Retirement Progress Report glossary
Glossary of terms used in CalSTRS Retirement Progress Report.
Additional earnings credit
A percentage increase to the account balance of Defined Benefit Supplement Program members and Cash Balance Benefit Program participants that is granted by the Teachers’ Retirement Board when investment earnings and, consequently, the funded status of the respective programs exceed certain thresholds.
The percentage of your final compensation that you will receive as a retirement benefit for every year of service credit. The age factor is based on your age on the last day of the month in which your retirement is effective.
The age factor for CalSTRS 2% at 60 members is 2% at age 60. The age factor gradually decreases to 1.1% at age 50 if you retire before age 60 and increases to the maximum 2.4% at age 63. The career factor may increase this amount.
For example, if you retire at age 60 and have 20 years of service, you will receive 2% (your age factor at age 60) of your final compensation multiplied by the 20 years of service credit. This equals 40% of your final compensation (2% x 20).
The age factor for CalSTRS 2% at 62 members is 2% at age 62. The age factor gradually decreases to 1.16% at age 55 if you retire before age 62 and increases to the maximum 2.4% at age 65.
CalSTRS 2% at 60 / CalSTRS 2% at 62
CalSTRS has two benefit structures. For Defined Benefit members, your benefit structure is listed on page 1 of your Retirement Progress Report.
- Members first hired on or before December 31, 2012, are under CalSTRS 2% at 60.
- Members first hired on or after January 1, 2013, are under CalSTRS 2% at 62.
In addition, educators who were members of another eligible public retirement system on or before December 31, 2012, and performed service in that system within six months of becoming a CalSTRS member are also under the CalSTRS 2% at 60 benefit structure, as are those who performed service that could be credited to the Defined Benefit Program that was subject to coverage under a different retirement system, including Social Security, on or before December 31, 2012.
The 2% refers to the age factor, or percentage of final compensation, that Defined Benefit Program members will receive as a retirement benefit for every year of service credit.
Pension2 is CalSTRS’ voluntary defined contribution plan that offers 403(b), 457(b), Roth 403(b) and Roth 457(b) plans for additional income in retirement. Select from a variety of investment options with low fees and expenses. To learn more, visit Pension2.
Available only for members under the 2% at 60 benefit structure. An increase in the percentage of final compensation on which your Defined Benefit service retirement is based. If you retire with at least 30 years of earned service credit, 0.2% is added to the age factor up to the maximum age factor of 2.4%, which is reached at age 61½ with the career factor instead of age 63. The career factor doesn’t apply if you die before retirement unless you filed a preretirement option election with CalSTRS. The career factor doesn’t increase the age factor beyond 2.4% at any age.
Cash Balance Benefit Program
The CalSTRS Cash Balance Benefit Program is a retirement plan for part-time, substitute, adjunct or temporary educators. Your district may offer the Cash Balance Benefit Program as an alternative to Social Security, private plans and the Defined Benefit Program. Your eligibility to participate in the program is determined by your basis of employment, rather than the actual number of hours or days you work, and whether your employer offers the program. Your Cash Balance contributions are made through pre-tax payroll deductions. There are no fees or expenses. In addition to a retirement benefit, you’re eligible for survivor and disability benefits.
For more information about the Cash Balance Benefit Program, see the “Benefits for part-time educators” section in the Member Handbook.
A CalSTRS randomly generated number used to identify members. CalSTRS uses this number instead of your Social Security number for security and privacy. Your Client ID is listed on page 1 of your Retirement Progress Report.
Specific employment activities such as teaching, vocational or guidance counseling, mentoring, services related to school curriculum and certain administrative duties performed for an employer in a position with certification qualifications authorized by the Commission on Teacher Credentialing or under minimum standards adopted by the Board of Governors of the California Community Colleges, or under the provisions of an approved charter for a charter school eligible to receive a state apportionment. Includes service performed by school health professionals, school librarians, superintendents and others as defined in California Education Code section 22119.5.
Current year excess service and enhancements
You can only earn up to one year of service credit in a school year, so part of your and your employer’s contributions for compensation from your service that exceeds one full year of service credit is credited to your Defined Benefit Supplement account at the close of the school year—8% or 9% of your compensation are your member contributions and 8% of your compensation from your employer. These contributions are not credited to the Defined Benefit Program. Any excess contributions above this amount are returned to your employer, who will return your portion to you.
For CalSTRS 2% at 60 members, certain other limited-term payments are also credited to your Defined Benefit Supplement account.
