Penn State faculty and staff members participate in one of several different retirement programs: the State Employees' Retirement System (SERS); the Teachers Insurance and Annuity Association College Retirement Equity Fund (TIAA-CREF); or the Public School Employees' Retirement System (PSERS). Also, under very specific circumstances, some employees of the Penn State College of Agriculture may be able to continue participation in the Federal Civil Service Retirement.
IMPORTANT: Your choice of a retirement plan, once made, is irrevocable. You may not change retirement plans.
Your selection of a retirement plan is part of your on-line benefits enrollment through ESSIC, and is the first of a two-step process. You also must complete an enrollment form for your chosen retirement system.
If you choose TIAA-CREF, the ESSIC program will provide a link to the on-line TIAA-CREF enrollment form for Penn State employees. Alternatively, you can access the TIAA-CREF retirement enrollment form from the Employee Benefits Division web site. SERS will provide enrollment form materials to those who elect to participate in the State Employee's Retirement System.
Over 95% of Penn State faculty and staff belong to either SERS or TIAA-CREF. Regardless of the plan that is chosen, employees are required to contribute to their retirement plan. The contribution per pay by SERS participants is 6.25% of gross salary. TIAA-CREF members contribute 5.00% of their gross salary. All Penn State retirement plan contributions are tax deferred.
The SERS plan is available to both faculty and staff at Penn State. As a defined benefit plan, retirement income is determined by the employee's length of service and by his or her average salary for the three highest years of earnings. Since SERS retirement is calculated on a formula basis, a member of the SERS plan who retires at age 60 or older, or who has 35 or more years of service, can estimate the amount of his or her basic annual SERS retirement benefit by applying the following formula:
The TIAA-CREF retirement program is a defined contribution plan. Retirement income is determined by the amount contributed by the employee (5%), the amount contributed by Penn State as the employer (9.29%), and the performance of the underlying investments that the participant chooses.
Retirement income from membership in TIAA-CREF is determined by the amount of money that has been contributed to the account by the employee and the University, the age at retirement and the performance of the TIAA-CREF investments. Therefore, there is no rule of thumb for calculating too far in advance the amount of TIAA-CREF benefit that an individual might receive at time of retirement.
Faculty and staff must carefully consider which retirement plan option will best meet his or her situation based on a number of factors. Additional information about the TIAA-CREF organizations and other plan details is available in the Retirement Plan Comparisons as well as the Frequently Asked Questions for retirement plans.
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