Missouri Teacher Retirement: PSRS and PEERS Benefits and Rules

Missouri teacher retirement runs through one of two statewide defined benefit pension systems: the Public School Retirement System of Missouri (PSRS) for certificated employees, and the Public Education Employee Retirement System (PEERS) for non-certificated school staff. Whichever system covers you, the promise is the same — a monthly check for life, calculated by formula from your salary and years of service, once you meet the eligibility rules.¹

Which System Covers You

PSRS covers licensed teachers, administrators, and other staff who hold a certificate from the Missouri Department of Elementary and Secondary Education. PEERS covers non-certificated public school employees such as bus drivers, custodians, food service workers, and paraprofessionals.¹

Both are defined benefit plans. Your eventual income is set by a formula, not by investment performance, and the monthly benefit is guaranteed for life.² You don’t opt in or out, and you don’t pick between plan types the way private-sector workers sometimes can.

When You Can Retire

Vesting

You become vested after five years of eligible service in either system. Once vested, you can leave covered employment at any age, keep your contributions in the system, and collect a monthly benefit when you later reach retirement eligibility.³ Leave before five years and you can withdraw your own contributions plus interest, but you forfeit any future monthly benefit.

Normal Retirement

Both PSRS and PEERS use three paths to full retirement benefits with no reduction:

Age 60 with five years of service.
Any age with 30 years of service.
Rule of 80 — your age plus your years of service equal 80 or more. A teacher who starts at 22 and works continuously could qualify around age 51.

Meeting any one of these gets you the full benefit formula.⁴ PEERS members follow identical thresholds.⁵

Early Retirement

If you’re vested but haven’t hit normal retirement, PSRS offers two early paths: “25-and-Out,” available once you’ve completed at least 25 years of service, and an “Age-Reduced” option at age 55 with at least five years of service. Both come with a permanently reduced benefit factor. For PEERS, an age-reduced option applies a 1.61% benefit factor instead of the normal rate. The reduction is permanent, so you’re trading lifetime monthly income for earlier access.

How Your Monthly Benefit Is Calculated

The PSRS formula is straightforward: 2.5% × final average salary × years of service = annual benefit. Your final average salary is a monthly average of your three highest consecutive years of PSRS-covered salary, and it includes employer-paid health, dental, and vision insurance premiums.⁴

A concrete example: a teacher with 30 years of service and a final average salary of $5,500 per month would receive $5,500 × 0.025 × 30 = $4,125 per month under the Single Life plan. The 2.5% factor applies for members with fewer than 32 years of service at retirement. Each additional year of service adds another 2.5% of your final average salary to the check.

PEERS uses the same structure with a smaller multiplier: 1.61% per year of service at normal retirement, reflecting the generally lower salaries of non-certificated positions.

Choosing Your Payout

At retirement you pick from six benefit plans. The choice is permanent and affects both your monthly income and what your survivors receive after your death.⁶

The Single Life benefit pays the largest possible monthly amount for your lifetime and stops at your death. No payments continue to anyone. This is often the right choice if you have no dependents or your beneficiary has adequate income from other sources.²

Joint-and-survivor options reduce your monthly benefit during your lifetime so a designated beneficiary keeps receiving a portion after your death. You pick the survivor percentage; higher percentages mean a larger reduction to your own check while you’re alive.

The Partial Lump Sum Option (PLSO) pays a one-time amount at retirement in exchange for permanently reduced monthly benefits. You choose a lump sum equal to 12, 24, or 36 times your Single Life monthly benefit.⁴ There’s a catch that surprises many members: you must work at least three years past your normal retirement eligibility date to qualify for the PLSO. Retire the moment you’re first eligible and the option isn’t available.

What Comes Out of Your Paycheck

Contributions are split equally between employee and employer. For the 2025–2026 school year:

PSRS: 14.5% from your paycheck plus 14.5% from the district, for a combined 29%.
PEERS: 6.86% from your paycheck plus 6.86% from the district, for a combined 13.72%.

These rates held steady from the prior year.⁷ Your contributions come out pre-tax, so you won’t pay income tax on them until you receive them back as retirement benefits. The employer match is automatic.

Cost-of-Living Adjustments

Your check isn’t frozen at the amount you first receive. The PSRS/PEERS board reviews cost-of-living adjustments each year based on the Consumer Price Index for Urban Consumers (CPI-U):⁸

CPI-U below 0%: no COLA.
CPI-U between 0% and 2%: no COLA until cumulative inflation reaches 2%, then a 2% adjustment applies and the cumulative counter resets.
CPI-U between 2% and 5%: a 2% COLA.
CPI-U at 5% or above: a 5% COLA.

Missouri law caps the annual COLA at 5% and sets a lifetime cap at 80% of your original monthly benefit. The January 2026 COLA was 2.0%.⁸

Social Security for Missouri Teachers

PSRS-covered employees do not pay into Social Security on their PSRS-covered wages. For years, this created a problem for teachers who earned Social Security credits through other employment, whether from summer work, a prior career, or a spouse’s record. The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) cut into those benefits.

