KPPA releases annual financial report

Published 11:18 am Tuesday, January 2, 2024

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The Kentucky Public Pensions Authority has released its Annual Comprehensive Financial Report (ACFR) for the Fiscal Year (FY) ended June 30, 2023, showing strong investment returns, General Fund appropriations and employer contributions lead to a record $24.9 billion in assets.

The report, 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 funds operated by KPPA. As such they are critical components of KPPA’s effort to maintain transparency for all stakeholders.

Included in the FY 2023 ACFR are details of the annual audit of financial statements by the State Auditor’s office. That independent audit found that the financial statements presented in the ACFR “present fairly, in all material respects, the fiduciary position of KPPA as of June 30, 2023, and the changes in its fiduciary net position for the year then ended in accordance with principles generally accepted in the United States of America.”

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The FY 2023 ACFR shows that the blended FY return for all pension funds was 9.54%, and for the insurance trust fund the blended return was 10.15%.

Individual returns for all 10 pension and insurance funds exceeded their long-term actuarial assumed rates of return, which were 5.25% for the Kentucky Employees Retirement System (KERS), Nonhazardous and State Police Retirement System (SPRS) pension funds and 6.25% for all other pension and insurance funds. They also exceeded the median peer pension fund return of 7.64% according to Wilshire, KPPA’s investment consultant.

Asset growth in pension funds led to improved funded ratios in the County Employees Retirement System (CERS), KERS hazardous and nonhazardous pension funds and the SPRS pension.

Commitments by the General Assembly and the Governor to fully fund contributions, and provide additional allocations, combined with prudent management by the Office of Investments, means that all pension and insurance plans will be fully funded by Fiscal Year 2049, according to KPPA’s actuary, GRS, provided KPPA receives the full Actuarially Determined Contribution (ADC) each year and all actuarial assumptions are met.

The FY 2023 report can be found on the Annual Reports page on the KPPA website. The FY 2023 Summary Annual Financial Report, which highlights key points from the ACFR, can be found on the Summary Annual Reports page.