Retirement Incentive Program
The Retirement Incentive Program is a program provided by employers that would increase the service credit used in calculating the CalSTRS service retirement benefit.
This program allows Defined Benefit Program members who are eligible to retire to receive two additional years of service credit. If you return to work with the same employer within five years of retirement, or if you reinstate, you will lose the ongoing increase in your benefit.
To participate, school districts must be able to demonstrate cost savings.
I am participating in the Cash Balance Benefit Program, can I take advantage of the Retirement Incentive Program?
No. The Retirement Incentive Program is only available to Defined Benefit Program members.
How can I receive the retirement incentive?
The retirement incentive benefit of two years of service credit is provided to eligible Defined Benefit Program members by participating school districts, community college districts, and county offices of education when the employer’s governing board takes formal action to provide the benefit to all of its employees eligible as members of the Defined Benefit Program, and the employer pays the benefit’s costs and associated administrative fees to CalSTRS.
The two years of service credit may be provided to eligible Defined Benefit Program members by participating school districts, community college districts and county offices of education pursuant to a Memorandum of Understanding between the employer and the representative employee organization. The employer pays the benefit’s costs and associated administrative fees to CalSTRS.
I am age 52 and have 28 years of service credit. Will the additional service credit I receive count toward my eligibility to retire for service?
No. You must already be eligible to retire for service at the time the incentive is offered to receive the benefit.
Does the additional service credit I receive count toward other CalSTRS benefit enhancements?
No. The additional service credit does not count toward the service credit necessary to qualify for other CalSTRS benefit enhancements, such as one-year final compensation, the career factor or longevity bonus.
How do I get an estimate of my retirement benefits including the retirement incentive benefit?
You may estimate your retirement benefits using the Retirement Benefits Calculator.
You may also schedule a benefits planning session with a benefits specialist.
Which employers are eligible to offer the retirement incentive?
To be eligible, the school district, community college district or county office of education is required to certify that its participation in the CalSTRS Retirement Incentive Program will result in cost savings and the employer pays the benefit’s costs and associated administrative fees to CalSTRS.
CalSTRS employers may no longer offer the existing Retirement Incentive Program as a result of declining enrollment, or for the retention of credential employees or employees qualified to teach in teacher shortage disciplines, unless the employer adopted the resolution prior to January 1, 1999, pursuant to a contractual obligation.
How does a CalSTRS employer pay the benefit costs?
Either immediately or annually over an eight-year period. An additional fee is associated with the payment plan, and regular interest is charged on the balance.
Can I pay the cost of the benefit if my employer doesn’t offer the retirement incentive?
No. Your employer must pay the cost of the benefit.
Can charter schools offer the Retirement Incentive Program?
What if my employer adopted a resolution prior to January 1, 1999, to offer the old two-year service credit retirement incentive after January 1, 2004?
Any Defined Benefit Program member who retires on or after January 1, 2004, with a two year additional service credit retirement incentive is subject to the rules enacted in Chapter 313, even if the employer had previously adopted a resolution under the old program.
Postretirement Employment Restrictions
Are there other scenarios under which a CalSTRS member who retires with the Retirement Incentive Program would forfeit the benefit by returning to work?
Yes. A member will lose the ongoing increase in their benefit if he or she:
- Becomes an active member again by returning to CalSTRS-covered employment (reinstate).
- Receives unemployment within one year of the effective date of retirement.
- Returns within five years to any employment, including substitute teaching, working as a teacher’s aide or working as an employee of a third party with the school district that granted your incentive credit.
If I forfeit the benefit increase, how will my retirement benefit be reduced?
If you forfeit the benefit increase, additional years of service granted by the Retirement Incentive Program would no longer be included in your benefit calculation. Your new benefit would be based on your service credit without the additional two years of service credit.
If your retirement allowance is overpaid as a result of losing the benefit increase, a receivable will be established and CalSTRS will collect the overpayment at a rate of 5 percent of your monthly benefit until the entire balance is paid.