During a special meeting of the Public School Employees’ Retirement System (PSERS) board on April 19, board members voted to correct a calculation error that will result in some PSEA members paying more for their retirement benefits for the next three years. This has already been a difficult year, and we realize this rate increase may be particularly challenging for members at the beginning of their careers.

Here is what happened

Under state law, a “shared risk” provision kicks in when PSERS’ nine-year fund returns are less than 6.36 percent. In December, the PSERS board-certified nine-year fund returns at 6.38 percent, which would have avoided the shared risk provision. PSERS discovered that this calculation was incorrect and recertified fund returns at 6.34 percent.

Impact on contribution rates

This will not impact members who joined PSERS before July 1, 2011. For PSEA members who joined PSERS on or after July 1, 2011, this means that their PSERS contribution rates will increase as shown in the graph below.

For example:

• A teacher in PSERS Class T-E with 10 years of experience earning $70,000 would pay an additional $350 per year ($70,000 x 0.5%), or roughly $10.50 per paycheck after taxes over 26 pays.
• An education support professional in PSERS Class T-E with seven years of experience earning $15,750 would pay an additional $79 per year ($15,750 x 0.5%); roughly $3.00 per paycheck after taxes over 26 pays.
• 
  

The actual increase for each member will depend on each member’s salary and years of experience. It is important to remember that every dollar you contribute to PSERS goes to fund your pension.

We recognize that the contribution rate increase comes at the conclusion of a very difficult year for PSEA members. We are angry and disappointed about the process PSERS used to make this decision.

And we realize that this is going to impact members at the beginning of their careers. Please be assured that we are committed to advocating for strong salary schedules and competitive starting salaries to close the gap with similarly educated professions and to improving learning and working conditions in a post-pandemic environment.

This is not welcome news

PSEA appreciates that this is not welcome news. And we recognize that the contribution rate increase is especially troublesome for members who are just beginning their careers. We know they will feel the impact of this increase most dramatically.

Be assured that PSEA understands this. That is why we are so angry and disappointed about the process PSERS used to make this decision.

Questions about PSERS operations

Unfortunately, PSERS has also confirmed that the FBI is conducting an investigation into PSERS’ activities. PSEA doesn’t have any information or details about the FBI’s investigation, since the FBI doesn’t discuss active investigations with the press or the public. If the probe discovers information that indicates changes to PSERS’ operations are necessary, we will certainly support those reforms.

Just as important, recent news reports about some of PSERS’ operations – stories about real estate transactions and expenses for contractors' business-related travel – are also troubling. These reports may lead to necessary and important changes to PSERS’ internal operations, but they do not impact your retirement benefits in any way.

When the investigation is complete and all of the facts are known, be assured that PSEA will advocate for any reforms that protect the integrity of the pension fund and safeguard your pension benefits.

Protecting members’ pensions is a top PSEA priority

PSEA has made it clear to PSERS that we are angry and disappointed in the way this was handled and that this error should never have occurred. And PSERS must correct whatever process led to the initial calculation mistake - immediately.

For PSEA, protecting the integrity of the pension fund and safeguarding members’ retirement security is a top priority. It always has been, and it always will be. This is why we have fought tirelessly to protect the retirement security that you’ve earned and paid for and ensured that PSEA members’ retirement benefits are among the best in the nation.

The risk-sharing provision that the PSERS board triggered on April 19 was included in the pension law at the insistence of lawmakers who wanted to eliminate your defined benefit pension system altogether. After relentless advocacy, PSEA was able to protect your defined benefit pension from these attacks, but the risk-sharing provisions were negotiated into the law.

PSERS will share more information

If you are impacted by this shared risk provision, PSERS will contact you with additional information. In the meantime, we will continue to demand that PSERS fix whatever mistake led to the initial calculation error.

Dashboard:

https://docs.google.com/document/d/1w7jVwX2HFJ10VenxzdXvVDEKtbWSEXHdlsE5gRWruCM/edit

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