Under the CalSTRS 2014 Funding Plan, contribution rates from all parties—members, employers and the state—to the Defined Benefit Program were increased gradually over several years.
The Defined Benefit Program contribution rates for members vary slightly depending on your benefit structure:
- CalSTRS 2% at 60 members (first hired on or before December 31, 2012): Your contribution rate is 10.25 percent of your creditable earnings.
- CalSTRS 2% at 62 members (first hired on or after January 1, 2013): By law, you must contribute 50 percent of the normal cost of your benefits. Your total contribution will be adjusted up or down depending on whether there are changes to the normal cost of benefits.
For 2017–18, your contribution rate is 9.205 percent of your creditable earnings.
Your contributions are withheld from your earnings by payroll deduction, and service up to one year is credited to your Defined Benefit account.
Defined Benefit Supplement Program
As of January 1, 2011, you and your employer each contribute 8 percent of your earnings, for a total of 16 percent, to your Defined Benefit Supplement account on earnings in excess of one year of service.
Limited-term payments or retirement incentives are also creditable to the Defined Benefit Supplement for 2% at 60 members only.
For more information about your contributions, see the CalSTRS Member Handbook.
Employer Pick-Up of Contributions
Most employers participate in the federal Employer Pick-Up Program under Internal Revenue Code section 414(h)(2). Under this provision, your employer “picks up” your CalSTRS contributions so that you can defer income taxes on that portion of your compensation.
Your contributions must be deducted from your compensation and considered creditable compensation for retirement purposes.
Your tax-deferred contributions are credited to your Defined Benefit account as “Employer-Paid Member Contributions.” The contributions are taxable when returned to you or your beneficiaries as a lump sum or monthly benefit.
Your Employer’s Contributions
For 2017–18, your employer—school district, community college district, participating charter school or county office of education—contributes an amount equal to 14.43 percent of your creditable earnings to CalSTRS.
Your employer’s contributions are not credited to your Defined Benefit account but are deposited into the Teachers’ Retirement Fund to help fund the benefits paid to all members and beneficiaries.
Under the CalSTRS 2014 Funding Plan, employer contributions on compensation creditable to the Defined Benefit Program will increase gradually up to 19.1 percent in 2020–21. Beginning in 2021–22, the Teachers’ Retirement Board has a limited rate setting authority to adjust the contribution rate up or down by no more than 1 percent per year up to a maximum contribution rate of 20.25 percent.
Defined Benefit Supplement Program
The employer contribution rate for compensation creditable to the Defined Benefit Supplement Program is 8.25 percent.
Of this amount:
- 8 percent is credited to your Defined Benefit Supplement account.
- 0.25 percent is credited to the DB Program to pay for the cost of service credit for unused sick leave.
For more information about employer contributions, see the CalSTRS Member Handbook.
The State’s Contributions
The state contributes 6.828 percent of members’ annual earnings to the Defined Benefit Program.
The state also contributes an additional 2.5 percent of member earnings into the CalSTRS Supplemental Benefit Maintenance Account. The SBMA account is used to maintain the purchasing power of benefits.