Key Issue: Pension

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Key Issue: Pensions

You have a decision to make

If you first become an active member of the Public School Employees’ Retirement System (PSERS) on or after July 1, 2019, you will have a choice of three retirement plans.

You will automatically be enrolled as a Class T-G member in a hybrid retirement plan that has both a defined benefit (DB) and a defined contribution (DC) component (see below). For individuals who spend their careers in public education, class T-G offers employees the guaranteed highest monthly benefit and the least risk. PSERS will notify you and give you a specific date by which you must respond if you want to switch to one of two optional retirement plans. You don’t have to do anything to remain a Class T-G member.

What are the options?

ClassT-G.

This option includes both a defined benefit
plan and a defined contribution plan. This plan offers
the highest possible guaranteed retirement benefit.
Both employees and employers, in total, contribute
more into the plan than they do under the other options.

Class T-H.

Like T-G, this option includes both a
defined benefit plan and a defined contribution plan.
Both employees and employers, in total, contribute
less than they do under class T-G, but the benefit will
be lower.

 

 

 

 

 

Class DC.

This option does not include a defined
benefit plan and includes only a defined contribution
plan. Employees contribute the same amounts as
they do under class T-H.

What is the difference between defined benefit (DB) and defined contribution (DC) plans?

  • A defined benefit plan is a pension. This component of your PSERS retirement guarantees you a specific monthly benefit for life provided you render at least 10 years of service or work until age 67 with at least three years of service.

Years of Service X Final Average Salary X [1.25% or 1.0%]
depending on the class you choose and when you retire

  • A defined contribution plan is like a 401(k). This component of your PSERS retirement is based on the amount of contributions made by you and your employer and the investment performance on those contributions. Your contributions have the potential to grow based on investment earnings, but you are not guaranteed a specific monthly benefit.

Who contributes to the plan options?

Regardless of which option a PSERS member selects, both the employee and the employer pay a percentage of an employee’s compensation into the fund. Here are the employee and employer contributions for each option. The amount the employer pays into the defined benefit plan can change from year-to-year.

See examples for your membership type