Frequently Asked Questions: AB 340, the Public Employees’ Pension Reform Act of 2013
On September 12, 2012, Assembly Bill 340 (AB 340), the California Public Employees’ Pension Reform Act of 2013 (PEPRA) was signed into law.
Given the unique benefits offered as part of the CalSTRS comprehensive hybrid retirement system, the provisions of AB 340 will impact current and future members differently. Changes to the CalSTRS benefit program under AB 340 primarily affect those who are first hired on or after January 1, 2013.
What is CalSTRS-covered employment?
CalSTRS-covered employment is any of the following activities performed either as an employee of a CalSTRS employer; an employee of a third party contracted to perform services within the California public school system; or an independent contractor within the California public school system:
- The work of teachers, instructors, district interns, and academic employees employed in the instructional program for pupils, including special programs such as adult education, regional occupation programs, child care centers, and prekindergarten programs.
- Education or vocational counseling, guidance, and placement services.
- The work of directors, coordinators, and assistant administrators who plan courses of study to be used in California public schools, or research connected with the evaluation or efficiency of the instructional program.
- The selection, collection, preparation, classification, demonstration, or evaluation of instructional materials of any course of study for use in the development of the instructional program in California public schools, or other services related to school curriculum.
- The examination, selection, in-service training, or assignment of teachers, principals or other similar personnel involved in the instructional program.
- School activities related to, and an outgrowth of, the instructional and guidance program of the school when performed in addition to other activities described in this list.
- The work of nurses, physicians, speech therapists, psychologists, audiometrists, audiologists, and other school health professionals.
- Services as a school librarian.
- The work of employees who are responsible for the supervision of persons or administration of the duties described in this list.
- The work of superintendents of California public schools.
New vs. Existing Member
I was a part-time educator before 2013, but my service was covered by Social Security, not CalSTRS. If I join the DB Program in 2013, which benefit plan will apply to me?
The current benefit plan will apply to you because you were first hired to perform creditable activities before 2013.
If I was in the DB Program, quit teaching in 2012, took a refund, and returned to teaching in 2013, which benefit plan will apply to me?
The current benefit plan will apply to you. The new benefit plan applies to those who are first hired to perform service that could be creditable to CalSTRS on or after January 1, 2013. The service you performed before 2013 was creditable to CalSTRS. The current benefit plan applies whether or not the refunded contributions are redeposited.
Eliminating the Purchase of Nonqualified Service (Air time)
Will I still be able to buy out-of-state service after 2012?
Yes. AB 340 did not affect other types of service credit purchases, including purchases of out-of-state service. Members will also continue to be able to redeposit previously withdrawn contributions.
I started paying for air time service in 2012, but I wasn’t going to finish paying it off for 10 years. Will I be able to do that?
Yes. You can complete your purchase after January 1, 2013. The prohibition on purchasing air time only applies to requests that are received after 5:00 p.m. on December 31, 2012. Your request has been received and processed if you are in the midst of paying for your air time.
Do I have to be vested in order to purchase air time?
Yes, you must be vested on or before the date you submit your request to purchase air time. If you submit a request prior to being vested, your request will not be accepted.
If I retired before 2013 and I am over normal retirement age, will the 180-day period in which my benefit is reduced for any compensation apply to me?
No. If your most recent retirement is prior to 2013 and you are over normal retirement age, the zero dollar limit for the first 180 calendar days of retirement will not apply to you. If you reinstate and re-retire in the future, after January 1, 2013, the zero dollar limit will apply for the 180 calendar days after your most recent retirement.
If I retired before 2013 and I am under normal retirement age, will the 180-day period in which my benefit is reduced for any compensation apply to me?
Yes. You are subject to the laws that were in effect prior to the passage of AB 340, and you are subject to the zero dollar limit for the first six months after your most recent retirement.
If I retired several years ago but did not have a break in service, do I have to stop working for 180 days to avoid a reduction in my benefit?
No. If your most recent retirement happened more than 180 calendar days ago, the required 180-day break in service does not apply to you. You will not have your benefit reduced unless you earn more than the annual earnings limit ($40,011 in 2012-13).
If I retired on or after January 1, 2013, will the 180-day period in which my benefit is reduced for any compensation apply to me?
Yes. If your most recent retirement is on or after January 1, 2013, the zero dollar limit for the first 180 calendar days of retirement will apply to you, regardless of your age.
If I am retired but work for a company that provides services to the public schools, will my benefits be affected by the earnings limit?
Yes. The earnings limit applies to CalSTRS-covered activities performed as an employee of an employer, as an employee of a third party, or as an independent contractor within the California public school system. If you are working for a third party, you may be excluded from the earnings limit only if:
- The third-party employer does not participate in a California public pension system;
- The activities you perform are not normally performed by employees of an employer; and
- It is an assignment held for 24 months or less.
If I retire and go to work for CSU, will my CalSTRS benefit be affected by the earnings limit?
No. CalSTRS has no limitation on compensation earned outside the California public school system. This includes earnings from work in private industry, private schools, public schools outside of California, or the University of California or California State University systems.
Can my unused sick leave still be converted to service credit upon my retirement?
Yes. The ability to convert unused sick leave to service credit at retirement remains the same.
I am a member of CalSTRS and a concurrent retirement system. Can I still retire concurrently?
Yes. The ability to retire concurrently remains the same. If you are a new member, you are subject to the new age factors and three-year final compensation, as well as the other limitations on compensation for new members.
Defined Benefit Supplement Program
I’m a new member as of January 1, 2013. Do I have a DBS account?
As a new member first hired to perform CalSTRS creditable activities on or after January 1, 2013, you will only have a DBS account if you perform creditable service that exceeds one year of service credit in a school year.
If I am a new member as of January 1, 2013, and have less than a year of service credit, will my extra assignment which had been credited to the DBS Program continue to be credited to the DB Program?
Yes. If you have worked less than a year and have an extra assignment, that service credit and those contributions will continue to roll over to the DB Program to fill out that year.
I’m a current member. Do I still have a DBS account?
If you were a CalSTRS member between January 1, 2001, and December 31, 2010, you have a DBS account. You may also have a DBS account if you received compensation for creditable service that exceeded one year in a school year or that was paid for a limited number of times. The laws that apply to your DBS account as a current member remain the same.