HARRISBURG, PA – The Pennsylvania Public School Employees’ Retirement System (PSERS) Board of Trustees approved updated actuarial assumptions following completion of its five-year actuarial experience review conducted by the system’s independent consulting actuary.
The review, conducted by Gallagher in accordance with the Retirement Code, covered the five-year period from July 1, 2020, through June 30, 2025. It evaluated a broad range of demographic and economic assumptions, including a comparison of actual member experience with the assumptions used to measure PSERS’s long-term pension obligations.
The review supported maintaining the assumptions of a 7% investment rate of return and 2.5% long-term inflation, both unchanged from the previous five-year review.
The review also updated other key economic assumptions, setting projected future salary increases at 4.9% and employer payroll growth at 3%, along with targeted revisions to assumptions related to non-mortality and mortality membership demographics.
The updates are estimated to reduce the unfunded actuarial accrued liability by $1 billion, from $40.9 billion to $39.9 billion, while increasing the funded ratio from 66.6% to 67.1%. The favorable impact reflects the actuary’s analysis that recent member experience differed from certain prior assumptions. Updating those assumptions provides a more accurate measurement of the liability.
The new assumptions will be reflected in the June 30, 2026, actuarial valuation and will be used by the board to set the fiscal year 2027-28 employer contribution rate in December.
"This review helps us understand how the system is positioned for the future,” said board Chair Richard Vague. “Using updated assumptions gives us a clearer picture of the system and supports long-term planning.”
The review also reflects PSERS’ long-term commitment to its members.
“Our members rely on PSERS for retirement benefits they have earned over the course of their careers,” said board Vice Chair Susan Lemmo. “This review is an important part of planning responsibly for the future and maintaining that commitment.”
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About the Board of Trustees
The 15-member Board of Trustees is an independent administrative board of the Commonwealth of Pennsylvania. The board stands in a fiduciary relationship to PSERS’ members regarding investments and disbursements of the system’s funds. The board’s other functions outlined in the Public School Employees’ Retirement Code include certifying contribution rates, authorizing the system’s actuarial valuation and independent audit, publishing an annual financial statement, and overseeing the operational activities performed by the system’s executive director and chief investment officer.
About the Pennsylvania Public School Employees' Retirement System
PSERS, founded in 1917, began operations in 1919 to oversee a statewide defined benefit pension plan for public school employees. PSERS' role expanded upon the passage of Act 5 of 2017 to include oversight of two new benefit options consisting of defined benefit and defined contribution (DC) components and a stand-alone DC plan. As of June 30, 2025, PSERS had a total net position of about $83.7 billion and a membership of about 262,000 active, 255,000 annuitants and beneficiaries, and 26,000 vested inactive members.