With a "shared risk/shared gain" provision, Class T-E, Class T-F, Class T-G, and Class T-H members benefit when investments are doing well and share some of the risk when investments underperform. Your Defined Benefit (DB) contribution rate may increase or decrease by 0.50% or 0.75% within the specified range once every three years. There are minimums and maximums to adjustments that can occur for shared risk and shared gain.
| Membership Class | DB Base Rate | Shared Risk/Gain Increment | Min | Max | |
|---|---|---|---|---|---|
| Class T-E | 7.50% | +/- 0.50% | 5.50% | 9.50% | |
| Class T-F | 10.30% | +/-0.50% | 8.30% | 12.30% | |
| Class T-G | 5.50% | +/-0.75% | 2.50% | 8.50% | + 2.75% DC Component |
| Class T-H | 4.50% | +/-0.75% | 1.50% | 7.50% | + 3.00% DC Component |
Review Periods
Every three years, PSERS evaluates the investment performance for the past 10 years to determine if the Shared Risk/Gain threshold was met. If the actual investment rate of return, net of fees is between –1% and +1% of PSERS' return assumption, then member contribution rates will not change.
| Review Period | Effective Date | Met Shared Risk Threshold? | Impact |
|---|---|---|---|
| July 1, 2013 to June 30, 2023 | July 1, 2024 | Yes | Shared Gain; Member DB Contribution Rate Decreased to Base Rate |
| July 1, 2011 to June 30, 2020 | July 1, 2021 | No | Shared Risk; Member DB Contribution Rate Increased |
| July 1, 2011 to June 30, 2017 | July 1, 2018 | Yes | No Change |
| July 1, 2011 to June 30, 2014 | July 1, 2015 | Yes | No Change |
The next review period will be for the 10-year period ending on June 30, 2026. Any impact of the review will be effective July 1, 2027.
When will the rate increase?
- If the return is less than PSERS' return assumption by 1% or more, then member contribution rates will increase by the increments listed in the chart above.
- If the return is equal to or below PSERS' return assumption by less than 1% and the total contribution rate is below the member's base rate, then the member contributions rates will increase.
When will the rate decrease?
- If the return is equal to or exceeds PSERS' return assumption by less than 1% and the total contribution rate is above the member's base rate, then the member contribution rates will decrease.
- If the return is more than the PSERS' return assumption by 1% or more, then the member contribution rates will decrease.
Other Conditions
If PSERS is fully funded at the time of the comparison, your shared risk/gain increment cannot be greater than zero. In addition, if in any given year, the full actuarially required contribution is not provided by employers and the Commonwealth, then there will be no shared risk/gain increment. A member's contribution rate will not be increased if there has not been an equivalent increase to the employer contribution rate over the previous three years.
For more information on PSERS funding levels, please see PSERS Actuarial Valuation.
