Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
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Updated August 19, 2026. Quick answer: Pennsylvania Public School Employees’ Retirement System (PSERS) — the COLA is ad hoc (legislature only), and whether it compounds is not stated, service credit can be purchased, and no DROP was found. Vesting varies by class — 5 or 10 years depending on which class you are in, and one class could not be confirmed. The four decisions below are the ones that are hard to reverse.
Provisional. This page is published at medium confidence. The specific points that could not be confirmed are listed under What could not be verified below, and are named rather than smoothed over.
The verdicts
| Is the COLA granted? | Ad hoc (legislature only) |
|---|---|
| Is the COLA compounded? | Unstated |
| Vesting | Varies by class per PSERS’s Becoming Vested page: T-D — ≥5 years service with ≥1 year qualifying, OR age 62+ with ≥1 year qualifying. T-E and T-F — ≥10 years qualifying service, OR age 65+ with ≥3 years. T-G and T-H — DB component: ≥10 years qualifying, OR age 67+ with ≥3 years; DC component vests faster — 3 eligibility points (1 point per fiscal year of contributions); PSERS states T-G/T-H participants may vest in the DC Plan sooner than the DB Plan. Class DC (DC-only) — vests at 3 eligibility points. T-C vesting language was unclear/incomplete on the source page (‘special conditions apply… contact PSERS’) — UNCONFIRMED for T-C. |
| Buy service credit? | Yes |
| DROP? | None found |
| State | Pennsylvania |
Those first two rows are separate questions and are routinely confused. Whether you get an increase at all is one thing; whether it compounds is another. A system can grant an increase automatically every year and still compute it against your original pension forever, which is a materially worse deal than it sounds.
The COLA
PSERS COLAs are not automatic/recurring; enacted via specific legislation. Most recent example per PSERS’s own COLA page: an increase for members who retired on or before July 1, 2001 was passed by the General Assembly and signed into law as Act 21 of 2026 (signed July 12, 2026). Beneficiaries and survivor annuitants are explicitly excluded from this increase. Increases are retroactive to July 1, 2026. Act 21 of 2026 increase amounts vary by retirement date: from 15% (retired between July 2, 2000 and July 1, 2001) up to 24.5% (retired before July 2, 1982). Only applies to those who retired on or before July 1, 2001 — retirees after that date received no COLA under this act.
Buying service credit
Prior PA public-school service (‘Former Uncredited Full-Time/Part-Time Service’); ‘Return of Refunds’ (buying back previously withdrawn service); Non-Qualifying Part-Time (NQPT) service; military service (Intervening/draft-related, Non-intervening — up to 5 years after 3 years of school service, and activated duty on/after July 1, 2013 under specific conditions); Out-of-State School Service (1-12 years max) and U.S. Government Service in education roles (subject to forfeiting other retirement benefits); Approved Leave of Absence for professional study, Special Sick Leave, and Maternity Leave (only if before Nov 1, 1978); County Board of School Directors service, County Nurse Service, Cadet Nurse Service. Class T-H has no DB purchasing options except USERRA; Class DC has no DB plan to purchase into.
What it costs. For NQPT and most non-school/non-state service, full actuarial cost, calculated from projected total credited service, final average salary, contributions, and interest, plus the projected funds needed for the corresponding portion of lifetime benefit. Military service pricing follows the Class T-C/T-D calculation method as an exception.
Run your own numbers before deciding — some purchases never recover their cost, and the calculator shows which.
