The retirement program designed for California's substitutes, part-time teachers, and adjunct instructors.
The Cash Balance Benefit Program is a retirement program for people employed by the
public schools of this state, and schools supported by this state, to perform creditable
service on an hourly, daily or temporary basis. The governing board of a school district,
community college district or county office of education may, by formal action, elect to
provide the benefits of the CB Benefit Program for eligible employees. CalSTRS administers
both the CB Benefit Program and the Defined Benefit Program. These two programs form a single
retirement plan known as the State Teachers' Retirement Plan.
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Employers may offer the CB Benefit Program to eligible employees.
Employers must elect through formal school board action, exclusively,
or in addition to other alternative plans, and/or Social Security.
If a school district, community college district or county office of education elects
to provide the CB Benefit Program, then:
- Employees hired by a school district or county office of education to perform
creditable services on an hourly or daily basis, or are contracted for less
than 50 percent for each full-time position, are eligible to become participants
in the CB Benefit Program on the later of: 1) the first day on which creditable
service is performed, or 2) the date of the governing board’s action to provide
the program, or 3) the effective date of the employer’s governing board’s action to
provide the CB Benefit Program, on condition the employee is not subject to mandatory
membership in the DB Program.
- Employees hired by a community college district to perform creditable service on a
part-time or temporary basis (semester to semester), or for not more than 60 percent
of the hours per week considered a regular full-time assignment, are eligible to become
participants in the CB Benefit Program on the later of: 1) the first day on which creditable
service is performed, or 2) the date of the governing board’s action to provide the
program, or 3) the effective date of the employer’s governing board’s action to provide
the CB Benefit Program, on condition the employee is not subject to mandatory membership in the DB Program.
- Persons who perform trustee service for an employer who has elected to provide the CB Benefit Program
may elect to participate for that service.
Elections
Employees have the right to elect coverage under either Social
Security; or an alternative plan in lieu of the CB Benefit
Program if the employer's governing board's action provides
for these options.
An election to participate in either Social Security or an
alternative plan does not prevent an employee from electing
to participate in the CB Benefit Program at a later date,
as long as the CB Benefit Program is provided by the employer
and the employee is eligible to participate in the plan.
Discontinued eligibility
- If a participant’s basis of employment with a school district or county office of
education that provides the CB Benefit Program changes to a contracted basis of 50 percent
of more per each full-time position, all creditable service performed for that employer shall
be subject to coverage by the DB Program.
- If a participant’s basis of employment with a community college district that provides the
CB Benefit Program changes to a contracted basis of 60 percent or more per each full-time
position, all creditable service performed for that employer shall be subject to coverage by the DB Program.
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Each employer contributes a minimum of 4 percent of salary
on behalf of each participating employee. Through the collective
bargaining process, employers are permitted to pay different
levels of employee and employer contributions, as long as
the following conditions are met:
- The sum of the employee and employer contributions equals
or exceeds 8 percent of employee salary, but in no event
shall the employer contribution rate be less than 4 percent.
- The employee and employer contribution rates are the same
for each participant employed by the employer.
- The contribution rates as determined under the collective
bargaining agreement become effective on the first day of
the plan year and remain in effect for at least one plan
year.
- The employee and employer contribution rate shall be in
one-quarter increments.
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A participant has an immediate vested right to a benefit,
equal to the sum of the balance of contributions, including
any compounded interest earned on his or her employee and
employer accounts.
The CB Benefit Program has a guaranteed interest rate which
is determined annually by the Teachers' Retirement Board.
The rate is based on the average of thirty-year U.S. Treasury
notes for the 12 months immediately preceding the plan year
(May - April).
The CB Benefit Program is a separate benefit structure within
CalSTRS CB Benefit Program contributions are invested at the
direction of the Board in internally pooled portfolios of
the Teacher's Retirement Fund. The CB Benefit Program has
ownership of units of these pooled portfolios, which reflect
market fluctuations of underlying securities on a daily basis.
Units are purchased using the current market value per unit.
