The retirement incentive program is a permanent program that provides an additional 2 years of service credit to members of the Defined Benefit (DB) Program. To participate, school districts must be able to demonstrate cost savings. The retirement incentive program allows school districts to add 2 years of service credit to calculate a member’s benefit.

Member Eligibility

• I am participating in the Cash Balance Benefit Program, can I take advantage of the retirement incentives?

  No, the retirement incentive programs are only available to DB Program members.

• How can I receive the retirement incentive?

  The two years service credit retirement incentive benefit is provided to eligible members of the DB Program by participating school districts, community college districts, and county offices of education when the employer’s governing board takes formal action to provide the benefit to ALL of its employees eligible as members of the DB Program, AND the employer pays the benefit’s costs and associated administrative fees to CalSTRS.

• I am age 52 and have 28 years of credited service – will the additional service credit I receive count towards my eligibility to retire for service?

  No. A member must already be eligible to retire for service in order to receive the benefit.

• Does the additional service credit I receive count towards other CalSTRS benefit enhancements?

  No. The additional service credit does not count towards the service credit necessary to qualify for other CalSTRS benefit enhancements such as one-year final compensation, the career factor bonus or longevity bonus.

• How do I get an estimate of my retirement benefit including the retirement incentive program?

  You may estimate your retirement benefit including the Retirement Incentive increase by utilizing the CalSTRS Retirement Benefits Calculator.

  You may also schedule an appointment for a benefits counseling pre-retirement interview with one of CalSTRS trained benefits counselors. During your pre-retirement interview you will receive an estimate of your retirement benefit including the retirement incentive. Individual counseling interviews may be done in person or by telephone.

Employer Eligibility

• Which employers are eligible to offer the retirement incentive?

  To be eligible, the school district, community college district or county office of education is required to certify that its participation in the CalSTRS retirement incentive program will result in cost savings AND the employer pays the benefit’s costs and associated administrative fees to CalSTRS.

  (CalSTRS employers may no longer offer the existing retirement incentive program as a result of declining enrollment, or for the retention of credential employees or employees qualified to teach in teacher shortage disciplines, unless the employer adopted the resolution prior to January 1, 1999 pursuant to a contractual obligation.)

• How does a CalSTRS employer pay the benefit costs?

  Either immediately or annually over an eight year period. An additional fee is associated with the payment plan, and regular interest (currently 6 percent annually) is charged on the balance.

• Can I pay the cost of the benefit if my employer doesn’t offer the retirement incentive?

  No. Your employer must pay the cost of the benefit. However, members currently are able to purchase up to five years of CalSTRS credit not related to actual service, called nonqualified service.

• Can Charter Schools offer either retirement incentive program?

  Yes.

• What if my employer adopted a resolution prior to January 1, 1999 to offer the old two year service credit retirement incentive after January 1, 2004?

  Any DB Program member who retires on or after January 1, 2004 with a two year additional service credit retirement incentive is subject to the rules enacted in Chapter 313, even if the employer had previously adopted a resolution under the old program.

Post-Retirement Employment Restrictions

• Are there other scenarios under which a CalSTRS member who retires with either retirement incentive program would forfeit the benefit by returning to work?

  Yes, any member will forfeit the retirement incentive benefit if he or she:

  • Reinstates to active service, or
  • Receives unemployment compensation within one year of the retirement date.
• If I forfeit the benefit increase how will my retirement benefit be reduced?

  Any member who forfeits the benefit increase would thereafter begin to receive a retirement benefit based on the level of service credit he or she had earned prior to retirement and being granted the retirement incentive.

  If your retirement allowance is overpaid as a result of losing the benefit increase, a receivable will be established and CalSTRS will collect the overpayment at a rate of five percent of your monthly benefit until the entire balance is paid.

Retirement After Reinstatement Enhancements

Many CalSTRS retirees find that they wish or need to return to employment in the California public school system while continuing to receive their retirement benefits. Others make the decision to forgo their retirement allowance for the time being and return to active status. When they do so, they may not retire again for at least a year. If they wait at least two years to re-retire, they may be eligible for certain benefit enhancements, as described below.

