Will my final compensation include any overload teaching, such as any course in addition to my regular full-time load?
If a member has completed their full-time load, the compensation earned from extra duty assignments, summer school or overload teaching is credited to the cash balance component known as the Defined Benefit Supplement Program and is not included in final compensation used to establish pension benefits associated with the Defined Benefit Program. (If a member earns less than a full year of service, such as when they retire in the middle of the school year, this additional service will be credited to the Defined Benefit Program, and will affect the final compensation.) A cash balance plan acts like a hybrid plan that contains features of a 401(k) plan and defined benefit plan. Contributions to the cash balance program component are made by both the employer and employee.
In a cash balance plan, a member has a nominal account in which contributions and any investment earnings are credited to the member’s account. At the time of retirement, disability, death or termination of program membership, the employee receives a benefit equal to the balance in that account as they would in a defined contribution plan.
A strong benefit to the cash balance plan component is that it serves as a built-in mechanism to prevent inappropriate benefit enhancement, while allowing members to still use their earned income toward retirement. Inappropriate benefit enhancement or pension spiking prevention is something CalSTRS takes seriously.