Pension Abuse Hotline and Compensation Review Unit Announced
Two major initiatives are now underway at CalSTRS to augment administrative activities focused upon detecting, preventing and reducing pension spiking. These programs were developed by an enterprise-wide anti-spiking task force that spent much of the last fiscal year identifying ways CalSTRS could strengthen its current processes.
Pension Abuse Reporting Hotline
The Pension Abuse Reporting Hotline will allow anyone to anonymously report cases of suspected pension abuse, including spiking–the inflation of pay during the final compensation period, for the purpose of increasing the pension benefit. The hotline is part of a multi-faceted reporting system comprised of:
- A toll-free telephone number: (855) 844-2468
- An online submission form available on the CalSTRS website.
- A separate confidential postal mail station to receive reports of suspected pension abuse or spiking. The address is:
P.O. Box 15275, MS-16
Sacramento, CA 95851-0275
Compensation Review Unit
In addition, the new Compensation Review Unit will focus on compensation changes that may signal pension spiking. The unit, comprised of Member Benefit Services division specialists, will gather the facts and analyze each case individually.
CalSTRS must conduct a thorough review of all suspected spiking cases to give members due process, as resulting actions could have significant implications on their lifetime retirement income.
These new components supplement ongoing efforts to address spiking that include:
- An automated salary review that flags annual salary bumps exceeding allowable limits. CalSTRS conducts reviews to determine whether the increase appropriately reflects changes in duties or were provided in order to spike the pension.
- A robust, risk-based school district audit program that identifies employers who have provided inconsistent or accelerated pay increases, particularly during an employee’s final compensation period. In 2009-10, 50 school district audits identified $1.7 million in overpaid monthly allowances that are now being recovered.
- A Defined Benefit Supplement Program, which created a hybrid structure in 2001, allows CalSTRS to ensure that contributions made on extra compensation for summer school or other extra-pay assignments are credited to a cash balance account that acts like a 401(k) and do not figure into final compensation, a factor in setting pension benefits.