CalSTRS Finds Half Million Dollars Overpaid to Yuba City School Retirees
Retirement Incentive payments were improperly added to final compensation affecting 54 retirees.
WEST SACRAMENTO, CA – The California State Teachers’ Retirement System (CalSTRS) announced today that it is in the process of recovering more than $500,000 in pension overpayments to 54 Yuba City Unified School District retirees, the result of incorrectly reported retirement incentive payments. The finding was made public in a .
The retirement incentives were erroneously added by the district to 54 educators’ final compensation. Final compensation is a key factor, along with service credit and age at retirement, when calculating CalSTRS pension benefits in the Defined Benefit (DB) Program.
The error took place over a seven-year period, from the 2002-03 to 2008-09 school years. The amount reported in error by the Yuba City Unified School District to the members’ DB accounts was slightly more than $127,000. As of November 30, 2012, the resulting overpayment in core pension benefits totaled approximately $563,600. The retirement incentive payments should have been reported to the members’ Defined Benefit Supplement (DBS) accounts, which act more like a 401(k) and include contributions based on supplemental pay.
“The results of this audit are painful for the affected retired members and underscores the vital importance of employer reporting accuracy,” said CalSTRS Chief Executive Officer Jack Ehnes. “Our efforts to improve the oversight of districts and CalSTRS’ ongoing educational efforts with them, we expect, will lead to fewer of these types of findings in the long run.”
The affected members’ monthly pensions will be reduced by amounts ranging from $12 to $922. CalSTRS will also begin collecting the overpayments from the members at a rate set by law and not to exceed 5 percent of the adjusted monthly benefit.
In some cases, CalSTRS calculates it will not be able to collect the entire overpayment amount from a member over a lifetime. In such instances, CalSTRS will collect the remainder from the district in accordance with the law. CalSTRS is in the process of determining who among the affected members falls into this category.
The California State Teachers’ Retirement System, with a portfolio valued at $157.8 billion as of December 31, 2012, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans, as well as disability and survivor benefits. For 100 years, CalSTRS has served California’s public school educators and their families, who today number 856,000 from the state’s 1,600 school districts, county offices of education and community college districts.