PSRS New Member FAQs

Q. What is PSRS?
A. The Public School Retirement System of Missouri (PSRS) is a defined benefit plan that provides disability and service retirement benefits to members, and benefits to qualified beneficiaries of deceased members. PSRS was created with the adoption of The Public School Retirement Act, which became effective July 1, 1946. PSRS is established as a corporate body and is not assigned to any department of state government. The PSRS/PEERS Board of Trustees is charged by law with the administration of PSRS. Changes to the law governing PSRS can be made only by an act of the Missouri Legislature.

Q. What is a defined benefit plan?
A. Retirement plans generally fall under one of two categories: Defined Benefit Plan or Defined Contribution Plan. A Defined Benefit (DB) Plan uses a definite formula by which member benefits are calculated. Normal benefits with PSRS are calculated based on a multiplier, your years of service credit, and your salaries. Once determined, the benefit is paid for life. The retirement plan assumes responsibility for investment decisions. In contrast, in a Defined Contribution Plan (DC), an individual’s benefit is based on the contributions made to the plan and the investment earnings. The individual who owns the DC plan makes the investment decisions. An individual may outlive the funds available to them during retirement in a DC plan. An example of a DC plan is an Individual Retirement Account (IRA).

Q. Is membership in PSRS required?
A. Yes. PSRS membership is required, regardless of position, for certificated employees employed to work by an employer within the Retirement System in a position that normally requires the employee to work the full school day, or at least the same number of hours per week as required for such a position, and also normally requires the employee to work at least 600 hours during the school term. Certificated employees/teachers employed less than full-time for at least 17 hours per week on a regular basis in a position that requires the employee to work at least 600 hours during the school term may elect membership in the Public Education Employee Retirement System (PEERS) within the first 90 days of their initial part-time employment.

Q. What employers are covered by PSRS?
A. PSRS-covered employers include all Missouri public school districts, except those in the city of St. Louis and Kansas City, all Missouri public two-year colleges, and non-profit educational associations that have elected to join.

Q. What are the advantages of being a PSRS member?
A. Upon attaining eligibility, members may receive lifetime monthly retirement benefits. Disability benefits are available to qualified members who become totally disabled before age 60. Benefits may also be available to qualified beneficiaries if a member’s death occurs prior to retirement. Payment plans are also available for benefits to continue to a surviving beneficiary if a member’s death occurs after retirement.

Q. What is PEERS?
A. PEERS (formerly NTRS) is also a Defined Benefit Plan administered by the PSRS/PEERS Board of Trustees. Its members include the non-certificated staff of public school districts in Missouri (except those in the city of St. Louis and Kansas City), the public two-year colleges that have elected to join and statewide non-profit educational organizations that have elected to join. PSRS and PEERS are separate entities and operate under separate state laws. A primary difference between the two is that PSRS is not covered by Social Security and PEERS is covered by Social Security.

Q. What is vesting and when am I vested?
A. Vesting establishes the right to a future retirement benefit without additional PSRS-covered service. You are vested once you acquire five years of creditable service with PSRS.

Q. What is the contribution rate and how is it set?
A. The contribution rate for the school year 2008-2009 is 13.0% for the employee and 13.0% for the employer. For example if your eligible annual compensation is $27,000, your total retirement contributions withheld from your pay are $3,510 ($27,000 x 13.0%). Your employer also remits $3,510. The contribution rate is set each year by the PSRS/PEERS Board of Trustees based on the actuarial need.

Q. What is included in eligible compensation reported to PSRS?
A. Eligible compensation reported to PSRS consists of all earnings from PSRS-covered employers during the school year (July 1 – June 30), including extra duties, overloads, overtime and career ladder. Also included is the amount your employer pays for your health, dental and vision insurance premiums. Example: Your earnings for the school year total $25,000. The health, dental and vision insurance premiums paid on you by your employer are $2,000. Your total compensation reported to PSRS is $27,000.

Q. When are my contributions credited to my account?
A. Contributions are credited to your account at the conclusion of the school year and upon completion of the PSRS audit process under the date of June 30. In the fall of every year, you will receive a Statement of Account. You can also view your account information on this Web site by clicking the link, "View Account Information" found at the top of this page.

Q. What happens to the employer’s matching contributions?
A. Employer contributions and investment earnings are held in a general reserve account and are used to pay monthly benefits to members and beneficiaries of deceased members. Employers’ matching contributions are not remitted specifically for you, are not credited to your account, and are not refundable to you, your beneficiary or your employer.

Q. What is the interest rate that I receive on my funds, and when is interest credited to my account?
A. The interest rate is set each year by the Board of Trustees. Interest is credited to your account only on June 30 and is calculated based on your previous June 30 balance.

Q. How do I earn service credit?
A. Credit is earned based on the percentage of actual salary received compared to the full-time annual base reported by your employer for the school year (July 1 through June 30).

You may not earn more than 1.0 year of credit in any school year.

