HARRISBURG, PA — Pennsylvania’s public school pension system is showing improved financial health, with rising funding levels, declining debt, and stronger long-term investment performance.
What This Means for You
- The pension system’s financial position is improving but remains underfunded
- School employer contribution rates are slightly decreasing
- Pension payouts continue to have a major impact on Pennsylvania’s economy
The Pennsylvania Public School Employees’ Retirement System reported its funded ratio rose to 66.6% for the fiscal year ending June 30, 2025, up from 64.8% the previous year.
The funded ratio measures how much money the system has compared to what it owes in future benefits. A higher percentage indicates improved financial stability.
Funding Progress and Lower Liabilities
The system’s unfunded liability—the gap between assets and promised benefits—declined by $1.1 billion, according to the actuarial valuation report.
Officials attributed the improvement to consistent employer contributions at required levels and steady payroll growth.
“PSERS has made steady progress strengthening the system’s financial position, and projections show that this trend is expected to continue in the years ahead,” Executive Director Uri Monson said.
Employer Costs and Membership Trends
The employer contribution rate, which is the percentage of payroll school employers must pay into the system, was set at 33.59%, down from 34%.
Officials said the reduction reflects payroll growth, though it was partially offset by demographic factors.
Active membership also increased to 261,669 in 2025, up from a pandemic-era low of 247,873, a 5.3% rise.
Total membership now stands at 542,434, representing roughly one in 25 Pennsylvanians.
Economic Impact of Pension Payments
PSERS paid approximately $7.7 billion in pension benefits during the 2024-25 fiscal year, with $6.9 billion distributed to Pennsylvania residents.
Officials estimate those payments generated about $9.6 billion in economic impact statewide.
“These results show steady progress and reinforce the importance of maintaining a disciplined, long-term approach to funding the system,” said Board Chair Richard Vague.
Investment Performance Exceeds Targets
A separate investment performance review showed the system’s returns exceeded its long-term target.
PSERS reported returns of:
- 11.74% over one year
- 9.58% over three years
- 8.10% over five years
- 8.53% over 10 years
These results surpass the system’s assumed long-term rate of return of 7%.
“PSERS’ solid performance highlights the value of maintaining a diversified investment strategy and a disciplined approach,” Vague said.
Board Actions and Next Steps
The board approved several new investment commitments totaling $425 million across multiple funds and authorized contract negotiations for actuarial services.
Trustees also adopted the system’s 2025 Stress Test Report, which evaluates how the pension system would perform under different economic and demographic scenarios.
The report will be submitted to the governor, General Assembly, and the Independent Fiscal Office for further review.
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