Current Status of Public School Employees’ Retirement System (PSERS)
With an asset shortfall over $30 Billion, PSERS is underfunded, the funded percentage currently stands under 70% and is expected to drop below 60% by 2017.
PSERS Problems Are Your Problems
To close the gap PSERS has taken three core steps to improve their solvency:
- Decreased the benefits for new teachers
- Increased the time it will take for new teachers benefits to vest
- Laid out the projected funding requirements going forward
Meeting Your PSERS Funding Requirements
The employer funding requirements are going to 16.75% for the next school year (2013-2014) and projected to increase each year thereafter until maxing out at an employer funding level of 28.04% in 2019.
The total projected retirement commitment combined for both employer and employee will be at least 24.25% of employee salaries next year, and are projected to be as high as 37.54% by 2019.
These funding levels are needed to pay for the underfunded obligations of the plan and will not serve to increase retirement benefits for new teachers.
These changes make participation in PSERS unsustainable for Charter Schools, and uninviting for their new teachers.
With your schools retirement plan costs projected to rise over a third of your teachers pay, finding another retirement plan solution is imperative.
What Can You Do?
You have the opportunity to provide a better option for both your school and your employees. eXcel-FRS, with legal advice from O’Donnell Associates, has created a PSERS alternative plan for Charter Schools.
Our plan defines and controls your retirement plan costs going forward, while offering your employees the resources and funding they need to save and plan for a successful retirement.
Controlling Costs with Our Retirement Plan Solution
The Plan Features:
- 5% Mandatory Employee Contribution (Pre-Tax)
- 100% Employer Matching Contribution up to 5%
- Employees can defer more than 5% if desired, but these dollars are not matched
- One Year Vest on Employer Matching Dollars
- “Open Architecture,” Low Cost Investment Line Up
Serving Your Employees – Helping to Reach Retirement Goals
The ultimate goal of any retirement plan is to successfully retire employees. We never lose sight of this goal while helping you manage your plan.
eXcel-FRS Retirement Consultants will come to your location to complete enrollments with your employees and help them with their retirement planning. We will automatically enroll all of your employees at the mandatory rate. If employees do not choose their own investments, they are automatically placed in the Vanguard Target Date Retirement Fund that matches their age to keep them appropriately invested.
What is the Cost to the School?
The only fee your school will have out-of-pocket is a one-time set up cost of $1,850 for plan documents, plus any legal costs associated with having PSERS approve the alternative plan.
The school will also have to fund the match of 5% of salary for employees.
What is the Cost to Employees?
Employees play $36 a year to have the account ($1,200 minimum per plan), plus the investment costs. At start-up most employees will pay less than 1%, depending on the specific fund selections, for investment expenses. Investment costs decline as plan assets grow.
To use an alternative plan to PSERS you must comply with the IRS regulations and comply with Pennsylvania Charter School Law. Your plan must be submitted to PSERS for their review and approval. The PSERS alertnative Pennsylvania Charter School Plan has been approved by PSERS, and is already in use with a number of Charter Schools.
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