Kansas House Bill HB2086

Kansas 2025-2026 Regular Session

• Introduced: 1/23/25
• Refer: 1/23/25
• Report Pass: 2/14/25
• Engrossed: 2/25/25
• Refer: 2/26/25

Caption

Adjusting the KPERS 3 dividend interest credit by lowering the dividend interest credit threshold to 5% and increasing the dividend share to 80%.

Summary

HB 2086 amends the Kansas Public Employees Retirement System (KPERS) provisions governing the KPERS 3 plan’s annual additional interest credit, sometimes described as a dividend interest credit. The bill changes the formula used to calculate that extra credit for members’ annuity savings accounts and retirement annuity accounts beginning with calendar year 2024 and thereafter. Under current law, the additional credit is based on 75% of the five-year average net compound rate of return above a 6% threshold; the bill lowers the threshold to 5% and increases the share paid to members to 80%. The bill applies to both the annuity savings account and the retirement annuity account sections of the KPERS 3 statute. It preserves the existing quarterly base interest credits and the general structure of annual additional credits, but updates the percentage and return threshold used in the calculation. It also repeals and replaces the affected statutory sections, K.S.A. 74-49,306 and 74-49,308, to incorporate the new formula.

Impact

HB 2086 would directly alter Kansas retirement law by increasing the potential annual dividend interest credit paid to KPERS 3 members and by making that credit easier to trigger through a lower return threshold. The practical effect is to increase credited earnings on eligible member accounts when investment performance exceeds 5%, which could improve retirement account growth for covered public employees and increase the system’s benefit obligations relative to current law. The bill amends two core KPERS statutes and repeals the existing versions of those sections.

Sentiment

The available voting history suggests the bill was broadly supported in the House, passing final action 116-5. No committee transcript excerpts were provided, so there is no recorded debate to indicate detailed concerns or endorsements beyond the strong floor vote. The overall sentiment appears favorable toward enhancing KPERS 3 member credits and aligning the dividend formula with a more generous distribution of investment returns.

Contention

The main policy issue is the balance between providing larger credits to KPERS 3 members and preserving retirement system funding stability. Supporters likely view the bill as a member benefit improvement that shares more investment gains with participants, while any opposition would likely focus on the fiscal impact of lowering the return threshold from 6% to 5% and increasing the share from 75% to 80%. Because no committee discussion transcript is available, specific arguments from legislators or stakeholders are not documented in the provided materials.