Ask Jack

Ask Jack

Chief Executive Officer of CalSTRS, Jack Ehnes

Ask Jack is an online communication channel offered by CalSTRS CEO, Jack Ehnes. This Web forum solicits questions about the sustainability and administration of the CalSTRS Defined Benefit Program. Not all will be posted directly, but Jack’s responses will be inclusive of views and perspectives.

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Ask Jack Jack Ehnes

Ask Jack: I’ve read some 403(b) retirement savings plans have high fees that make them a bad deal. How do you tell the good plans from the bad?

How to choose the 403(b) investment vehicle that is right for you? CalSTRS members have access to up to 59 separate 403(b) supplemental tax sheltered investment vendors, offering 220 individual products, and a staggering 5,000 plus choices within those products. The vendors and products vary depending on where you work. That’s vexing.

Ask Jack Jack Ehnes

Ask Jack: Does the CalSTRS pension provide retirement security for California educators?

Yes, according to a recent study, Are California Teachers Better off with a Pension or a 401(k)?, conducted by Nari Rhee, PhD, of the UC Berkeley Center for Labor Research and Education and William Fornia, FSA, of Pension Trustee Advisors, the CalSTRS defined benefit pension provides a better, more secure retirement income when compared to an account-based cash balance or 401(k)-style plan.

Ask Jack Jack Ehnes

Ask Jack: Is there a stipulation on going back to work after retirement in a public school setting?

Yes, there are certain restrictions for working after retirement in a public school setting. If you return to work after service retirement in a CalSTRS-covered position, including substitute teaching, as an employee of a public school system, an independent contractor or an employee of a third party, there are restrictions under state and federal law that apply to you.

Ask Jack Jack Ehnes

Ask Jack: Can I retire after 30 years of service?
Can I retire regardless of my age at retirement without any deductions if I started teaching at age 25?

If you are a CalSTRS 2% at 60 member, which generally means you were first hired before 2013, you could retire as early as age 50 if you have at least 30 years of service. Otherwise, you cannot retire before age 55, and you must have at least five years of service. In either case, your benefit will be reduced for retiring at an earlier age.  

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Ask Jack: Can I transfer my service with CalSTRS to CalPERS?
I was a teacher for 10 years under CalSTRS and have been under CalPERS for the past 20 years.

No, you cannot transfer your service credit to CalPERS, but one option that you have when accruing benefits from more than one California public retirement system is concurrent retirement. You can retire concurrently if:

  1. You are at least age 55 and a member of certain other California public retirement systems, including CalPERS, and
  2. You retire from both systems either on the same day or on different dates as long as you do not perform service creditable to either system between those dates.
Ask Jack Jack Ehnes

Ask Jack: How does CalSTRS determine final compensation?

Final compensation is the highest average annual compensation earnable during a specified period of CalSTRS-covered paid employment.

If you have fewer than 25 years of service credit, your final compensation is based on your highest average compensation earnable during any period of 36 consecutive months of paid employment covered by CalSTRS under the CalSTRS 2% at 60 benefit structure.

Ask Jack Jack Ehnes

Ask Jack: What actions have been taken to correct the $73 billion CalSTRS funding gap?

In June of 2014, legislation was enacted to address a projected shortfall in the CalSTRS Defined Benefit Program.  The CalSTRS 2014 Funding Plan enacted in Assembly Bill 1469 sets the Defined Benefit Program on a sustainable course to eliminate the unfunded liability in roughly 30 years. This historic legislation calls for gradual, shared contribution increases from members, employers and the State of California over the next several years beginning July 1, 2014.

Ask Jack Jack Ehnes

If I am a substitute teacher and have no intention of getting my credential, now or in the future, do I still have to contribute to CalSTRS?

As a substitute teacher, you become a member of CalSTRS as early as the first day following the pay period in which you have performed 100 or more days of creditable service during the school year for a single employer (Education Code section 22503). Until passing that threshold, you can only become a member of the CalSTRS Defined Benefit Program by making a voluntary election in writing.

Participation in the CalSTRS Defined Benefit Program for California public school preK-12 teachers, community college instructors and public school administrators is mandatory; part-time educators can choose to become members.

Ask Jack Jack Ehnes

As a pre-2013 CalSTRS member who is still teaching, what happens if I leave teaching for 5 years and then return? Am I part of the new CalSTRS 2% at 62 group, or will I still receive CalSTRS 2% at 60 benefits for this future service?

If you were hired prior to 2013 but leave teaching for a period of time and return to the California public school system, the current CalSTRS 2% at 60 benefit plan will continue to apply to you.

The new CalSTRS 2% at 62 member benefit plan applies to those who are first hired to perform service that could be creditable to CalSTRS on or after January 1, 2013. The service you performed before 2013 was creditable to CalSTRS.

Ask Jack Jack Ehnes

If I plan on retiring in June 2015, how will the increases in contributions affect my retirement and benefits?

In addition to the increase in your contribution rates over the next three fiscal years ending July 1, 2016, Assembly Bill 1469 provides those members who pay the higher contribution rate a guarantee of the 2 percent annual benefit adjustment or improvement factor upon retirement.

Your retirement benefit is still otherwise based on a formula set by law that uses your years of service credit, your age at retirement and your final compensation to calculate your benefit.

Ask Jack Jack Ehnes

If I make a preretirement election and choose the 100% Beneficiary Option and die before I retire, what amount does my spouse receive?

When you are eligible to retire, you may make a preretirement election of an option to provide a monthly lifetime income for another person or persons if you should die before retirement.

When you elect an option, your monthly retirement benefit will be reduced from the Member-Only Benefit. The percentage of the reduction is based on the option you elect, your age and your beneficiary’s age at the time you elect an option.