FRANKFORT, KY – The Kentucky Public Pensions Authority has released Annual Comprehensive Financial Reports (ACFRs) for the County Employees Retirement System (CERS) and the Kentucky Retirement Systems (KRS) for the Fiscal Year (FY) ended June 30, 2024. The award-winning reports, and the Summary Annual Financial Report (SAFR), to be published later, serve as resources for understanding the structure, financial status, investments, and governance of the retirement systems operated by KPPA. As such they are critical components of KPPA’s effort to maintain transparency for all stakeholders.
Beginning with the 2024 ACFRs, KPPA produced separate annual reports for CERS and KRS, based on decisions taken by the Boards of Trustees for CERS and KRS. Those reports can be found on KPPA’s website under the Publications & Forms tab by clicking on the Annual Reports page.
KPPA will continue to produce one SAFR, which provides an overview of information in the CERS and KRS ACFRs, as well as insights into the combined systems. In the coming weeks, that report can also be found in the Publications & Forms section of the website, on the Summary Annual Reports page.
Included in the FY 2024 ACFRs are details of the annual audits of financial statements by KPPA’s auditing firm, Blue & Co., LLC. That independent audit found that the financial statements in the ACFRs “present fairly, in all material respects, the fiduciary position of CERS and KRS as of June 30, 2024, and the changes in their fiduciary net positions for the year then ended in accordance with principles generally accepted in the United States of America.”
CERS
The FY 2024 CERS ACFR shows that total CERS assets increased to a record $19.1 billion as of June 30, 2024. The increase of $1.9 billion over FY 2023 was primarily due to investment performance.
CERS member contributions increased 9.3% over FY 2023 due to growth in covered payroll for nonhazardous and hazardous plans. Employer contributions were down 3.7%. Net investment income added $1.9 billion during FY 2024. That, on top of $1.6 billion in investment income in FY 2023, means that over the past two fiscal years, investment performance has contributed nearly $3.5 billion to CERS, helping offset a 6% increase in benefits paid and refunds.
CERS pension and insurance plans earned a combined average investment return of 11.7% net of fees for the fiscal year, an increase of 1.4 percentage points over FY 2023.
The funded ratios for the CERS Nonhazardous and Hazardous pension plans increased during the fiscal year, due to strong investment returns and growth in covered payroll. The funded ratio for the CERS Nonhazardous and Hazardous insurance plans decreased but in both cases is still more than 100%.
KRS
KRS’ fiduciary net position increased by 16.5% to $8.9 billion. The $1.3 billion increase in FY 2024 was primarily due to investment returns, actuarially accrued liability contributions, and additional funding of $240 million allocated by the Kentucky General Assembly.
Member contributions increased 17% from the prior fiscal year, employer contributions rose 15.3%, and net investment income increased by $235 million.
All KRS pension and insurance plans returned a combined average of 10.6% during FY 2024, 1.8 percentage points more than in FY 2023.
The funded ratio for the Kentucky Employees Retirement System (KERS) Nonhazardous pension plan increased by three percentage points to 24.8% from 21.8%. All other KERS and State Police Retirement System (SPRS) pension plans saw their funded ratios improve during the fiscal year.
Full Funding by 2049
CERS and KRS pension and insurance plans are projected to be fully funded by 2049, according to KPPA’s actuary, GRS, provided the plans receive their full Actuarially Determined Employer Contributions (ADEC) each year and all actuarial assumptions are met.
The ACFRs show that the systems operated by KPPA paid out more than $2.2 billion in pension benefits in FY 2024, 93% of which went to Kentucky residents. These benefits represent a consistent revenue stream to all local Kentucky counties.
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The Kentucky Public Pensions Authority is responsible for the investment of funds and administration of pension and health insurance benefits for over 433,000 active and retired state and local government employees, state police officers, and nonteaching staff of local school boards and regional universities.
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https://kyret.ky.gov