If you are a member of the Pennsylvania Public School Employees’ Retirement System (PSERS), you may be entitled to a refund following a significant class action settlement. This legal action stems from a reporting error regarding investment performance that resulted in many school employees paying higher contribution rates than necessary. Understanding how to navigate the claim process is essential for ensuring you receive the money you are owed.
Understanding the PSERS Shared Risk Settlement
The PSERS shared risk settlement was established to resolve claims that the retirement system incorrectly calculated its investment returns for the period ending in 2020. Because the reported returns were lower than the actual performance, a “shared-risk” provision was triggered. This provision required members to contribute a higher percentage of their salary toward their pensions.
The discrepancy involved a 9-year investment return figure that was originally reported as 6.36%, just below the 6.38% threshold needed to avoid a rate hike. It was later revealed that the actual return was higher, meaning the rate increase should never have happened. The settlement aims to compensate those who were financially impacted by this calculation error.
What Is the Shared Risk Provision?
The shared risk provision is a mechanism designed to keep the pension fund stable. When investment returns fall below certain targets, both the state and the employees are required to contribute more to the fund. In this specific instance, the error led to an unnecessary increase in the employee contribution rate by 0.5% or 0.75%, depending on the member’s specific plan.
Who Is Eligible for a Refund?
Eligibility for the settlement generally includes current and former Pennsylvania public school employees who were active members of PSERS during the affected periods. If you saw an increase in your pension deductions starting in July 2021, you are likely part of the settlement class.
Specific Eligibility Criteria
- Class T-E and Class T-F Members: You must have been enrolled in these specific classes and made contributions between July 1, 2021, and the date the rates were corrected.
- Active Employment: You must have been employed by a Pennsylvania public school entity during the years the shared-risk rates were in effect.
- Contribution Records: Only those who actually paid the increased “shared-risk” rate are eligible for a refund of the overage.
Most eligible members should have received a formal notice via mail or email. This notice contains a unique Class Member ID, which is necessary for filing a claim or checking your status online.
How to File Your Claim
The process for claiming your portion of the settlement has been designed to be straightforward. However, it requires attention to detail to ensure your information matches the records held by the settlement administrator.
Step 1: Locate Your Notice
Check your mail and email for the official settlement notice. This document is the most important piece of information you will receive, as it confirms your eligibility and provides the credentials needed to access the secure filing portal.
Step 2: Visit the Official Settlement Website
Access the dedicated settlement website provided in your notice. Be cautious of third-party sites that may look similar; always ensure you are using the official portal designated by the court. This site will allow you to submit your claim electronically, which is the fastest method for processing.
Step 3: Enter Your Information
You will need to provide your Class Member ID and verify your contact information. If your address has changed since you were last employed by a school district, this is the time to update it to ensure your check reaches you safely.
Step 4: Review and Submit
Before submitting, review the calculated amount if it is provided. Most settlements of this type calculate the refund automatically based on payroll data provided by PSERS. Once you are satisfied that the information is correct, submit the form and save your confirmation number.
Important Deadlines to Remember
Class action settlements are strictly bound by timelines. Missing a deadline can result in the loss of your right to a refund or your right to object to the settlement terms. While these dates can sometimes shift due to court orders, you should aim to complete your actions as early as possible.
- Claim Filing Deadline: This is the final date by which your claim must be submitted or postmarked.
- Exclusion Deadline: If you wish to sue PSERS individually, you must “opt-out” or exclude yourself by this date.
- Objection Deadline: This is the final date to submit a formal letter to the court if you disagree with the settlement terms.
- Final Approval Hearing: The date the court will decide whether to officially approve the settlement and allow payments to begin.
What to Expect After Filing
Once the filing deadline passes, the settlement administrator must verify all claims. This process can take several months. After the court grants final approval and any potential appeals are resolved, the distribution of funds will begin.
How Much Will I Receive?
The amount of your refund depends on how much you overpaid into the system. For most members, this represents the difference between the standard contribution rate and the inflated shared-risk rate. For many, this amount ranges from a few hundred to over a thousand dollars, depending on their salary and years of service during the affected period.
Tax Implications
It is important to note that these refunds may be considered taxable income, as the original contributions were often made on a pre-tax basis. You should consult with a tax professional once you receive your payment to determine how to properly report it on your tax return.
Common Questions About the Settlement
What if I didn’t receive a notice?
If you believe you are eligible but did not receive a notice, you can contact the settlement administrator through the official website. You may need to provide your Social Security number or PSERS member ID to verify your status in the database.
Do I need a lawyer?
No, you do not need to hire your own lawyer to participate in this settlement. The class representatives have already retained counsel to represent the interests of all members. The legal fees for these attorneys are typically paid out of the total settlement fund and are approved by the court.
What if I am retired now?
Even if you have since retired, you are still eligible for a refund if you were an active employee paying the higher rates during the 2021-2024 period. The settlement is based on past contributions, not your current employment status.
Conclusion
The PSERS shared risk settlement is an important step in correcting a financial error that affected thousands of dedicated school employees across Pennsylvania. By following the steps to file your claim and staying informed about deadlines, you can ensure that you receive the reimbursement you deserve. If you have colleagues who worked during the same period, encourage them to check their eligibility as well. Taking a few minutes to verify your status today can result in a significant refund for your years of hard work in the education system.