CalSTRS will automatically establish an account under
the DBS Program for all DB Program members who perform creditable
service and make contributions to CalSTRS on creditable compensation
earned for that service.
Each member of the DB Program will continue to contribute
eight percent of their CalSTRS-covered salary toward retirement.
However, 1/4 of those contributions (two percent of salary)
will be allocated to a DBS Program account established for
the member and the remaining 3/4 of the contributions on creditable
compensation earned by the member will go to the DB Program.
The partial allocation of contributions to the DBS Program
will not affect any benefits available under the DB Program
to the member or to those persons already receiving benefits.
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A member’s right to an amount equal to the member’s
Defined Benefit Supplement account balance will be vested
at the time contributions are initially credited to the member's
account.
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The DBS Program has a guaranteed interest rate which is determined
annually by the Teachers' Retirement Board (TRB). 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). For 2006-07, the guaranteed interest rate is 4.75 percent.
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The DBS Program is a separate benefit structure within the
state Teachers' Retirement Plan. DBS Program contributions
are invested at the direction of the Teachers' Reirement Board
(TRB) in internally pooled portfolios of the Teacher's Retirement
Fund (TRF). The DBS 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 accumulate in Gain and Loss Reserve to credit interest
to members' 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 TRB
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.
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The board may declare an additional earnings credit to be
applied to Defined Benefit Supplement accounts for a plan
year. Prior to declaring an additional earnings credit, the
board shall consider all of the following:
(1) Whether the plan’s investment earnings with
respect to the Defined Benefit Supplement Program for the
plan year exceed the amount required to meet the liabilities
identified in paragraphs (2), (3), and (4).
(2) The amount required for the plan year to credit
interest on members’ nominal accounts at the minimum
interest rate.
(3) The amount of the plan’s administrative
expenses with respect to the Defined Benefit Supplement Program
for the plan year.
(4) The sufficiency of the Gain and Loss Reserve
and whether any additions must be made to that reserve.
For any plan year that the board declares an additional earnings
credit, the board shall specify the amount to be added to
members’ accounts as a percentage increase. The additional
earnings credit shall be applied to the balance of credits
in each member’s nominal account as of the last day of
the plan year and shall be applied as of the date specified
by the board. The additional earnings credit shall not be
added to the balance of credits transferred from a member’s
Defined Benefit Supplement account to the Annuitant Reserve.
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When the board declares an additional earnings credit for
a plan year, the board also may declare by plan amendment
an additional annuity credit, for members and annuity beneficiaries
who are receiving an annuity, based on the remaining balance
of credits in the member's Defined Benefit Supplement account.
The additional annuity credit, if declared by the board, will
be paid in a lump-sum.
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Both federal and California state tax codes provide for tax
penalties for certain early withdrawals. A 10 percent federal
and two percent state tax penalty which is subject to change
may be assessed for early withdrawals.
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A member who meets the following eligibility requirements
will receive a retirement benefit under the Defined Benefit
Supplement Program:
(1) The member has terminated all employment to perform
creditable service subject to coverage by the plan. The member’s
employer or employers if the member has multiple employers,
shall certify on a form prescribed by the system that the
member’s employment has been terminated.
(2) The member has retired for service under the
Defined Benefit Program.
(3) A member has submitted a completed application
for a retirement benefit on a form prescribed by the system.
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A member’s retirement benefit under the Defined Benefit
Supplement Program will be an amount equal to the balance
of credits in the member’s Defined Benefit Supplement
account on the date the retirement benefit becomes payable.
A retirement benefit will be a lump-sum payment, or an annuity
payable in monthly installments, or a combination of both
a lump-sum payment and an annuity, as elected by the member
on the application for a retirement benefit.
A member may elect to receive the retirement benefit as an
annuity provided the balance of credits in the member’s
DBS account on the date the benefit becomes payable equals
at least $3,500 after any lump-sum payments have been made
from the account.
Effective January 1, 2007, a member who is retiring may choose one of
the following five annuities:
- DBS Member-Only Annuity (formerly known as a Single Life Annuity With
a Cash Refund),
- DBS 100 percent Beneficiary Annuity (formerly known as DBS 100 percent
Joint and Survivor Annuity),
- DBS 75 percent Beneficiary Annuity,
- DBS 50 percent Beneficiary Annuity (formerly known as DBS 50 percent
Joint and Survivor Annuity), or
- a period certain annuity payable over a specified number of years from
a minimum of three years to a maximum of 10 years.
Upon distribution of the entire retirement benefit in a lump-sum payment,
no other benefit will be payable to the member or the member's beneficiary
under the Defined Benefit Supplement Program.
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If a member reinstates from service retirement, payment of
a retirement annuity will terminate. The member’s Defined
Benefit Supplement account will be credited with the actuarial
equivalent of the member’s annuity as of the date the
annuity is terminated.
If the member subsequently retires again, an annuity based
on the remaining balance of credits in the member’s Defined
Benefit Supplement account at the time of the subsequent retirement
will become payable.
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A member will receive a disability benefit under the Defined Benefit Supplement Program beginning on the effective date of the member's disability retirement or disability allowance benefit.
