Pennsylvania Public School Employees' Retirement System
PSERS for New Employees
Understanding your PSERS membership options and retirement benefits as a new PFTHW employee.
What is PSERS?
Your retirement security starts here
The Public School Employees' Retirement System (PSERS) is an agency of the Commonwealth of Pennsylvania that administers the pension plan for Pennsylvania's public school employees. The PSERS pension plan is a governmental defined benefit plan, classified by the Internal Revenue Service Code as a 401(a) plan.
What is a Defined Benefit Plan?
A defined benefit plan means that your retirement benefit is determined by a guaranteed state-based formula which includes a retirement factor, years of credited service, and your final average salary. Your final average salary is calculated using the last 36 months of salary as reported by your employer.
Mandatory Enrollment for Full-Time Employees
New Member Enrollment
New members of PSERS hired on or after July 1, 2011 are automatically enrolled in PSERS as a member of Class T-E. Here's what to expect during your enrollment process:
Step 1: Enrollment Packet
You will receive information from PSERS explaining that an account has been established for you. This packet will ask you to verify your personal information, contact information, and employer information.
Step 2: Class Election Letter
In addition to the informational packet, Class T-E members will receive a separate letter containing a T-F Membership Class Election Form. This form allows you to choose between Class T-E and Class T-F.
Step 3: Make Your Decision
Class T-E members who wish to choose Class T-F must complete and return the election form to PSERS within the deadline stipulated in the letter (typically 45 days from the date of notification).
Important: 45-Day Election Period
New employees have 45 days from the date of notification to elect membership into Class T-F.
- • No action is required to stay in Class T-E
- • Your election of Class T-F is binding and irrevocable
- • Once your class is determined, you will remain in that class permanently
- • You will not have another opportunity in the future to change your class of membership
Class T-E vs Class T-F: What's the Difference?
There are two distinct differences between Class T-E and Class T-F that will impact your career:
Class T-E
(Default)Your Contribution Rate
7.50%
Base rate with "shared risk" provision that could cause your total contribution level to fluctuate between 7.50% and 9.50%
Pension Benefit Multiplier
2.0%
Used to calculate your retirement benefit
Class T-F
(Must Elect)Your Contribution Rate
10.30%
Base rate with "shared risk" provision that could cause your total contribution level to fluctuate between 10.30% and 12.30%
Pension Benefit Multiplier
2.5%
Used to calculate your retirement benefit
Understanding the Trade-Off
How Your Retirement Benefit is Calculated
Your PSERS retirement benefit is an annual benefit, payable monthly, calculated using a formula based on your years of credited service, your final average salary (last 36 months), and a multiplier that depends on your membership class.
Retirement Benefit Formula
Multiplier × Final Average Salary × Years of Credited Service = Yearly Benefit
Class T-E Formula
2.0% × Final Average Salary × Years of Credited Service
Class T-F Formula
2.5% × Final Average Salary × Years of Credited Service
Retirement Benefit Examples
Let's compare the retirement benefits for someone who works 35 years with a final average salary of $83,381:
Class T-E Example
Lower contributions, lower benefit
Calculation:
2.0% × 35 years = 70% of salary
2.0% × 35 × $83,381
Annual Pension Benefit
$58,367
per year
Class T-F Example
Higher contributions, higher benefit
Calculation:
2.5% × 35 years = 87.5% of salary
2.5% × 35 × $83,381
Annual Pension Benefit
$72,958
per year
The Difference
$72,958 - $58,367 = $14,591
Class T-F provides a $14,591 higher pension benefit every year in retirement
What Will This Cost Per Paycheck?
Understanding the difference in your take-home pay between Class T-E and Class T-F is important for making an informed decision. Here's an example based on a starting teacher salary:
Class T-E Contribution
Step 1 Bachelor's Degree Annual Salary
$46,766
Calculation
$46,766 × 7.5% ÷ 26 pays
Per Pay Contribution
$134.90
Class T-F Contribution
Step 1 Bachelor's Degree Annual Salary
$46,766
Calculation
$46,766 × 10.3% ÷ 26 pays
Per Pay Contribution
$185.26
Contribution Difference Per Pay
$50.36
Class T-F costs an additional $50.36 per paycheck at the starting salary level
Vesting Requirements
You must be "vested" to receive the pension benefit. Vested means you are eligible for a monthly retirement benefit after termination of employment.