Unitized funds are accounted for on a multiple class level,
which entails the sharing of one portfolio by two or more
owners. Income and portfolio level expenses are distributed
to each class level on a pro rata basis determined by the
amount of units owned as a percentage of the total units of
the portfolio.
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Funds accumulated in the Gain and Loss Reserve are used to
credit interest to participants' employee and employer accounts
during years when the rate of return on investments is less
than the guaranteed interest rate. Annual additions to the
Reserve are determined by the Board on earnings in excess
of those needed to credit the guaranteed interest rate and
pay administrative costs. The Gain and Loss Reserve will also
be used to ensure adequate funds are available in the Annuitant
Reserve for monthly annuity payments.
After the end of the plan year, when the total investment
earnings for the immediately preceding plan year are known,
the Board may declare an additional earnings credit. Any additional
earnings credit will be applied to participants' employee
and employer accounts.
Normal retirement age is 60, but no earlier than age 55 years.
A participant must terminate all creditable service and apply
for a retirement benefit. Distribution of a retirement benefit
must begin by age 70-1/2, unless still working.
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Both federal and California state tax codes provide for tax
penalties for certain early withdrawals. A 10 percent federal
and 2 percent state tax penalty may be assessed for early
withdrawals.
Participants may be permitted to transfer funds from eligible
retirement plans into the CB Benefit Program, as long as the
transfers are allowable under applicable federal and state
laws.
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Normal retirement benefit is a lump-sum benefit equal to
the balance of credits in participant's employee and employer
accounts. All of the lump-sum payment may be eligible to roll
over into an IRA, defined contribution plan, or other eligible
retirement plan that accepts such a rollover;
OR
Effective January 1, 2007, participant may choose one of the following five annuities,
if the participant's balance is $3,500 or more:
- Participant-Only Annuity
- 100% Beneficiary Annuity
- 75% Beneficiary Annuity
- 50% Beneficiary Annuity
- Period-Certain Annuity 3-10 Years
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If a participant becomes reemployed to perform creditable
service while receiving a monthly retirement annuity:
- Prior to 60 years of age, their annuity shall be terminated.
The employee/employer account of the participant shall be
credited with the actuarial equivalent balances as of the
date of reemployment.
- On or after 60 years of age but within one year of the
annuity commencement date, their annuity shall be terminated.
The employee/employer account of the participant shall be
credited with the actuarial equivalent balances as of the
date of reemployment.
However, if a participant becomes reemployed, to perform
creditable service under the plan, on or after age 60 and
more than one year after the annuity commences, the retirement
annuity shall continue and if the employment is covered by
Cash Balance participation the new employee/employer contributions
shall be credited to a new CB account established on behalf
of the participant.
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A participant may apply for disability at any time. All creditable
service subject to coverage by the CB Benefit Program must
be terminated prior to the disability date. A disability benefit
will become payable only upon determination by the Board that
the participant has a total and permanent disability.
Normal distribution is a lump-sum benefit. The benefit amount
is equal to the balance of contributions, interest and additional
credits in the participant's employee and employer accounts.
Effective January 1, 2007, the participant may choose one of the following five annuities
if the participant has a balance of $3,500 or more:
- Participant-Only Annuity
- 100% Beneficiary Annuity
- 75% Beneficiary Annuity
- 50% Beneficiary Annuity
- Period-Certain Annuity 3-10 Years
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Death of Participant Prior to Retirement
Normal distribution is a lump-sum benefit. The sum of the
balance of credits of the participant's employee and employer
accounts is payable to the named beneficiary. If no valid
beneficiary is designated, the lump-sum payment will be paid
to the participant's estate.
Beneficiary
A participant's beneficiary to whom a death benefit is payable,
may elect to receive the benefit in the form of an annuity,
provided the sum of the balance of credits to the participant's
employee and employer accounts equals or exceeds $3,500. The
beneficiary may choose a period certain annuity.
Death of Participant Receiving Annuity
Benefit payable in accordance with form of annuity elected
by the participant.