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The member's disability benefit under the Defined Benefit Supplement Program shall be an amount equal to the balance of credits in the member’s Defined Benefit Supplement account on the date the disability benefit becomes payable.
A disability benefit will be a lump-sum payment, or an annuity payable in monthly installments, or a combination of both a lump-sum payment and an annuity, as elected by the member on the application for a disability benefit.
Upon distribution of the entire disability benefit in a lump-sum payment, no other benefit will be payable to the member or the member's beneficiary under the Defined Benefit Supplement Program.
A member may elect to receive the disability benefit as an annuity provided the balance of credits in the member's DBS account on the date the benefit becomes payable equals at least $3,500 after any lump-sum payments have been made from the account.
A member may choose one of the following annuities:
- Member-Only annuity (a single life annuity with a cash refund feature)
- 100 percent beneficiary annuity
- 75 percent beneficiary annuity
- 50 percent beneficiary annuity
- Period certain annuity payable over a specified number of years from a minimum of three years to a maximum of 10 years
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If a member’s disability allowance or disability retirement
allowance is terminated, payment of a disability annuity will
terminate. The member’s Defined Benefit Supplement account
shall be credited with the actuarial equivalent of the member’s
annuity as of the date the annuity is terminated.
If a disability allowance or a service or disability retirement
allowance subsequently becomes payable again, an annuity based
on the remaining balance of credits in the member’s Defined
Benefit Supplement account at the time of the subsequent disability
or service or disability retirement becomes payable.
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A final benefit under the Defined Benefit Supplement Program
will become payable when the system receives proof of the
member’s death.
If the member’s death occurs before an annuity under
the Defined Benefit Supplement Program becomes payable, the
final benefit will be an amount equal to the balance of credits
in the member’s Defined Benefit Supplement account on
the date of the member’s death.
A beneficiary, other than an entity, may elect to receive
the final benefit as an annuity provided the balance of credits
in the member’s Defined Benefit Supplement account equals
at least $3,500. The beneficiary who elects to receive an
annuity will elect one of the following forms of payment:
- A period certain annuity payable over a specified number
of years from a minimum of three years to a maximum of 10
years, but not to exceed the life
expectancy of the beneficiary.
The beneficiary may designate a payee to receive the remaining
balance of payments if the beneficiary’s death occurs
prior to the end of the period certain.
If the death of a member occurs while the member is receiving
an annuity under the Defined Benefit Supplement Program, the
final benefit will be payable in accordance with the terms
of the annuity elected by the member.
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The termination benefit is a lump-sum payment that is equal to the
balance of credits in the member's Defined Benefit Supplement account.
Upon termination of all employment to perform creditable service subject
to coverage under the plan for a reason other than retirement,
disability, or death, a member will be eligible for a termination benefit.
To qualify for a termination benefit, a member must not have
been paid a termination benefit in the last five years.
Upon distribution of the termination benefit, no further
benefit will be payable to the member or the member’s
beneficiary under the Defined Benefit Supplement Program.
If a member submits an application for a refund of contributions under
the Defined Benefit Program, that application will also be deemed an
application for a termination benefit under the Defined Benefit Supplement Program.
A termination benefit is payable after six months have elapsed following
the date the member terminated employment. If the member performs creditable
service within the six months following termination of employment,
the termination benefit will not be payable and the application will be cancelled.
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Additional Earnings Credit
A percentage determined by the TRB for a plan year by means
of a plan amendment and credited to members' DBS accounts
on a specified date.
Annuitant Reserve
Reserve account established by the TRB within the CalSTRS'
Cash Balance Fund for the payment of monthly annuities.
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.
Defined Benefit (DB) 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 paid to a member who meets the definition of disability or
disabled, that is an amount equal to the balance of credits in the
member's account as of the disability date.
Disability Date
Date the benefit becomes payable to a member who has been
approved for a disability benefit from the DBS Program.
Employee Account
The nominal account to which 2 percent of the member's 8 percent
are diverted along with accrued interest and any additional
earnings credits credited under the plan.
Employee Contribution Rate
Percentage of the member's salary withheld by the employer
as an employee contribution.
Employer
School district, community college district, or county office
of education that has elected to provide the benefits of the
DBS Program to persons employed to perform creditable service.
Employer does not include the state.
Final Benefit
Benefit payable under the plan upon the death of the member.
Full Time Equivalent (FTE)
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.
Member
Person who has performed creditable service subject to coverage
under the DB Plan, and who has contributions credited under
the DBS Program or is receiving an annuity under the DBS Program
by reason of creditable service.
Plan
The State Teachers' Retirement Plan.
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 DBS 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 balance
of credits in the member's account as of the retirement date.
Retirement Date
Date the benefit becomes payable to a participant who has
applied for a retirement benefit from the DBS 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, severance pay, annuity contracts, tax-deferred
retirement programs, or other insurance programs.
Termination Benefit
Benefit that is an amount equal to the balance of credits
in the member's account payable under the provisions of the
DBS Program six months after termination of all creditable service.
Disability or Disabled
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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