In 2016, the legislature passed Senate Bill 1428 into law which affects the PSPRS membership (not CORP or EORP) that includes new benefit provisions for existing and new members and, as a result of the intricate changes, the PSPRS Matrix of Plan Provisions was created to outline the differences between the Membership Tiers, eligibility, Member Benefits, options, and other System-related information. You may also view a short, 3-minute video on basic reform measures from SB1428 titled Video: Pension Reform Overview.
In addition, pursuant to legislation for the new options available to our members, PSPRS was required to engage with a federally registered investment advisor to help all members of PSPRS managed plans with retirement planning and overall financial wellness, so through a formal request for proposal process, PSPRS partnered with Public Safety Financial/Galloway to provide "education, counseling and objective participant-specific plan advice" for our members. As a member of the PSPRS, you may contact Public Safety Financial/Galloway here.
PSPRS employers are encouraged to reference the SB1428 Toolkit.
Tier 2 Membership Election
One of the significant changes in SB 1428 applies to Tier 2 Members who joined PSPRS between January 1, 2012 and June 30, 2017, who work for employers who do NOT pay into social security. With this new law, these members will be automatically enrolled in a Defined Contribution (DC) plan of 3% of their salary plus full employer match, in addition to the traditional Defined Benefit (DB) plan, unless the employees elect to “opt-out” of this requirement through the PSPRS Members Only portal by June 30, 2017.
Please note that Tier 2 Members who DO contribute to Social Security may also be impacted by this change and are encouraged to actively register a decision on the Members Only portal since the member/employee could transfer to a non-Social Security employer in the future and, in this case, would become required to pay into the Defined Contribution (DC) benefit, in addition to the traditional Defined Benefit (DB) plan. To assist the Tier 2 Members in this process, the following items were prepared, which we hope will guide you in the process:
Tier 2 Member Opt-Out Process (summarizes Tier 2 Membership opt-out process)
Webinar: Tier 2 "Opt-Out" Process (conducted January 31, 2017) (PowerPoint Presentation)
Video: Tier 2 Automatic Enrollment/Opt-Out
Tier 3 Membership Election
Another significant change in SB 1428 applies to members who join the PSPRS on or after July 1, 2017. These members will be given a maximum of 90 days to make an irrevocable election to participate in either:
1) A Defined Contribution (DC) Plan (401a) of at least 9% (pre-taxed) contribution rate plus employer matching based on a vesting schedule.
2) A Defined Benefit (DB) Plan (401a) of a (pre-taxed) variable contribution rate initially expected to be 9-11% based on employer risk-pooling. However, for members that do NOT pay into social security, they will be required to pay into a hybrid DC plan of 3% (pre-taxed) contribution rate plus employer matching based on a vesting schedule.
If a member does not make an election within 90 days, the member will automatically be enrolled in the Defined Benefit (DB) Plan with hybrid DC, if applicable.
To assist the Tier 3 Members in this process, the following video was prepared:
Video: Tier 3 Choice: DB vs. DC Plans (explains options available to Tier 3 members)