PSERS Defined Contribution Plan: T-G, T-H, and DC-Only Explained

If you were hired on or after July 1, 2019, you're in a fundamentally different retirement system than the veteran teachers down the hall. Act 5 of 2017 created three new membership classes — T-G, T-H, and DC-only — and two of them split your retirement between PSERS (the pension) and Voya Financial (the investment account). That dual structure introduces complications that legacy classes never deal with.

How the Hybrid Plan Works

Classes T-G and T-H combine a smaller defined benefit pension from PSERS with a defined contribution account administered by Voya Financial. You contribute to both, your employer contributes to both, and at retirement you'll draw income from two separate sources with different rules, different providers, and different tax treatment.

Class T-G (default): 5.50% of your salary goes to the DB component and 2.75% goes to the DC component, totaling 8.25%. Your DB multiplier is 1.25%.

Class T-H (elected): 4.50% goes to DB and 3.00% goes to DC, totaling 7.50%. Your DB multiplier is 1.00%.

Class DC-only (elected): 7.50% goes entirely to your DC account with no defined benefit component at all. Your retirement income depends entirely on your account balance and investment returns.

The employer also contributes to both components, with the DC employer match vesting after 3 eligibility points (generally three years of credited service).

Shared-Risk Adjustment

The DB contribution rates for T-G and T-H are subject to PSERS' shared-risk mechanism, evaluated every three years based on the system's 10-year investment performance. If returns beat the actuarial threshold, your DB rate decreases. If they fall short, it increases — within statutory limits of plus or minus 1.0% to 3.0%.

The current rates (effective July 1, 2024 through June 30, 2027) reflect a shared-gain decrease. The next evaluation covers the 10-year period ending June 30, 2026.

Your DC contribution rate is fixed and doesn't adjust with shared-risk evaluations.

The Voya Account

Your DC contributions go into a Voya Financial investment account. You choose from available investment options and manage the allocation yourself. The account balance belongs to you — subject to vesting rules for the employer match.

At retirement or separation, you'll handle DC distributions through Voya, not PSERS. Confirm the available options and tax treatment with Voya; the DC account is administered separately from your PSERS defined benefit pension.

DB vs. DC: What You're Trading

Legacy class members get a guaranteed monthly check based on a formula. Their risk is longevity — the pension pays as long as they live. Your hybrid structure splits that guarantee: the DB portion still provides a lifetime pension, but with a lower multiplier (1.25% or 1.00% compared to 2.0% or 2.5% for legacy classes). The DC portion's payout depends on how much you contributed, how the investments performed, and how you choose to withdraw.

For DC-only members, there's no guaranteed monthly pension at all. Your retirement income is your account balance, period. That's more flexibility but also more exposure to market risk.

The 5-Year FAS Difference

Your defined benefit pension uses a 5-calendar-year Final Average Salary instead of the 3-year period that legacy classes enjoy. A longer averaging window smooths out late-career salary spikes, meaning a big raise in your last year or two has less impact on your pension formula. Plan accordingly if you're counting on a late-career bump to boost your retirement income.

Planning with Two Providers

The biggest practical headache for hybrid members isn't the math — it's managing two separate retirement systems simultaneously. You'll request your DB estimate from PSERS (Form PSRS-151 through the MSS portal) and your DC balance from Voya's portal. Your exit counseling with PSERS covers only the DB component. Your DC distribution decisions are handled separately.

The Pennsylvania PSERS Retirement Guide walks through both components and how they interact at retirement, including the vesting timeline, distribution options, and the specific forms each provider requires.

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