This page outlines how CalSTRS handles pension spiking, what we've done recently to improve our prevention, detection and resolution of suspected incidents of spiking, and how we intend to continue improving our capabilities.
CalSTRS takes pension spiking seriously. We have a fiduciary
responsibility to collect and ensure accurate reporting of
compensation. Efforts that improve our ability to aggressively
detect and pursue instances of suspected inappropriate pension
benefit enhancement, known as spiking, are underway.
CalSTRS determines spiking to be the inappropriate enhancement of
the retirement benefit, which most frequently occurs when an
employer pays an excessive increase in compensation to a member
at the end of his or her career. In cases where spiking has been
determined, CalSTRS adjusts benefits to the appropriate level and
collects overpayments in a manner consistent with the law.
Audits: CalSTRS regularly conducts school
district audits and analyzes employer compensation reports to
identify excessive increases that could enhance a member’s final
pension benefit. This includes an analysis of other risk factors,
such as large amounts of special compensation and inconsistent
pay raises throughout a members’ career. For calendar year 2012,
CalSTRS identified approximately $1,500,000 in benefit
overpayments based upon 19 employer audits.
Compensation Review Unit: In September 2011,
CalSTRS formed an additional, anti-spiking, Compensation Review
Unit (CRU) focused on analyzing individual cases to determine if
compensation changes have resulted in pension spiking. For
calendar year 2012, the CRU reviewed 175 cases and identified 13
individual overpayments totaling $320,000.
