Lexington City pension subcommittee adds CERS access issue to short-term list after members report recruits can’t withdraw prior funds

Members of the Lexington City pension subcommittee discussed cases on Monday in which police recruits and officers who previously paid into the County Employees Retirement System (CERS) say they cannot access those funds after becoming city employees.

The discussion centered on administrative limits and fees. "We have several police recruits and officers that, have paid into CERS from a previous employer, but they cannot access those funds because they're an employee of the city, even though they're not paying into serves pension," Speaker 3, a pension subcommittee member, said. Speaker 3 and others described attempts to withdraw or roll over those accounts as blocked by the retirement system; several members said dormancy fees are eroding account balances when transfers are not allowed.

The subcommittee discussed whether the problem is within the pension board’s authority or a matter of state statute. "I foresee that that's a state issue and not us because we can't change their statutes," Speaker 3 said. Members noted two related concerns: (1) some individuals cannot perform a direct rollover because they moved directly from one employer to another without a break in service, and (2) dormancy charges can reduce balances when funds sit without permitted direction. Speaker 1 said the problem can affect recruiting for police and fire positions because prospective hires may lose portability of prior service credit or access to prior contributions.

The group did not adopt a formal motion or take a vote. Instead, members agreed to add the matter to their short-term work list so staff can investigate options and next steps. Speaker 3 said the subcommittee would contact Ken Armstrong — who had raised the issue — and that a member would "send him an email" to explain the board is looking into the concern. Several members suggested contacting a person identified as Bill to learn whether any state-level remedy or legislative approach could apply.

The subcommittee also reviewed its prioritization of other items: it moved several items to the short-term list while keeping DROP (deferred retirement option plan) on the long-term list. No changes to benefits or transfers were approved at the meeting; members said further research and possible outreach to the Kentucky retirement systems will be needed before any formal recommendation.

Members emphasized that each employee’s situation may be fact-specific. "Every situation is unique and nuanced, and you'll have to really understand what is different," Speaker 4, a subcommittee member, said. The group concluded by directing staff to research legal and administrative barriers to rollovers or credit for prior service, and to report back at a future meeting.

The discussion provides the subcommittee a clear next step: gather information about statutory or administrative limits at CERS and related systems, estimate the scope of affected employees, and determine whether city-level or state-level action would be required to change access or transferability of those retirement funds.