Vesting Requirements for Class T-E and T-F
You are vested when you meet ONE of the following:
10 Years of Qualifying Service
At any age
Age 65 or Older
With at least 3 years of service at termination
If You Leave Before Vesting
Service Credit
Service credit is the measure of your time as a PSERS member. You earn service credit for each year you work and contribute to PSERS. Understanding how service credit works is important for planning your retirement.
Full-Time Service
If you work full-time (typically 1,000+ hours per year), you earn one full year of service credit for each school year.
Part-Time Service
Part-time employees earn fractional service credit based on the percentage of full-time hours worked. For example, working 50% time earns 0.5 years of service credit.
Purchasing Service Credit
You may be able to purchase additional service credit for certain types of leave, military service, or previous employment. Contact PSERS for eligibility and cost information.
Leaves of Absence
Additional Factors to Consider
Making the decision between Class T-E and Class T-F requires careful consideration of your personal financial situation and long-term goals. Here are some important factors to think about:
Could You Invest the Difference?
Could you stay with Class T-E and invest on your own the difference between the T-F per pay contribution and the T-E per pay contribution ($50.36 per paycheck) over your 35-year career?
Absolutely. The question is: Will you do better investing on your own, rather than electing Class T-F?
You'd need to speak to a trusted financial advisor to determine which option is best for your situation.
Long-Term vs Short-Term Thinking
Class T-F provides significantly higher retirement income but requires higher contributions throughout your career. Consider your budget, career plans, and retirement goals when making this decision.
The Guaranteed Benefit
PSERS is a defined benefit plan, meaning your retirement benefit is guaranteed by the state-based formula regardless of market performance. This security is valuable when planning for retirement.
Purpose of This Information
Managing Your PSERS Account
PSERS provides online tools to help you manage your account, estimate your retirement benefit, and plan for your future. Take advantage of these resources to stay informed about your retirement security.
Online Account Access
Create your PSERS online account at www.psers.pa.gov to:
- •View your service credit and contributions
- •Update beneficiary information
- •Use retirement benefit calculators
- •Access important forms and documents
Annual Statement
Each year, PSERS sends you an annual statement showing:
- •Total service credit earned
- •Total contributions made
- •Current beneficiary designations
- •Estimated retirement benefit
Important Information
Creating Your PSERS Account
Once you receive your enrollment packet from PSERS, you can create your online account at www.psers.pa.gov. Through your account, you can view your service credit, update beneficiaries, and access retirement calculators.
Social Security
PSERS members do not pay into Social Security for their PSERS-covered employment. However, if you have other employment where you pay Social Security taxes, you may be subject to the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO), which could reduce your Social Security benefits.
Tax Considerations
Your PSERS contributions are made with pre-tax dollars, reducing your current taxable income. When you receive retirement benefits, they will be subject to federal income tax (but not Pennsylvania state income tax for PA residents).
Questions About PSERS?
Contact PSERS directly at 1-888-773-7748 or visit www.psers.pa.gov for personalized information about your account.
PFTHW HR can also help with general PSERS questions.
Helpful Resources
Visit the following resources to learn more about PSERS and make an informed decision about your membership class:
PSERS Official Website
Access comprehensive information about PSERS membership, benefits, and retirement planning.
Visit PSERS New Member Page →PSERS Member Services
Contact PSERS directly with questions about your account, membership class election, or benefits.
Phone: 1-888-773-7748
Website: www.psers.pa.gov
PFTHW Human Resources
Contact PFTHW HR for general PSERS questions and assistance with your enrollment process.
Your HR representative can help answer questions about your PSERS enrollment and provide guidance on the Class T-E vs T-F decision.