Q. What constitutes a school year?
A. July 1 through June 30 is a school year.

Q. What is a reinstatement or a purchase of service?
A. If you were a previous member of PSRS and withdrew your funds, you may pay back the amount withdrawn and reinstate the years you forfeited. Several purchase provisions exist to allow members to buy service credit and allow them to vest or retire earlier and/or increase their benefit. Please refer to the Member Handbook and the sections on “Purchasing and Reinstating Service Credit.”

Q. Does PSRS provide disability benefits?
A. PSRS provides benefits to vested members under age 60 who become permanently disabled while working in PSRS-covered employment and are subsequently unable to earn a livelihood in any occupation.

Q. May I borrow against my account?
A. No. The law does not permit partial withdrawal or loans.

Q. How does a divorce affect my PSRS benefit?
A. Missouri statute and case law state that PSRS funds hold the same status as funds of the federal Social Security Administration in a divorce action. Since current federal law does not allow the division of Social Security benefits in a divorce, PSRS funds also cannot be divided in divorce. Upon a change in life status, including a divorce, benefits shall be paid in accordance with the statutory order of succession of beneficiaries, unless you file a new designation of beneficiary form with PSRS.

Q. What happens if I leave PSRS-covered employment before reaching retirement eligibility?
A. If your employment ends, you have the right to withdraw your contributions and interest in a lump-sum payment, in which case you forfeit your service credit and any rights to future benefits. If you have fewer than five years of credit (not vested), you can leave your funds with PSRS for the next five school years and receive interest. If you return to PSRS within the five-year period, you will continue with the same membership. If you do not earn any retirement credit within the five-year period, your membership terminates and you will be encouraged to withdraw your funds. Your funds do not accrue additional interest once your membership terminates. If you have five or more years of service credit (vested), you may leave your funds and they will continue to accrue interest. You may withdraw at any time or apply for lifetime monthly benefits when you reach retirement eligibility.

Q. Will I receive the employer matching contributions if I withdraw my funds in a lump sum?
A. No. You do not receive the employer’s matching contributions. These funds are only paid in the form of monthly benefits to retirees and qualified beneficiaries of deceased members.

Q. What happens to my PSRS account if I die before I retire?
A. Death benefits may be payable as:

1. A lump-sum refund of your account balance; or
2. Monthly survivor benefits to your spouse and/or dependent children; or
3. The Option 2 retirement-based lifetime monthly payment to a qualified beneficiary.

It is very important that your beneficiary designations are kept up-to-date so benefits may be paid according to your wishes in the event you decease before retirement. Please refer to the section on Death Before Retirement found in your Member Handbook or contact PSRS for information on conditions that must be met in order for your beneficiaries to receive these benefits.

Q. When am I eligible to receive a monthly retirement benefit and how is the amount calculated?
A. Please refer to our online Benefit Estimate Calculator.

Q. Will I pay into Social Security or Medicare while employed under PSRS?
A. You will not pay Social Security taxes while employed by a PSRS-covered employer. You will pay Medicare taxes, which are currently 1.45% of your earnings.

Q. Why aren’t Social Security taxes withheld?
A. When Social Security was created in 1935, public employees, including federal, state and municipal government workers, were excluded from coverage because they had their own retirement systems already in place. Legislators did not want to duplicate a government service already provided at other levels. In 1956 Missouri’s teachers voted in a referendum to see if they wanted to become a part of the Social Security program. The vote indicated that they clearly did not want to participate.

Q. Will I be eligible to receive Social Security benefits and PSRS benefits?
A. It depends. Two laws could reduce your Social Security benefits. The Windfall Elimination Provision (WEP) affects people who earn a pension from work not covered by Social Security (like PSRS) and also work at other jobs where they pay Social Security taxes long enough to qualify for those benefits. If you have 40 units of Social Security, you should be able to receive a reduced Social Security benefit. The Government Pension Offset (GPO) affects the spouses and widow(er)s of Social Security pensioners who qualify for spousal Social Security benefits. If you qualify for Social Security through a spouse, those benefits are typically reduced to zero unless you have very few years of PSRS service.

Q. Can I voluntarily choose to pay into Social Security or Medicare while in PSRS-covered employment?
A. No. The initial referendum passed by the PSRS membership in 1956 applies to the entire membership. There are no provisions within federal law that would allow for individual members to elect Social Security participation.

Q. What if I have many years with Social Security? Can I avoid some of the reduction of my Social Security benefit?
A. If you have between 21 and 29 years of substantial Social Security earnings, the reduction under the Windfall Elimination Provision (WEP) is applied on a sliding scale with each additional year of earnings giving you a higher percentage of your full benefit. With 30 years of substantial earnings, the WEP is totally eliminated. Keep in mind, the Government Pension Offset (GPO) may still apply to a spousal benefit calculation.

Q. If I am eligible for Social Security and Medicare benefits, at what age will they begin?
A. Reduced Social Security benefits are available at age 62; the year full benefits begin is based on the year of your birth and no earlier than age 65. Medicare benefits begin at age 65 for most individuals.

Q. How can I get additional information on Social Security and Medicare?
A. Contact the Social Security Administration at (800) 772-1213, or visit the Web site at
www.socialsecurity.gov.