About Employer Contribution Rates

• Number of Employees who are MembersGenerally, the higher the number of members there are on an employer’s payroll, the higher the employer's annual payment is. Membership in the Retirement System is falling — from March 31, 2002 to March 31, 2012, the total number of active members decreased from 544,530 to 536,599.
• Higher SalariesHigher salaries often increase an employer’s total bill. Since employer rates are billed as a percentage of salary, the more your employees earn each pay period, the more your contribution to the System increases.
• Retirement Plans and Options OfferedEmployers can choose to offer improved retirement plans or optional benefits (i.e. one-year final average salary for police officers and/or firefighters) to its employees. The greater the benefits offered, the greater the employer’s annual contribution. For example, if an employer chooses to provide a special plan for a specific employee group such as police officers or firefighters, the cost will be greater than a regular plan. A special plan allows for retirement after completing a specific number of years of credited service in specific job titles rather than attaining a certain age.

Description of Growth in Total Salaries (2002-2012) bar graph

Higher salaries often increase an employer’s total bill. Since employer rates are billed as a percentage of salary, the more your employees earn each pay period, the more your contribution to the System is likely to increase. Overall, this graph shows that, from 2002 through 2012, total salaries have risen from $21.2 billion to $27.5 billion. However, when you compare each system, the results are a bit surprising: while ERS salaries rose from $18.8 billion in FYE 2002 to $25 billion in FYE 2010, in each of the last two fiscal years, salaries have actually gone down. Conversely, PFRS salaries have continued to trend upward, from $2.3 billion in FYE 2002 to $3.2 billion in FYE 2012.

Description of Benefit Payments (2002-2012) bar graph

This graph shows that, from 2002 through 2012, benefit improvements have increased the System’s liabilities by 97.46%. The enhancements, such as cost-of-living adjustments and death benefits, are passed by the Legislature and signed into law by the Governor; they have helped fuel the dramatic surge in public pension costs over the last decade.