Pension systems are confusing, complex, and have never been easy to understand. Pension systems throughout various organizations are normally different and each of them have their own unique characteristics. All of them are funded differently and have benefit payouts that vary widely across the board. Thankfully for Missouri teachers, the Public School Retirement System (PSRS) is strong and very generous with its pension benefits. With that being said, it doesn't make the pension system any easier to understand than any of the other ones! The basics are listed below for you to begin to get a grasp of the PSRS pension system.
Qualifying For Your Full Benefit Factor
There are three ways you can qualify your full pension factor of 2.5%. If you don't qualify for one of these, your pension benefit will be reduced.
- 30 & Out- Plain and simple, you will need to have 30 years of PSRS covered employment.
- Rule of 80- Your age plus your years of service must at least equal 80.
- 60 & 5- You must be at least 60 years old with at least 5 years of service.
Calculating Your Income For Your Pension Benefit Estimate
Your three highest consecutive earning years will be used to determine your final pension benefit. A few things included in this benefit are your normal contracted pay, some of your additional pay if you do other activities, and also the employer paid portion of your insurance benefits. Since it includes all these things, the easiest way to find this number is to look at your PSRS statement.
Typical Calculation
2.5% x Years of Service x Average of Your Three Highest Consecutive Earning Years
A Few Things to Keep in Mind
Just because you aren't happy with your calculated pension benefit, doesn't mean you're out of luck on what you can do to increase it with various strategies. If you've heard of a thing called "25 and Out" just remember that your pension benefit will be reduced by your age. Some teachers will receive social security benefits but in most cases there will be a reduction. If you feel like you won't be able to get your pension benefit to a satisfying place, it might be time to look into other ways to supplement your retirement income. The more proactive you can be about your financial planning, the better off you will be later in the future!