1. C a l i f o r n i a S t a t e Te a c h e r s ’
Retirement System
Member Handbook
YOUR GUIDE TO CalSTRS BENEFITS
2007 – 2008
2. CalSTRS Resources Dial 800-228-5453
then press the numbers to access
Web sites
www.CalSTRS.com 1 2 3
Click Contact Us to e-mail Account Data Teletalk Statement of Account
Order Forms/Brochures
www.403bCompare.com
Call 800-228-5453
7 a.m. to 6 p.m. 4 5 6 0
Monday through Friday Survivor/Disability Cash Balance Benefits Counseling/ Customer
TTY 916-229-3541 Benefits Caseworker Benefit Program Workshops Service
866-384-4457
Home Loan Program
800-699-4032 The summarized data pertain to the Teachers’ Retirement Law
Voluntary Investment Program (California Education code 22000 et. seq.) and procedures effec-
Write CalSTRS tive January 1, 2007. The Member Handbook is intended as a ready
P Box 15275
.O. source of information about CalSTRS and not as a legal document or
Sacramento, CA 95851-0275 a substitute for the law. If differences appear between the law and the
Fax 916-229-3879 handbook, the law must prevail.
Permission is hereby granted to reproduce, copy, or duplicate the
Visit Member Services information in this handbook, provided credit is given to CalSTRS.
7919 Folsom Boulevard
Sacramento, CA 95826
3. www.CalSTRS.com
800-228-5453
Dear Member,
Welcome to the California State Teachers’ Retirement System. I am
pleased to present the latest edition of the Member Handbook. Whether
you are just beginning your career in education or are an experienced
educator, this handbook will answer many of the questions you have
about your benefit coverage. The information in it can help you make
informed decisions during your active career and prepare fully for
your retirement.
CalSTRS is the nation’s largest teachers’ pension fund and our
dedicated, professional and conscientious staff work hard to improve
service and responsiveness to your needs. Although we serve nearly
800,000 California educators and their families, we are committed
to providing exemplary service to each and every person who calls,
writes or visits CalSTRS.
Service to CalSTRS members and the security of the Teachers’
Retirement Fund remain our highest priorities. We look forward to
assisting you throughout your career and retirement.
Sincerely,
Jack Ehnes
Chief Executive Officer
Member Handbook 2007 • i
4. A Brief History of CalSTRS
The California State Teachers’ Retirement System was established by law in 1913 to provide
retirement benefits to California’s public school teachers. Membership in the CalSTRS Defined
Benefit Program includes all employees in California public schools from kindergarten through
community college in positions performing creditable service under the Defined Benefit Program.
Teachers’ Retirement Board
The Teachers’ Retirement Board sets policies, makes rules for, and administers the California
State Teachers’ Retirement System. The board is also responsible for ensuring benefits are paid by
the system in accordance with law.
Our 12-member Teachers’ Retirement Board is made up of:
• Three member-elected positions representing current educators.
• A retired CalSTRS member appointed by the Governor and confirmed by the Senate.
• Three public representatives appointed by the Governor and confirmed by the Senate.
• A school board representative appointed by the Governor and confirmed by the Senate.
• Four board members who serve in an ex-officio capacity by virtue of their office: Director of
Finance, State Controller, State Superintendent of Public Instruction and State Treasurer.
The board appoints a Chief Executive Officer to administer the system consistent with the
board’s policies and rules. The board also selects a Chief Investment Officer to direct the invest-
ment of the Teachers’ Retirement Fund in accordance with board policy.
The board has seven standing committees: Audits and Risk Management, Benefits and
Services, Board Governance, Investments, Compensation, Legislation and Appeals.
Teachers’ Retirement Fund
The Teachers’ Retirement Fund is a special trust fund established by law that holds the assets
of the CalSTRS Defined Benefit, Defined Benefit Supplement and Cash Balance Benefit programs.
The assets come from contributions by employees, employers and the state of California. The
fund’s investments create a stream of income to add to those assets.
When selecting investments, the Teachers’ Retirement Board applies standards of safety,
diversification, liquidity and structure for a complete and profitable investment portfolio. The
portfolio includes stocks, bonds, real estate and short-term investments. Within these catego-
ries, CalSTRS further diversifies by holding a variety of issues within each segment.
