Ask Jack is an online communication channel offered by CalSTRS CEO, Jack Ehnes. This Web forum solicits questions about the sustainability 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.
Yes, CalSTRS offers a voluntary defined contribution plan, CalSTRS Pension2. This voluntary, personal wealth program features low fees and expenses, no surrender or load fees while providing you the opportunity to invest in 403(b), Roth 403(b) and 457 plans to build additional retirement savings. Pension2 offers Easy Choice Portfolios or the option to build your own portfolio. To better understand how CalSTRS Pension2 can become an important part of reaching your retirement goals, take a few minutes to watch our informational videos.
As a substitute teacher, you become a member of CalSTRS as early as the first day following the pay period in which you have performed 100 or more days of creditable service during the school year for a single employer (Education Code section 22503). Until passing that threshold, you can only become a member of the CalSTRS Defined Benefit Program by making a voluntary election in writing.
Participation in the CalSTRS Defined Benefit Program for California public school preK-12 teachers, community college instructors and public school administrators is mandatory; part-time educators can choose to become members.
If you were hired prior to 2013 but leave teaching for a period of time and return to the California public school system, the current CalSTRS 2% at 60 benefit plan will continue to apply to you.
The new CalSTRS 2% at 62 member benefit plan applies to those who are first hired to perform service that could be creditable to CalSTRS on or after January 1, 2013. The service you performed before 2013 was creditable to CalSTRS.
If you are a CalSTRS retired member looking to work in retirement within the California public school system, including the community college system, you are subject to the annual earnings limitation. The limitation for fiscal year 2014-15 is $40,173.
In addition to the increase in your contribution rates over the next three fiscal years ending July 1, 2016, Assembly Bill 1469 provides those members who pay the higher contribution rate a guarantee of the 2 percent annual benefit adjustment or improvement factor upon retirement.
Your retirement benefit is still otherwise based on a formula set by law that uses your years of service credit, your age at retirement and your final compensation to calculate your benefit.
When you are eligible to retire, you may make a preretirement election of an option to provide a monthly lifetime income for another person or persons if you should die before retirement.
When you elect an option, your monthly retirement benefit will be reduced from the Member-Only Benefit. The percentage of the reduction is based on the option you elect, your age and your beneficiary’s age at the time you elect an option.
Although CalSTRS is not subject to the anti-assignment rules of ERISA or Internal Revenue Code Section 401 (a)(13), the Teachers’ Retirement Law does provide protection from creditor attachments, or what is referred to as an anti-assignment provision under Section 22006. This section of the law offers an exemption from creditors attempting to seek payment for debt by using a member’s pension benefit as payment.
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.
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.
The California State Teachers’ Retirement System website has been developed in compliance with California Government Code §11135, which requires that all electronic and information technology developed or purchased by the State of California is accessible to people with disabilities. There are various types of physical disabilities that impact user interaction on the web. Vision loss, hearing loss, limited manual dexterity, and cognitive disabilities are examples, with each having different means by which to access electronic information effectively.