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Upon termination of all creditable service subject to coverage
by the plan, for any reason other than death, disability,
or retirement, a participant may apply for a lump-sum termination
benefit. The benefit amount is equal to the sum of the employee
and employer accounts, plus compounded interest as of the
date the benefit is paid.
Five-Year Rule
A participant may not apply for a termination benefit, if
less than five years has elapsed following the date that the
most recent termination benefit was distributed to the participant.
Waiting Period
The termination benefit is payable after six months has elapsed
following the date of termination of employment. The application
for the termination benefit will be automatically canceled
if the participant performs creditable service within six months
following the date of termination of employment.
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Additional Earnings Credit
- A percentage determined by the Board for a plan year by means
of a plan amendment and credited to employee and employer accounts
on a specified date.
Annuitant Reserve - Reserve
account established by the Board within the State Teachers'
Retirement Fund for the payment of monthly annuities with respect
to the CB Benefit Program.
Beneficiary - Any person(s)
or entity designated by the participant or otherwise entitled
by law to receive the death benefit under the plan.
Creditable Service - Specific
activities performed for an employer in a position requiring
a credential, certificate, or permit, or under the appropriate
minimum standards adopted by the Board of Governors of the California
Community Colleges, or under the provisions of an approved charter
for the operation of a charter school for which the employer
is eligible to receive state apportionment.
Death Benefit - Benefit
payable under the plan upon the death of the participant.
Defined Benefit Program
- California State Teachers' Retirement System Defined Benefit
Program as set forth in Part 13 (commencing with Section 22000)
of the Education Code.
Disability Benefit - Benefit
for permanent and total disability, that is an amount equal
to the sum of the participant's employee and employer accounts
as of the disability date.
Disability Date - Date the
benefit becomes payable to a participant who has been approved
for a disability benefit from the CB Benefit Program.
Employee Account - The nominal
account of the participant to which employee contributions and
interest and any additional earnings credits are credited under
the plan.
Employee Contribution Rate
- Percentage of the participant's salary withheld by the employer
as an employee contribution.
Employee Contribution -
Amount withheld from the participant's salary by the employer.
Employer Account - Nominal
account of the participant in which employer contributions on
behalf of the participant and interest and any additional earnings
credits are credited.
Employer - School district,
community college district, or county office of education that
has elected to provide the benefits of the CB Benefit Program
to persons employed to perform creditable service. Employer
does not include the state.
Employer Contribution Rate
- Percentage of salary the employer contributes to the CB Benefit
Program with respect to each employee who is a participant of
the program.
Employer Contribution -
Amount contributed by the employer to the program for each employee
who is a participant.
Full Time Equivalent - The
time that a person who is employed on a part-time basis would
be required to serve in a school year if he or she were employed
full time, as defined by Education Code Section 22138.5, in
that position.
Participant - Person who
has performed creditable service subject to coverage under the
CB Benefit Program, and who has contributions credited under
the CB Benefit Program or is receiving an annuity under the
CB Benefit Program by reason of creditable service.
Plan Year - Period commencing
on July 1 and ending on June 30 in the following year.
Reinstatement - Reemployment
with an employer in which creditable service subject to coverage
by the CB Benefit Program had previously been terminated and
a lump-sum distribution or annuity had been paid.
Retirement Benefit - Retirement
benefit payable is an amount equal to the sum of the participant's
employee and employer accounts as of the retirement date.
Retirement Date - Date the
benefit becomes payable to a participant who has applied for
a retirement benefit from the CB Benefit Program.
Salary
- Remuneration in cash for creditable service by an employer
to a participant. Salary does not include fringe benefits, job-related
expenses, money paid for unused accumulated leave, compensatory
damages, or severance pay. Annuity contracts, tax-deferred retirement
programs, or other insurance programs are not salary when the
cost is covered by an employer and not deducted from the participant's
salary.
Termination Benefit - Benefit
that is an amount equal to the sum of the participant's employee
and employer accounts payable under the provisions of the CB
Benefit Program upon termination of all creditable service.
Total and Permanent Disability
- Any medically determinable physical or mental incapacity that
is expected to prevent the participant from performing creditable
service for the employer for a continuous period of at least
one year.
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