Act 5 Current Member Election Sep. 1 through Nov. 30, 2019
No action is required to remain in your current membership class.
Open Election Period for Class T-C, Class T-D, Class T-E, and Class T-F Members
Act 5 of 2017 gives Class T-C, Class T-D, Class T-E, and Class T-F members a one-time option to elect prospectively into one of the new Act 5 membership classes that each have a lower defined benefit (DB) structure and adds a defined contribution (DC) component. Only members who are active on July 1, 2019, are eligible to elect one of the Act 5 membership classes. The election window is from September 1 to November 30, 2019. Before contacting PSERS to elect an Act 5 membership class, please thoroughly review the information contained within this article.
Public school employees who became PSERS members before July 1, 2019, are not required to elect one of the Act 5 membership classes (Class T-G, Class T-H, or Class DC).
No action is required to remain in your current membership class.
Key Benefit Differences Between Membership Classes
Class T-C, Class T-D, Class T-E, and Class T-F are DB membership classes that provide a guaranteed retirement based on a set DB formula (final average salary (FAS) x class multiplier x years of service). Retirement benefits in a DB plan are guaranteed for life.
Class T-G and Class T-H offer a lower guaranteed retirement benefit.
Class DC offers no guaranteed retirement benefit.
Act 5 of 2017 created additional classes of service that reduces the DB formula but adds a DC component. The DC component to a PSERS retirement benefit is based on the amount of contributions made by you and your employer and the investment performance on those contributions, with the overall balance being adjusted for fees and costs. Contributions have the potential to grow based on investment earnings but are not guaranteed against loss in declining investment markets.
PLEASE REMEMBER:
- By electing Class T-G or Class T-H, the defined benefit multiplier is lower than the defined benefit multiplier for your current membership class.
- By electing Class DC, you will not be entitled to a guaranteed defined benefit. Rather, as a Class DC member, your benefit will be comprised solely of your DC account value.
Accordion
Expand AllClick here for a more accessible versionComparisons
Plan Feature |
Class T-G and Class T-H |
Class DC |
|
DB |
DC |
DC |
Mandatory
contribution rate
Your Current Contribution Rate Does Not Change | Class T-G: 5.5% Class T-H: 4.5% | Based on the rate on 7/1/19 (total rate minus basic rate) | Based on the rate on 7/1/19 |
|
Shared Risk/Gain | T-C and T-D members – no T-E and T-F members- yes | N/A | N/A |
Employer
Contribution Rate | Actuarially determined | Class T-G: 2.25% Class T-H: 2.00% | 2.00% |
|
Multiple Service | Multiple service status not affected | N/A | Multiple service status will only apply to the prior membership class. Future service as Class DC will not accrue for multiple service purposes |
|
Purchases of Service | Purchases credited to member's class at the time of purchase. Non-school purchases, except military, at the full actuarial cost. | Not Permitted | Not Permitted |
|
Vesting | 10 years. Service from all classes count | Participant $ - immediately; Employer $ - 3 eligibility pts as a DC Plan participant. | Participant $ - immediately; Employer $ - 3 eligibility pts as a DC Plan participant. |
|
Retirement Multiplier | Class T-G: 1.25% for service after 1/1/2020 Class T-H: 1.00% for service after 1/1/2020 | N/A | N/A |
|
FAS calculation | Highest 3 for prior service Highest 5 years for service after 1/1/2020 | N/A | N/A |
|
Disability | 5 years of PSERS service, including service from all current and previous classes. | No DC disability, but eligible by virtue of DB membership | No, unless qualified on the DB side prior to election, injury occurred while a DB member, and timely DB application is submitted. Only a DB benefit can be calculated. |
|
Superannuation | For new service after 1/1/2020, earlier of: -Age 67 with 3 eligibility points, OR -Rule of 97 with at least 35 eligibility points.
(Class T-G Only) Service from all classes count. | N/A | N/A |
| DB Present Value1 | DC Acct Value2 |
|
Class T-C (DB Only) | 3- year FAS x 2.00% x years of service | $743,930 ($46,429 Annual Pension
for life) | N/A |
|---|
|
Class T-D (DB Only) | 3- year FAS x 2.50% x years of service | $929,913 ($58,036 Annual Pension
for life) | N/A |
|---|
|
Class T-E (DB Only) | 3- year FAS x 2.00% x years of service | $532,632 ($46,429 Annual Pension
for life) | N/A |
|---|
|
Class T-F (DB Only) | 3- year FAS x 2.50% x years of service | $665,790 ($58,036 Annual Pension
for life) | N/A |
|---|
|
Class T-G (DB+DC) | 5- year FAS x 1.25% x years of service + DC Account Value | $323,391 ($28,190 Annual Pension
for life) | $215,190 |
|---|
|
Class T-H (DB+DC) | 5- year FAS x 1.00% x years of service + DC Account Value | $284,584 ($24,807 Annual Pension
for life) | $215,190 |
|---|
|
Class DC (DC Only) | DC Account Value | N/A | $408,861 |
|---|
Assumptions
*Member assumptions: $25,000 starting salary with 3% annual increases, working for 35 years and receive a normal retirement.
1 -
PSERS DB Plan assumptions: 5-year FAS of $64,433, 3 -year FAS of $66,327, and earns a guaranteed 4% on contributions and interest. Member chooses not to withdraw any contributions.
2 -
PSERS DC Plan assumptions: 26 pay periods per year and a consistent 6% net growth each year.
This rate of return is not guaranteed.
Electing an Act 5 Membership Class
If you wish to elect an Act 5 membership class, call PSERS at 1.888.773.7748. A PSERS Retirement Representative will explain how your retirement benefit may be impacted and provide you with the necessary paperwork if you wish to continue with your election.
The election into one of the Act 5 membership classes is effective on January 1, 2020. All previous service credited with PSERS will remain with your current membership class.
Your decision to elect an Act 5 membership class or remain in your current membership class is irrevocable, even if you leave employment and later return to work for a public school employer.
Remember: No action is required if you wish to remain in your current membership class.