Taking a refund
On refund, PSERS pays the member’s own contributions plus interest earned — but ‘by law, PSERS will not credit interest to accounts that are not vested,’ and interest for non-vested members ceases at termination. The page also states ‘Vested members may request to receive a refund of their contributions and interest and also receive a monthly retirement benefit’ — the exact mechanics of this were NOT clearly resolved from the fetched source; UNCONFIRMED pending direct read of the full page or the PSRS-59 refund application form. UNCONFIRMED in detail. PSERS’s Refunding Contributions page (as retrieved) states only that a member with a break in service may request a refund of contributions and interest; it does not itemize whether employer contributions, purchased service credit, future DB eligibility, or retiree health (Premium Assistance) eligibility are explicitly forfeited. Indirect evidence: ‘Return of Refunds’ is listed as a purchasable service category (implying a refund otherwise removes that service credit); Premium Assistance (retiree health) eligibility is tied to eligibility points/years of service, so a refunded member who doesn’t buy back the credit would not separately qualify. This is a reasonable inference, not a directly quoted forfeiture statement. Yes, indirectly — ‘Return of Refunds’ is a listed purchase category allowing a member who returns to PA public school employment to buy back previously withdrawn service and restore the associated credit. The specific pricing formula for this category (vs. the general ‘full actuarial cost’ basis) was not separately confirmed.
This is the irreversible one. Refund versus leaving it in sets out the decision in the order it should be made.
An ad hoc COLA is not a COLA you can plan on.
PSERS increases come only when the legislature grants one, so a retirement plan that assumes an annual inflation adjustment is assuming something Pennsylvania has not promised. That gap is worth pricing before you file. The matching service below introduces you to advisers who pay to meet you.
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DROP
No DROP program found across PSERS's full Member Resources navigation (New to PSERS / Active Members / Leaving Employment / Retired Members, including the Retiring and Retirement Benefit Options pages). N/A N/A
This is an absence-of-evidence finding: it means a DROP does not appear in the materials reviewed, not that the system has published a denial. DROP is rarer than it appears — of the twelve systems checked for this guide, only one has an active programme.
Survivor options
Described generally on PSERS's Retirement Benefit Options page for DB-plan retirees; not broken out separately by membership class in the source text retrieved. Options: Maximum Single Life Annuity, Option 1, Option 2, Option 3, and a Customized Option. Not absolutely irrevocable, but changes are limited: under Options 2, 3, or a Customized option with a survivor, the retiree may name a new survivor and/or elect a different option if marital status changes or the designated survivor dies before the retiree, with PSERS recalculating based on the new survivor's age/gender. The source does not state whether it can be changed for any other reason, implying it is otherwise locked in at retirement.
What could not be verified
psers.pa.gov now redirects to the Commonwealth's pa.gov agency portal; all facts pulled from that official PSERS section. Two areas need direct-document follow-up before publication: (1) exact contribution rates/DB multiplier for legacy classes T-C, T-E, T-F were not located (only T-D, T-G, T-H, DC rates/formulas were found) — do not assume they match T-D or T-G/T-H; (2) precise mechanics of what a refund forfeits were ambiguous in the retrieved text — re-verify via the full Refunding Contributions page or the PSRS-59 form. DROP absence is a reasonably confident inference from comprehensive site navigation but not an explicit PSERS denial. Do not confuse PSERS with PMRS or SERS, both separate PA systems that do have different rules and surfaced in DROP-related searches.
These gaps are stated because a plan-rule page that hides its own limits is worse than no page. Your member handbook is the authority, and where it and this page disagree, the handbook wins.
Sources
- https://www.pa.gov/agencies/psers.html
- https://www.pa.gov/agencies/psers/member-resources/new-to-psers/class-election
- https://www.pa.gov/agencies/psers/member-resources/active-members/becoming-vested
- https://www.pa.gov/agencies/psers/member-resources/active-members/purchasing-service-credit
- https://www.pa.gov/agencies/psers/member-resources/leaving-employment/vesting-deferring-retirement
- https://www.pa.gov/agencies/psers/member-resources/leaving-employment/refunding-contributions
- https://www.pa.gov/agencies/psers/member-resources/leaving-employment/retirement-benefit-options
- https://www.pa.gov/agencies/psers/member-resources/retired/cola
- https://www.pa.gov/agencies/psers/member-resources/retired/health-insurance
Read 2026-08-04.
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Related: buyback calculator · is buying service credit worth it · refund or leave it in · DROP explained.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Powers of attorney, guardianship and trusts are governed by STATE law and differ change, and interest rates published by the IRS change every month - never rely on a rate quoted on any page, including this one. We are not a law firm or a tax adviser, and this is not legal or tax advice.