Information for Mid-Career Members
It's never too early to begin planning for retirement. How much do you know about your retirement plan and the benefits you are entitled to receive?
Even though retirement may still be years away, there are things you can do right now to make sure you get the most from your PSRS membership.
What Every Mid-Career Member Should Know
How Retirement Benefits are Funded
PSRS' funding comes from three sources: member contributions, employer contributions and investment earnings. Investment earnings are the primary source of funding for PSRS benefits. On average, 62 cents of every dollar paid to PSRS/PEERS retirees comes from investment earnings.
Missouri law requires the System to maintain a funding level that covers current and anticipated future benefit promises. This guarantees availability of funds to pay benefits as prescribed by law.
PSRS contributions are automatically deducted from your pay, pre-tax, to help fund your benefits. Your employer contributes an equal amount. Employer contributions are paid into a general fund used to pay benefits for retirees and beneficiaries.
The contribution rate is set each school year by the PSRS/PEERS Board of Trustees. It is based on the recommendation of the Systems' actuary after the annual actuarial valuation has been completed.
For 2016-2017, the contribution rate is 14.5% of your salary. Members who hold positions that require Social Security withholding contribute to PSRS at two-thirds the contribution rate, or 9.67%.
As a member, you have this guarantee: your contributions and the accrued interest are always returned to you or your beneficiary in the form of monthly benefits or a lump-sum payment.
The Importance of a Defined Benefit Plan
As a PSRS member, you are a member of a defined benefit, or DB, retirement plan. DB plans provide members like you predictable income for life, no matter how long you live. The term "defined benefit" is derived from the fact that your lifetime retirement benefits are determined by a pre-determined formula that includes:
- A benefit factor or percentage set by the Missouri Legislature
- Your salary (including employer-paid health, dental and vision insurance premiums)
- Your service earned while employed by PSRS-covered employers and service purchased
Unlike defined contribution, or DC, retirement plans such as IRAs, 403(b) or 401(k) plans, you don't have to make investment decisions regarding your retirement funds. As a DB plan, PSRS can more effectively reduce investment risk, and investment decisions are handled by PSRS' professional investment staff and managers.
And, because PSRS is a DB plan, your retirement benefits are payable for your lifetime. The amount of money in your PSRS membership when you retire does not have a bearing on the amount of benefits you can receive. While DC plans are an important piece of your overall retirement savings, they can be less effective, because they provide benefits based on account balances in those plans at retirement. That means a retirement based on DC plan savings alone can run out and leave you without the retirement income you need.
Purchasing or reinstating service can increase your benefit amount or help you retire earlier
One of the many advantages of PSRS membership is the ability to increase your benefit amount or become eligible for retirement earlier by purchasing, reinstating or transferring additional service to your PSRS membership. Applications for most types of service purchases are found on this website. Because of complex eligibility requirements, applications for a few types of service purchases and transfers are not found online. You can request a copy of any purchase application by contacting us.
Financial Protection for Loved Ones
If you die before you retire with PSRS, your beneficiaries may be eligible for survivor benefits. It is important to properly designate your beneficiaries so they are eligible for monthly survivor benefits. Three types of survivor benefits are provided for beneficiaries of members who die before retirement or while receiving PSRS disability retirement benefits.