Defined Benefit account activity
This section lists your contributions, plus interest earned, for your Defined Benefit account. Contributions are shown for your beginning balance, current fiscal year contributions, any prior year adjustments made by your employer and end-of-year totals. The end-of-year total is the amount you would receive if you were to forfeit rights to your benefit upon a separation from service by requesting a refund. Your member contributions are listed by taxed and tax-deferred contributions.
Taxed (or after-tax) contributions are those for which you already paid taxes. In general, you will not have any contributions in this field unless you redeposited or purchased permissive service credit with after-tax dollars.
Tax-deferred (or before-tax) contributions are those for which both state and federal income taxes are deferred until after you retire or take a refund after ending your CalSTRS-covered employment.
Defined Benefit Supplement Program
The Defined Benefit Supplement Program is a cash balance plan for Defined Benefit Program members that provides an additional retirement benefit. For every dollar you and your employer contribute to the program, your account is credited accordingly. Your account earns guaranteed interest and any additional earnings credits declared by the Teachers’ Retirement Board. Your benefits are paid as either a lump sum or an annuity equal to the total balance of your account. You and your employer make contributions on compensation earned from service in excess of one year of service credit, up to the compensation cap, and for CalSTRS 2% at 60 members, on limited-term payments. From January 1, 2001, through December 31, 2010, 25% of your regular monthly Defined Benefit member contribution was also credited to your account.
CalSTRS 2% at 62
You and your employer make contributions into this account on compensation earned for service performed in excess of one year of service credit, up to the compensation cap.
Defined Benefit Supplement account activity
This section lists contributions and interest earned in the Defined Benefit Supplement Program. These funds are paid to you when you begin to take a monthly benefit from the Defined Benefit Program, or six months after you terminate CalSTRS-covered employment and receive a refund of your Defined Benefit account contributions and interest. For more information, see “Your Defined Benefit Program membership” in the Member Handbook.
Defined Benefit Supplement account and annuity estimates
We use the information in your account to project your balance, generally at ages 55 and 60. If you have reached those ages, we use the next appropriate ages.
Disability and survivor benefit coverage
This section defines your coverage. You have Coverage A if you were hired on or before October 15, 1992, and did not elect Coverage B during a special election held between October 1992 and April 1993. If you were hired after October 15, 1992, or switched during the special election, you have Coverage B. For more information about these coverages, see the Member Handbook.
Electing a retirement option
When you’re eligible to retire, you may make a preretirement election of an option to ensure a monthly lifetime income for one or more loved ones after your death. When you elect an option, your monthly benefit will be reduced from the Member-Only Benefit. The percentage of the reduction is based on the option you elect, your age and the ages of your beneficiaries when you elect the option.
For more information, see the “Your retirement benefit” section in the Member Handbook.
Includes the information we’ve received from your employer regarding your employment in a CalSTRS-covered position.
Base hours are the number of hours you are required to work in one school year to earn one year of service credit in that position. For community college instructors and adult education instructors, base hour requirements for full-time and part-time instructors are different and must be at least the minimum time required by law. CalSTRS receives base hour information from your employer.
Under the CalSTRS Funding Plan, member contribution rates for the Defined Benefit Program increased. The member contribution rate for compensation creditable to the Defined Benefit Supplement Program, which includes compensation earned for service performed in excess of one year of service credit, is 8% for members under the 2% at 60 benefit structure. The member contribution rate for members under the 2% at 62 benefit structure is 9%.
If you earn compensation for service in excess of one year of service credit in a school year, your member contributions for this service in excess of the 8% or 9% Defined Benefit Supplement contribution rate will be returned to you by your employer.
CalSTRS will return any excess contributions to your employer in late September. Your employer is responsible for returning your excess member contributions to you. The total amount of your excess member contributions will be reported on your Retirement Progress Report. If you service retire on or before the Friday before Labor Day, we will return excess contributions to your employer. You will not receive a Retirement Progress Report in the fall—instead, you’ll find a report of your excess member contributions online on your myCalSTRS account (under the Services tab). If you have questions regarding the return of your excess contributions, contact your employer.
The highest average annual compensation earnable during a specified period of employment covered by CalSTRS.
CalSTRS 2% at 60: The final compensation period is 12 consecutive months if you have at least 25 years of service credit. Otherwise, the final compensation period is 36 consecutive months if you have fewer than 25 years of service credit.
CalSTRS 2% at 62: Final compensation is based on the highest average annual compensation earnable during any period of 36 consecutive months.
Final compensation for most disability benefits and some survivor benefits uses your earned, rather than earnable, compensation.
Hybrid retirement system
CalSTRS administers a hybrid retirement system consisting of traditional defined benefit (Defined Benefit Program), cash balance (Defined Benefit Supplement and Cash Balance Benefit programs) and voluntary defined contribution (CalSTRS Pension2) plans. CalSTRS also provides survivor and disability benefits.
