Can I Borrow Against My Kentucky Retirement?

Kentucky offers the majority of state and county employees access to one of three retirement systems. In addition, educators who work in the state are offered benefits through the Kentucky Teachers' Retirement System. Kentucky administers six retirement systems when judicial and legislators' systems are included. Funds contributed to the state-administered retirement accounts may not be used as loan collateral.

State Employees

The Kentucky Employees Retirement System (KERS), available since 1956 to the majority of state workers outside of the public school system, requires full-time employees to contribute a portion of wages and salaries to a retirement fund. Monies in these funds are invested in interest-bearing accounts, along with taxpayers' dollars to set up a retirement benefit package for each state employee. According to the Kentucky Personnel Cabinet, funds in KERS individual accounts may not be garnished or used as collateral for a loan. Funds cannot be withdrawn prior to retirement unless the employee terminates service with the state.

County Employees and State Police

The County Employees Retirement System and the State Police Retirement System operate under similar provisions to the slightly older KERS plan. Both these retirement systems have been in place since 1958. The county employees’ plan is available to employees of local governments and school boards. The state police system benefits uniformed state police officers. Neither plan can be used as collateral for a loan.


The Kentucky Teachers' Retirement System is a separate benefit package available to Kentucky educators. Retirement benefits to eligible members in this system are based on the number of years of service in Kentucky schools and the annual salary received prior to retirement. The Kentucky Teachers' Retirement System clearly states that teachers cannot borrow against contributions to this benefit plan. As with the KERS plan, members who terminate service with the state prior to retirement may withdraw the amount equaling their personal contributions plus accrued interest, but do not have access to state-contributed amounts.

Employee Credit Unions

State employees seeking a loan based on employment history with Kentucky may look to one of the state employee credit unions as an option. According to the Kentucky Personnel Cabinet, state employees who are enrolled in any of Kentucky's retirement plans may become a member of the Commonwealth Credit Union or the Kentucky Employees Credit Union. Both credit unions offer members a variety of loans and in some circumstances the repayment can be made as a direct payroll deduction. Consumer, personal, auto and home loans are available to qualified state employees through these member-owned agencies.