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PA Pension Overview. PSFC Meeting 2.7.13. Factors contributing to PSERS debt. 2 % 2%. 13%. 43%. Act 120 of 2010. CHANGES TO FUNDING: Required employer to pay the set rate Eliminated 2012 rate spike Committed employers to stepped up contributions subject to rate collars

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pa pension overview

PA Pension Overview

PSFC Meeting

2.7.13

act 120 of 2010
Act 120 of 2010

CHANGES TO FUNDING:

  • Required employer to pay the set rate
  • Eliminated 2012 rate spike
  • Committed employers to stepped up contributions subject to rate collars
  • Created employee “Risk-Sharing” contributions
act 120 of 20101
Act 120 of 2010

CHANGES IN BENEFITS (New Hires Only):

  • Dropped Multiplier to 2.0% with Option of 2.5% if member pays full cost difference
  • Increased age for full retirement to 65 or “Rule of 92” w/35 years of service
  • Eliminated the Option 4 lump sum withdrawals
  • Increased vesting period to 10 years
  • Increased the cost of the purchase of credit for

non-school service (except for military service)

act 120 of 2010 impact on cost of benefits
Act 120 of 2010:Impact on Cost of Benefits

Employer Normal Cost Rate

(Pre-Act 9)

Employer Normal Cost Rate (Class T-E)

Normal Cost Rate 10.50%

Member Rate (7.50)

Employer Normal 2.20%

Cost Rate

Normal Cost Rate 16.06%

Member Rate (av.) (7.40)

Employer Normal 8.66%

Cost Rate

What is Normal Cost?

The cost of benefits earned by school employees during the school year.

Along with projected investment earnings (currently 7.5%) this amount should fully fund the retirement benefits for a member by the time they reach normal retirement age.

slide10

Total ECR

Unfunded Liability Rate

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