Your future benefits are funded by contributions made by you and your employer during your period of membership and the investment earnings from those contributions. These contributions are held in trust and invested by the State Investment Board.
PSERS Plan 2 is a defined benefit plan. This means that at retirement you will receive a benefit based on service credit and average final compensation. The amount of your contributions or your employer’s contributions will not be a factor in calculating your retirement benefit.
You are required to contribute a percentage of your “reportable compensation” to PSERS. The percentage you contribute fluctuates depending on the funding needs of the Plan.
“Reportable compensation” means salaries and wages earned during a payroll period for personal services. This includes overtime, back pay and tax-deferred wages as defined by the Internal Revenue Code. Some examples of compensation that cannot be included are lump-sum payments for deferred annual sick leave, unused vacation leave or any form of severance pay.
Employer contributions are based on a percentage of your salary. The percentage your employer contributes fluctuates depending on the funding needs of the Plan. Employer contributions go toward future retirement benefits, are not credited to your account and cannot be withdrawn.
Because the plan is designed to provide retirement income, you may not borrow from or against your contributions.