• How do I reinstate to active service?

  Request termination of your retirement allowance using form SR 857 (Reinstatement After Retirement).

• What happens if I reinstate and re-retire?

  A previously retired member who has reinstated, performed an additional two or more years of credited service* after the most recent reinstatement, and accumulated the total service credit shown below, may qualify for the following enhanced benefits when he or she again retires from service:

  Service Credit	Enhancements
  25 or more years	One-year final compensation
  30 years	One-year final compensation, career factor (additional 0.2 percent added to age factor), and $200 longevity bonus
  31 years	One-year final compensation, career factor, and $300 longevity bonus
  32 years	One-year final compensation, career factor, and $400 longevity bonus

  *Important note: Credited service excludes unused sick leave service credit, Golden Handshake or nonqualified service credit. Members who do not reinstate for at least two years before retiring again and, therefore, do not qualify for the benefit enhancements may nevertheless be eligible for an increased age factor, career bonus and/or higher final compensation upon retirement.

• Under what circumstances can the one-year waiting period be waived?

  The one-year waiting period may not be waived.

• I am retired and considering reinstating for at least two years before retiring again. If I currently have an option, will it apply to my subsequent retirement?

  Yes. If you elected an option, upon your reinstatement your selection will become a pre-retirement election of an option. This means that if you die while an active member, your wishes for an ongoing allowance for your survivor will be carried out. Alternatively, you may choose to cancel the option following reinstatement or elect a different option after one calendar year has elapsed following your reinstatement and before your subsequent retirement. Remember, if you choose to change or cancel an option, normal assessment rules will apply.For more information on assessments, please refer to topic 371 under Quick Topics. Also, if you retired with an unmodified allowance, you may elect a pre-retirement election of an option after one calendar year has elapsed following reinstatement and before your subsequent date of retirement. You may also choose to wait and elect an option at retirement.

• How will reinstating affect my eligibility for CalSTRS to continue paying the Medicare Part A premium?

  Once you reinstate to active status, CalSTRS will not continue to pay your Medicare Part A premium as this benefit is only available only for retired members. Once you re-retire, CalSTRS will resume payment of the Medicare Part A premium as long as you meet the eligibility criteria based on your prior retirement history.

• What if I reinstate and re-retire before I earn two years of credited service subsequent to my reinstatement?

  The law requires that you wait at least one calendar year following reinstatement before you can start receiving a retirement benefit again. It is important to note that the benefit enhancements described above will not be included in your new retirement calculation if you did not earn the minimum two years of credited service required for these benefits.

• How will my service retirement be calculated if I reinstate and work at least two additional years?

  The following illustrations will help you understand how your retirement allowance will be calculated if you reinstate and work at least two additional years as required to receive the benefit enhancements. This illustration shows what your retirement would be at the age of 63, with the 2.4 percent age factor, if you reinstate and earn an additional two years of credited service:

  Prior service credit   29.000
  Current age factor *   2.4%
  Current final compensation   $5,000
  Current service credit   2.000

  Prior Service Credit		Current Age Factor		Current Final Compensation		Prior Unmodified Benefit
  29.000	x	0.0240	x	$5,000	=	$3,480
  Current Service Credit		Current Age Factor		Current Final Compensation		Current Unmodified Benefit
  2.000	x	0.0240	x	$5,000	=	$240
  Subtotal Unmodified Allowance					=	$3,720
  Longevity Bonus for 31.000 years					+	$300
  Total Benefit					=	$4,020

  * Please note that the age factor used in to calculate your prior retirement will be based on your current age minus the amount of time spent in retirement.
  (For example, if your current age is 65, and you were retired for two years, the age factor will be based on age 63.)

• How do I get an estimate of the benefit I will receive if I re-retire at least two years after I reinstate to active service?

  You may submit a request for an estimate either by writing to CalSTRS or by calling CalSTRS at 1-800-228-5453.

• How do I submit a reinstatement request?

  In order to reinstate to active member status you must complete and submit form SR857 (Reinstatement After Retirement).