The Teachers’ Retirement Fund portfolio market value was $157.9 billion as of December 31,
2006. CalSTRS ranks as the nation’s second-largest public pension fund.
For further information about Teachers’ Retirement Fund investments, visit www.CalSTRS.com.
ii • A Brief History of CalSTRS • CalSTRS
5. www.CalSTRS.com
800-228-5453
ContentsFront and back covers are in a separate document ............................................. a
A Brief History of CalSTRS ..................................................................................ii
Teachers’ Retirement Board ...............................................................................ii
Teachers’ Retirement Fund .................................................................................ii
1. Introduction ..........................................................................................................................1
Quick Start Guide to CalSTRS Benefits and Services .......................................... 1
Where You Can Find Information ........................................................................ 2
Recent Legislative Changes to CalSTRS Benefits................................................ 4
2. Your Membership and Benefits.........................................................................................5
Membership in the CalSTRS Defined Benefit Program......................................... 5
Membership for Part-Time Employees ............................................................... 6
Contributions to Your DB and DBS Accounts....................................................... 7
Borrowing Against Your Accounts ....................................................................... 8
Retirement Progress Report .............................................................................. 8
What if You Become Disabled? .......................................................................... 9
What Happens When You Die? .......................................................................... 9
If You Terminate Your CalSTRS-Covered Employment ........................................... 9
Refunding Your CalSTRS Contributions ............................................................. 10
Redeposits – Restoring Service Credit ............................................................. 11
Defined Benefit Supplement Program ............................................................... 11
Changing Employment to a Different Public Retirement System ......................... 12
3. Benefits for Part-Time Educators....................................................................................15
Retirement Plans for Public School Employees ................................................. 15
Retirement Options for Public School Educators ............................................... 15
Social Security Program................................................................................... 18
Cash Balance Benefit Program ........................................................................ 18
Choosing Between Defined Benefit and an Alternative Retirement Program ........ 19
Consolidating Your Cash Balance and Defined Benefit Coverages ...................... 20
4. Building Your Financial Future ........................................................................................21
Step One – Determine How Much You Will Need in Retirement.......................... 21
Step Two – Attend a Workshop ........................................................................ 21
Step Three – Use CalSTRS Programs to
Build Supplemental Income and Achieve Home Ownership ............................... 22
Comparing 403(b) Plans .................................................................................. 23
CalSTRS Home Loan Program.......................................................................... 24
Step Four – Meet With a Benefits Counselor
to Get an Estimate of Your Retirement Benefit ................................................. 24
Benefits Counseling Offices by County/City ...................................................... 25
How Much Will You Need to Retire? ................................................................. 25
5. Approaching Retirement ..................................................................................................27
One-Time Death Benefit Recipient .................................................................... 27
Protecting Your Loved Ones Before You Retire ................................................. 27
About Social Security ...................................................................................... 29
Health Insurance............................................................................................. 31
Reduced Workload Program ............................................................................. 32
Retiring From Other Public Retirement Systems ................................................ 32
Member Handbook 2007 • iii
6. 6. Your Retirement Benefit ...................................................................................................33
Deciding When to Retire .................................................................................. 33
Retiring From More Than One Public Retirement System .................................. 34
How to Calculate Your Defined Benefit Retirement ............................................ 34
Ways to Increase Your Benefit.......................................................................... 34
Partial Lump Sum ........................................................................................... 38
Member-Only Benefit ....................................................................................... 39
Protecting Your Survivor with an Ongoing Benefit .............................................. 39
Defined Benefit Supplement Program .............................................................. 42
Guidelines for the Retirement Application Process ........................................... 44
Signing Up for Direct Deposit ........................................................................... 46
Benefit Estimate Worksheet ............................................................................ 47
Age Factor Table.............................................................................................. 48
Option Worksheets ......................................................................................... 49
Defined Benefit Supplement Annuity Calculation Estimates ............................... 54
7. After You Retire..................................................................................................................57
Annual Benefit Adjustment .............................................................................. 57
Purchasing Power Protection ............................................................................ 57
Medicare Premium Payment Program ............................................................... 57
Post-Retirement Employment ........................................................................... 57
Reinstatement to Active Member Status .......................................................... 58
Keeping You Informed ..................................................................................... 59
8. Disability Benefits ..............................................................................................................61
Before Filing a Disability Application ................................................................. 61
Reasonable Accommodation............................................................................ 61
Steps in the Disability Application Process ....................................................... 61
Filing a Disability Benefit Application ................................................................ 62
Coverage A or Coverage B ............................................................................... 64
Coverage A – Disability Allowance Program ....................................................... 64
Coverage B – Disability Retirement Program ..................................................... 68
9. Survivor Benefits................................................................................................................71
Coverage A or Coverage B – Family or Survivor Benefits .................................... 71
Coverage A – If You Die Before Retirement ....................................................... 72
Coverage B – If You Die Before Retirement ....................................................... 74
Defined Benefit Supplement Distribution .......................................................... 77
Coverage A or B – When You Die After Retirement ........................................... 77
10. Tax Information and Legal Matters..............................................................................79
Income Tax Withholding ................................................................................... 79
Internal Revenue Codes Affecting Benefits ....................................................... 80
Legal Matters ................................................................................................. 81
Members’ Rights – The Appeal Process ........................................................... 81
Community Property Information ...................................................................... 82
11. Teletalk Message Codes ................................................................................................83
Glossary of Terms ..................................................................................................................87
Index .........................................................................................................................................95
Checklist for a Secure Financial Future ............................................................. Back Cover
iv • Contents • CalSTRS
7. 1. Introduction
T he CalSTRS Member Handbook is for full-
time and part-time California public
educators, their beneficiaries, retirees and others
day of employment. You contribute 8 percent of
your pay as a CalSTRS member.
