Since I retired in June of 2013, does that mean that I will no longer receive a 2 percent annual benefit adjustment?
No, the annual benefit adjustment for anyone who retired on or prior to January 1, 2014 has not changed; nor has the administration of this benefit changed for this population of the CalSTRS membership.
Members who currently receive the annual benefit adjustment will continue to receive this benefit in their October 1 payment, each year, following the anniversary of their benefit effective date, or what is essentially their retirement date, as has occurred in previous years.
Administration of the Annual Benefit Adjustment Pre-2014
For members who retired prior to January 1, 2014, the annual benefit adjustment, or improvement factor, is not a contractually guaranteed benefit. The Legislature explicitly reserves the right to adjust this benefit up or down should economic conditions dictate. However, no suggestions to adjust this benefit have been made, nor has this benefit been reduced or eliminated in the past.
Administration of the Annual Benefit Adjustment Post-2014
For members who retire on or after January 1, 2014, the Legislature cannot adjust the 2 percent annual benefit adjustment. It became vested as a result of the CalSTRS funding plan enacted by Assembly Bill 1469. This new legislation, which became effective on July 1, 2014, calls for full funding of the Defined Benefit Program through gradual increases in member, employer and state contribution rates. The change in the annual benefit adjustment is the only change that has occurred to this benefit and it comes in an exchange for member contribution increases.