WEST SACRAMENTO, Calif. – Continued growth in the equity market, coupled with a bias to U.S. companies, fed a second year of healthy investment returns at the California State Teachers’ Retirement System (CalSTRS), which closed the 2013-14 fiscal year with an 18.66 percent return on its investments.
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) today announced the election of Corporate Governance Investment Officer Aeisha Mastagni to the Board of Directors of the International Corporate Governance Network (ICGN).
Ask Jack is an online communication channel offered by CalSTRS CEO, Jack Ehnes. This Web forum solicits questions about the funding and administration of the CalSTRS Defined Benefit Program. Not all will be posted directly, but Jack’s responses will be inclusive of views and perspectives.
No, the annual benefit adjustment for anyone who retired on or prior to January 1, 2014 has not changed; nor has the administration of this benefit changed for this population of the CalSTRS membership.
CalSTRS is the only pension system for California’s public school and community college educators. All public schools, community colleges and some charter schools participate in the CalSTRS comprehensive hybrid system. Retirement benefits and eligibility for full-time members are the same for all California public schools and do not change from district to district.
How you accumulate service credit depends upon your employment status, specifically whether or not you are a full-time or part-time educator. Service credit is the accumulated period of time, in years and partial years, during which you receive creditable compensation and make contributions to the Defined Benefit Program. Full-time educators typically earn one year of service credit for working one school year. For part-time educators, service credit for one school year is the hours or days actually worked compared to the full-time equivalent, or what would be required if employed full time in that position.
You are not required to begin to receive a retirement benefit once you stop working in a CalSTRS-covered position; you can leave your money in CalSTRS until you reach age 70 1/2 or request a refund. You’ll be officially retired as of the date you request on your Service Retirement Application.
Although a plan to address CalSTRS’ approximately $74 billion funding shortfall has yet to be enacted, recent activity suggests one may be forthcoming within the year. For some time CalSTRS has said closing the funding gap can occur through a gradual and predictable increase in contribution rates, fair to all parties involved. However, because the Teachers’ Retirement Board lacks the authority to adjust contribution rates, the Legislature and Governor must act to adopt a plan.
During the first 180 days of retirement, any compensation you earn from CalSTRS-covered employment, either as an employee of the school district, an independent contractor or as an employee of a third party performing service for a school district, will be offset by a reduction in CalSTRS benefits paid during that time. In addition, there is an annual limit on how much you can earn after retirement for such employment.
You are not required to begin to receive a retirement benefit once you stop working in a CalSTRS-covered position; you can leave your money in CalSTRS until you reach age 70 ½ or request a refund. You are officially retired as of the date you request on your Service Retirement Application.
Valuations operate akin to a measuring stick. They guide appropriate changes and decisions necessary to sustain the long-term viability of the fund. More specifically, the primary purpose is to analyze the sufficiency of future contributions from members, employers and the state to meet current and future obligations of the Defined Benefit Program.
The separation from service requirement seeks to curb the practice of retiring from a position and drawing a pension benefit from that service while returning to the same or similar position and earning a salary in that position. This practice is often referred to as double dipping and was a major concern of the Legislature and the Governor as they discussed pension legislation last year.
Yes, you can return to teaching after retirement. If you return to work after service retirement while still collecting a CalSTRS benefit in a position with the California public school system as an employee, an employee of a third party, or an independent contractor, there are restrictions.
Both the $71 billion and $80.4 billion CalSTRS unfunded liability values are accurate, as reported in the June 30, 2012 valuation report. The $80.4 billion, referenced in the Governor’s 2014-15 Budget Proposal, represents the difference between the market value of assets and actuarial liabilities as of June 30, 2012. The $71 billion value of the unfunded liability cited by CalSTRS represents the difference between the actuarial value of assets and actuarial liabilities as of June 30, 2012. Both could be used to determine the cost of addressing the funding shortfall as either figure would result in the same required increase in contributions.
Yes, participation in the California State Teachers’ Retirement System is mandatory for full-time California public school preK-12 teachers, community college instructors and public school administrators; part-time educators can choose to become members.
No, California law does not allow you to take a partial refund or borrow against your accumulated contributions and interest on account with CalSTRS. Under the law, only members who are no longer employed by a CalSTRS-covered employer are eligible for a refund of accumulated retirement contributions.
The six-month separation from service, or zero dollar earnings limit, is a legally mandated provision found in the California Public Employees’ Pension Reform Act of 2013, (PEPRA) passed by the Legislature and signed by Governor Edmond G. Brown in September of 2012. The law became effective on January 1, 2013.
What is needed to provide stability to the Defined Benefit Program is an increase in contributions made by members, employers and the state. Right now, those contributions are set in statute and the Teachers’ Retirement Board has no authority to adjust the contribution rates. For many years, contribution rates have been remarkably stable; member rates have not increased since 1972, employer rates have not changed since 1990, and the state’s rate is lower than it was since 1997.
AB 1933 (Strom-Martin) was enacted in 2000 to encourage members to stay in the profession longer to address shortages in the classroom that were occurring at that time. The bill included a sunset date, which means that provisions of the bill would not apply to members who achieved at least 30 years of service after December 31, 2010.
The Legislature and the Governor must tackle the challenge of crafting a funding plan for the CalSTRS Defined Benefit Program. Unlike other California pension plans, the CalSTRS board lacks the authority to raise contribution rates – only the Legislature and Governor have the authority to do so.
Full-time educators typically earn one year of service credit for working one school year for creditable service performed. This service credit is applied to your traditional Defined Benefit retirement benefit.
Yes, compensation earned from extra duty assignments, summer school, overload or extended contract teaching is credited to the cash balance component of your retirement benefit known as the Defined Benefit Supplement Program if you otherwise work in a full-time assignment. This compensation is not included in final compensation used to establish pension benefits associated with the traditional Defined Benefit Program. At retirement, disability, death or six months following termination of CalSTRS-covered employment, the funds in your account will be available to you or your beneficiary, whichever is applicable.
Electronic privacy is crucial for the ongoing success of the Internet as a convenient means to provide customer service. Your personal information will be used only to conduct CalSTRS-related business.