That changed with the Social Security Fairness Act, signed into law on January 5, 2025. The law eliminates both WEP and GPO retroactive to benefits payable for January 2024 and later. The Social Security Administration completed over 3.1 million payments totaling $17 billion to affected beneficiaries by July 2025.⁹

For Missouri educators, any Social Security benefits earned from non-teaching employment are now paid in full. If you’re already retired and were receiving a reduced Social Security check, your benefit should have been adjusted automatically. If it hasn’t been, contact the Social Security Administration directly.

Missouri Tax Treatment

Starting with tax year 2024, Missouri allows eligible taxpayers to subtract public retirement benefits from state taxable income up to the maximum Social Security benefit amount. For tax year 2026, the exemption cap is $48,967.¹⁰ The benefit has to be included in your federal adjusted gross income to qualify for the state subtraction.

For most PSRS and PEERS retirees, this shelters a large share of pension income — often all of it — from Missouri state tax. Federal income tax still applies regardless of the state exemption.

Working After You Retire

Many retired Missouri educators come back to part-time or substitute work in public schools. Both systems allow it, with strict hourly limits. For PSRS retirees returning to certificated positions at K–12 districts or community colleges, the cap is 550 hours per school year (July 1 through June 30).¹¹ PEERS retirees face the same 550-hour limit for covered positions.¹²

Go over and there are real consequences. Your retirement benefits are put on hold for any month the limit is exceeded, and you must repay the lesser of the amount earned over the limit or your total monthly benefit for those months. You’re required to notify the system immediately if you exceed 550 hours, and you should report start and end dates for any covered employment.¹²

A Critical Shortage Employment provision lets certain retirees work beyond the standard limit, up to 48 months total throughout retirement, without losing benefits. PSRS retirees working in non-certificated positions at K–12 districts are generally not subject to the hourly limit unless working under Critical Shortage Employment.¹¹

Disability and Survivor Benefits

PSRS provides disability retirement benefits to members who become permanently unable to work. To qualify, you must have at least five years of PSRS-covered employment, be under age 60, and have become permanently disabled while employed or within one year of leaving if the disabling condition began during employment.¹³ The standard is strict: you must be incapable of earning a livelihood in any gainful occupation for which you’re reasonably qualified, not just unable to perform your current teaching role.¹⁴

If an active PSRS member dies before retirement, three types of survivor benefits may be available: a lump-sum payment of accumulated contributions and interest, retirement-based monthly benefits, and dependent-based monthly benefits. Retirement-based monthly benefits require at least five years of service and are payable to a single beneficiary who was financially dependent on the member.¹⁵

One detail catches many families off guard. If you name a trust or your estate as your PSRS beneficiary rather than an individual, the only benefit payable is the lump-sum refund of contributions and interest. Your family would not be able to elect monthly survivor benefits. Naming an individual beneficiary, and keeping the designation current, matters.¹⁵

Dividing Benefits in a Divorce

PSRS and PEERS benefits can be divided in divorce through a court order. The IRS calls the general mechanism a Qualified Domestic Relations Order (QDRO), which directs the plan to pay a portion of a participant’s benefits to a former spouse or other dependent. The order must specify the participant and each alternate payee by name and address, and state the exact amount or percentage to be paid.¹⁶

A former spouse receiving benefits under a domestic relations order can roll that distribution into their own retirement account tax-free. The order cannot award a benefit type or amount that the plan itself doesn’t offer, so the division is limited to what PSRS or PEERS would otherwise pay. Getting the order drafted correctly before submission to the retirement system prevents costly rejections.

1
PSRS/PEERS. About PSRS/PEERS
2
PSRS/PEERS. PSRS Member Handbook 2025-2026
3
PSRS/PEERS. What it Means to be Vested in PSRS/PEERS
4
PSRS/PEERS. Eligibility and Calculations
5
PSRS/PEERS. Frequently Asked Questions
6
PSRS/PEERS. Benefit Plans
7
PSRS/PEERS. Contribution Rates Remain Unchanged for 2025-2026
8
PSRS/PEERS. Cost-of-Living Adjustments (COLAs)
9
Social Security Administration. Social Security Fairness Act: Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)
10
Missouri Department of Revenue. Pension FAQs
11
PSRS/PEERS. Working After Retirement Limits
12
PSRS/PEERS. PEERS Working After Retirement Brochure
13
PSRS/PEERS. Disability Retirement Benefits
14
Legal Information Institute. Missouri Code of State Regulations 16 CSR 10-6.070 – Disability Retirement
15
PSRS/PEERS. Survivor Benefits
16
Internal Revenue Service. Retirement Topics – QDRO: Qualified Domestic Relations Order