We’re Serious About Preventing Spiking
As I go around the state speaking to teachers groups, I’m starting to get more questions about what CalSTRS is doing to prevent pension spiking. CalSTRS is the steward of your pension funds and we are working hard to ensure spiking is prevented, detected and corrected.
However, it’s important to recognize what the law says CalSTRS can and cannot do.
CalSTRS is charged with policing the system. We don’t make the rules, we enforce them. Unfortunately, the Education Code, which governs teacher pensions, doesn’t always have clear rules for what is and isn’t spiking.
Also, not every significant compensation increase represents spiking – a raise could appropriately reflect a change in responsibilities.
CalSTRS takes great care to be thorough, fair and deliberate in reviewing any suspected case of spiking before changing a member’s pension payment. Our members’ due process during these reviews is important because any resulting actions will affect their retirement income for life.
Our careful efforts to determine if spiking has occurred includes robust, risk-based reviews with automated processes that flag excessive salary bumps from one year to the next. Additionally, we have a school district audit program, which in fiscal year 2009-10 alone identified a total of nearly $1.7 million in overpaid benefits determined to be spiking that are now being recovered.
In 2001 we created a hybrid plan structure to ensure contributions made on compensation that is determined to be spiking or for summer school and other extra-pay assignments are credited to a cash balance account. The Defined Benefit Supplement account acts like a 401(k) and does not figure into a member’s final compensation for calculating pension benefits.
CalSTRS is taking more steps to improve its ability to address potential spiking including:
- Forming a Compensation Review Unit to identify and resolve potential pension spiking cases.
- Establishing a toll-free hotline where CalSTRS members, employees of school districts and county offices of education and CalSTRS staff can anonymously report suspicions of pension spiking.
CalSTRS has been aggressive in developing safeguards against spiking and working in partnership with the Legislature to preserve the trust and secure the financial security of California’s educators.
Regardless of the amount of a retiree’s CalSTRS benefit, we are working hard to ensure the member receives the pension they have earned and no more. It’s an issue of fairness to all California’s educators.