- Traditional defined benefit plan: The CalSTRS Defined Benefit Program is a traditional defined benefit pension. It’s based on a formula that provides a fixed percentage of your final compensation as of the age you retire and your years of service credit, not on how much you contribute or how well CalSTRS investments perform.
- Cash balance plan: The CalSTRS Defined Benefit Supplement and Cash Balance Benefit programs are cash balance types of defined benefit plans to which employees and employers contribute fixed amounts and interest is credited at guaranteed annual rates. The Teachers’ Retirement Board may also grant additional earnings credits for both plans when the funded status exceeds certain thresholds after periods of substantial investment earnings. Retirement, disability, termination and death benefits are determined based on the total account balance. At retirement, you will receive all the funds in your account.
- Defined contribution plan: A retirement plan in which the benefit depends on your contributions, investment gains or losses, and expenses. Benefits under defined contribution plans are not guaranteed. Pension2 is the CalSTRS voluntary defined contribution plan. For more information, visit Pension2.
A member who has contributions and interest remaining in their Defined Benefit account but who did not perform creditable service during the last school year.
For CalSTRS 2% at 60 members, a benefit enhancement that increases your monthly benefit if you had at least 30 years of qualified service credit on or before December 31, 2010. The bonus will be reduced by an option factor if you choose an option.
Monthly Member-Only Benefit estimates
We project two possible retirement dates to help you plan your retirement. The Member-Only Benefit is usually the highest monthly benefit you can receive when you retire. This benefit does not include any reduction to provide a lifetime monthly benefit to someone after your death.
Modified Benefit estimates
If you made a preretirement election of an option to provide a monthly CalSTRS benefit after your death, we project two possible retirement dates, similar to the monthly Member-Only Benefit estimates, but show the reductions resulting from the option you elected.
A CalSTRS manager tasked with serving as an advocate for CalSTRS members and participants. The ombuds receives complaints from school employees, members and participants, employee organizations, the Legislature and the public regarding actions of CalSTRS employees. Contact the ombuds at 916-414-1411.
One-time death benefit recipient
Your survivors may be entitled to a one-time death benefit after you die. The amount of this benefit depends on your coverage and whether you die before or after retirement. This section describes your eligibility and lists any recipients you have named. For more information, see the “Your survivor benefits” section in the Member Handbook.
A plan feature that allows you to distribute your retirement benefit over your lifetime and the lifetime of one or more persons or the beneficiary of a special needs trust. Electing an option reduces your monthly payment in order to cover the extension of benefits to other people after your death.
- 100% Beneficiary Option: Upon your death, the Modified Benefit will be paid to your option beneficiary for life. If your option beneficiary predeceases you, your benefit will be raised to the Member-Only Benefit level.
- 75% Beneficiary Option: Upon your death, three-quarters of the Modified Benefit will be paid to your option beneficiary for life. If your option beneficiary predeceases you, your benefit will be raised to the Member-Only Benefit level.
- 50% Beneficiary Option: Upon your death, one-half of the Modified Benefit will be paid to your option beneficiary for life. If your option beneficiary predeceases you, your benefit will be raised to the Member-Only Benefit level.
- Compound Option: Upon your death, benefits will be paid to one or more option beneficiaries for life. The benefit paid to an individual beneficiary depends on the option and percent of the total benefit elected for that beneficiary.
The person or persons or beneficiary of a special needs trust you designate to receive a lifetime monthly benefit after your death. You must be eligible to retire to elect an option. There are additional guidelines for nonspouse option beneficiaries. For more information, see the “Your retirement benefit” section in the Member Handbook.
An actuarially determined factor used to calculate the reduction to your Member-Only monthly benefit when you elect an option to provide a lifetime monthly benefit to a designated option beneficiary after your death. The option factor is based on the option you elect, your age and the age of your beneficiaries at the time you elect an option.
Prior-year contribution adjustments
Includes prior-year information from your employer that we did not receive in time to include in last year’s report.
Service credit activity
Accumulated period, in full and partial years, for which you earned creditable compensation and made contributions under the Defined Benefit Program. This information includes your balance at the start of the fiscal year, how much you earned in the current fiscal year and your ending balance.
Service credit is one of the factors used to determine your eligibility for benefits under the Defined Benefit Program and cannot exceed 1.000 in any given school year. If you earn more than 1.000 year of service credit in a year, most of your member contributions and your employer’s contributions on compensation for service in excess of one year of service credit go to your Defined Benefit Supplement account.