever totals are in their "account" from contributions.