CalSTRS Takes Pension Spiking Seriously
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 instances 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 member’s career.
Compensation Review Unit: In September 2011, CalSTRS formed an additional, anti-spiking, Compensation Review Unit (CRU) focused on analyzing individual instances to determine if compensation changes have resulted in pension spiking.
Creditable Compensation Changes Effective in 2015: New regulations give employers and CalSTRS staff clear guidelines to ensure all members are being credited properly, consistently and fairly for their service. The regulations will also help CalSTRS identify, evaluate and determine instances of pension spiking – the boosting of pay at the end of a career to increase a pension benefit.
AB 340, The Public Employee Pension Reform Act: Places a cap equal to 120 percent of the Social Security wage base on creditable compensation that may be counted toward CalSTRS retirement benefits for workers hired on or after January 1, 2013. The cap is adjusted each year based on changes to the Consumer Price Index for All Urban Consumers (the 2016–17 compensation cap is $139,320).
Pension Abuse Reporting
- Pension Abuse Reporting Hotline
Report an instance of suspected pension spiking or other abuse to CalSTRS.
News Releases on Prevention Efforts
- CalSTRS Statement on the Adoption of Creditable Compensation Regulations
- CalSTRS Pension Abuse Hotline and Compensation Review Unit Announced
Information, Resources and Reports on Pension Spiking Prevention
- Plan Perspective: We’re Serious About Preventing Spiking
CalSTRS CEO Jack Ehnes discusses what CalSTRS is doing to prevent pension spiking in this blog entry.