For an overview of your Defined Benefit
interested in the many benefits and services Program membership and benefits, see Section
offered through the California State Teachers’ 2, Your Membership and Benefits.
Retirement System. This guide is designed to
focus on the Defined Benefit Program and to Defined Benefit Supplement Program
explain its many components that can help Your Defined Benefit Supplement account
you to a secure financial future including retire- will provide you additional retirement
ment, disability and survivor benefits as well income based on the amount in the account.
as the Defined Benefit Supplement account. One-fourth of your CalSTRS 8 percent
From program descriptions to retirement benefit payroll contribution will be allocated to
formulas, examples and worksheets, this hand- your DBS account through 2010. If you
book can be used as a reference for retirement earn more than one year of service credit in
benefits, eligibility and planning. This guide a school year, contributions from both you
also includes a Checklist for a Secure Financial and your employer will also go into this
Future on the back cover and a Retirement supplemental account until you retire.
Application Timeline in Section 6, Your For information on this account, see
Retirement Benefit. Section 2, Your Membership and Benefits.
For information on how benefit choices affect
Quick Start Guide to CalSTRS the Defined Benefit Supplement account, see
Benefits and Services Section 6, Your Retirement Benefit.
The following briefly introduces the main Disability Benefits
CalSTRS program benefits and indicates where Once you are vested and meet the eligi-
to look in this handbook for more information bility requirements, disability benefits may be
on each topic. half your highest average annual salary, plus
another 10 percent for each eligible child,
Defined Benefit Program up to a total of 90 percent, until the child
As a Defined Benefit Program member, reaches age 21 or 22, depending on coverage.
your retirement is guaranteed for life once The member’s portion of the disability benefit
you become vested with five years of service continues for life, as long as you are disabled
credit and are eligible to retire. Your retire- under Coverage B. Under Coverage A, the
ment benefit is a steady source of income and benefit may change at age 60.
is based on your age, final compensation and See Section 8, Disability Benefits.
years of service credit at retirement, not on how
much is in your account. If you are employed Survivor Benefits
full time to perform creditable service in a Cali- Depending on your amount of service
fornia public school or community college, your credit and if you die before or after retirement,
membership in CalSTRS begins on your first your survivor could receive a refund of the
balance in your retirement account, a one-
time amount and/or a monthly benefit.
See Section 9, Survivor Benefits.
Member Handbook 2007 • 1
8. Medicare Premium Payment Program Where You Can Find Information
CalSTRS does not provide health insur-
Throughout your career in California’s
ance coverage; however, CalSTRS will pay the
public school system, and the years to
Medicare Part A premium for Defined Benefit
follow, you and your dependents can rely on
members who retire before July 1, 2012,
CalSTRS as a trusted resource. Our customer
depending on eligibility. All benefit recipients
service representatives are available to answer
may authorize CalSTRS to deduct Medicare
your questions online or by calling our toll-
Part B and other group insurance premiums
free number at 800-228-5453. Our benefits
from their monthly benefit check.
counselors can help you build a CalSTRS
See Section 5, Approaching Retirement.
retirement plan to meet your specific needs.
