Benefit payments and earnings accruals in the PSS

Members have asked us some questions recently about the processing of PSS benefits and specifically about the accrual of earnings on their benefit payments.

If you are a PSS contributor, when your benefit payment is processed, earnings on any lump sum benefit do not cease at the date of your exit but continue to be applied up to the date of processing.

You are probably already aware that, as a contributing member of the PSS your total defined benefit amount is unaffected by fund earnings because it's defined by your final average salary (FAS) and a factor called an accrued benefit multiple (ABM).

During the period your PSS benefit is accruing (i.e. the period when you are a contributing member) your employer bears the investment risk. Therefore, if investment returns are negative, the employer contributes more to guarantee your defined benefit. Money you have transferred from another fund, or co-contribution amounts is, however, be affected by fund earnings whether negative or positive.

Consistent with that guarantee of the defined benefit, if negative earning rates apply during the period between the date of your exit from the PSS and the date of the processing of your lump sum benefit, then the lump sum amount determined at the date of exit will be paid to you, therefore guaranteeing that you aren't exposed to any negative earnings rates during the benefit processing period. If earnings rates are positive you will receive the benefit of the additional earnings in your lump sum benefit.

Money you have transferred from another fund, or co-contribution amounts may be affected by fund earnings whether negative or positive.

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