Cash Balance Benefit Program See Section 4, Building Your Financial
The Cash Balance Benefit Program is Future, for details on setting up an appoint-
CalSTRS’ alternative retirement program ment with a counselor.
that employers may choose to offer part- You can contact us in the following ways:
time educators. With the Cash Balance
Visit Our Web Site
Benefit Program, employers must contribute
The CalSTRS Web site at www.CalSTRS.com
4 percent of the salary you earn as a part-
provides current information for members,
time employee. You usually pay 4 percent;
employers and anyone interested in CalSTRS.
however, your contribution rate may be
The CalSTRS site includes such useful features
collectively bargained with your employer.
as the Retirement Benefit Calculator, which
See Section 3, Benefits for Part-Time
allows you to estimate your retirement benefit.
Educators.
You can also order and download forms and
Voluntary Investment Program publications. To send an e-mail, go to www.
If your district participates in this 403(b) CalSTRS.com/ContactUs.
program, you can set aside even more retire-
myCalSTRS
ment funds through tax-deferred savings.
Registered myCalSTRS users can access
CalSTRS oversees the Voluntary Investment
certain personal account information online
Program’s competitively priced services and
in a secure environment. Defined Benefit
investment options.
members have access to Form 1099-Rs begin-
See Section 4, Building Your Financial
ning with 2000, and annual statements and
Future.
benefit payment stubs beginning with 2002.
Home Loan Program Cash Balance Benefit Program participants
The CalSTRS Home Loan Program is have access to Form 1099-Rs and benefit
open to active, inactive and retired CalSTRS payment stubs beginning with 2003 and
members and Cash Balance Benefit Program annual statements beginning with 2004.
participants. Several options are available You can also review your tax withholding
for a conventional home purchase or refi- and beneficiary choices or update your
nance loan. mailing address and telephone number. The
See Section 4, Building Your Financial Online Messaging feature allows you to send
Future. and receive confidential information. Go to
www.CalSTRS.com and log in or register to
CalPERS Long-Term Care Program access myCalSTRS.
You and some members of your family
are eligible for the CalPERS Long-Term
Care Program.
See Section 5, Approaching Retirement.
2 • 1. Introduction • CalSTRS
9. www.CalSTRS.com
800-228-5453
Call Us Teletalk – Automated Information 1
Call us at 800-228-5453 and select an Service via Your Telephone
option as follows: The CalSTRS Teletalk information
system provides recorded messages giving
Press For: general information on a variety of CalSTRS
1 Account Data. subjects. To access the Teletalk system, call
800-228-5453 and then press 2. Teletalk
2 Teletalk, a recorded message system.
calls are answered electronically and you
Then press the three-digit code for information
on a variety of topics. A partial list follows; see
can choose topics easily via your telephone
the complete Teletalk call list in Section 12. keypad, for example:
3 Ordering forms, brochures and duplicate Enter: For this key topic:
annual statements of accounts or 1099s.
100 General Information
4 Survivor/Disability caseworkers.
150 Membership, Service Credit and Contributions
5 Cash Balance Benefit Program information.
200 Benefits Counseling
6 Benefits Counselors/Workshops.
250 Purchase of Additional Service Credit
0 Member Services representatives –
and Redeposits
7 a.m. to 6 p.m. Monday – Friday.
300 Pre-Retirement Election of an Option
350 Service Retirement
Publications and Newsletters
400 Disability Benefits
For additional information, you can order
420 Coverage A, Disability Allowance and
the following publications. To order publi- Rehabilitation Program
cations go to www.CalSTRS.com or call
800-228-5453 and press 3. 450 Coverage B, Disability Retirement and
Rehabilitation Program
CalSTRS Connections newsletter for
active members 500 Death Benefits
Cash Balance Benefit Program Information 520 Coverage A, Family Allowance Program
Packet 550 Coverage B, Family Allowance Program
Community Property Information 600 Increases in Benefits
Comprehensive Annual Financial Report 650 Tax Liability
Home Loan Program Fact Sheet 700 Refund of Contributions
Join CalSTRS? Join CalPERS?
750 Voluntary Investment Program
Member Handbook
900 Cash Balance Benefit Program
Purchase Additional Service Credit
Refund: Consider the Consequences You can find a complete list of Teletalk
message codes and topics at the end of
Retired Educator newsletter for retired this guide.
members and other benefit recipients
Social Security, CalSTRS and You
Tax Considerations for Rollovers
Your Retirement Guide (Service Retirement
Application)
Retirement: Your Next Journey (A
Benefits Overview CD)
Member Handbook 2007 • 3
10. Recent Legislative Changes to CalSTRS Benefits
• Pension Protection Act of 2006 - The PPA allows for eligible rollover
distributions to Roth IRAs, non-taxable amounts to be paid into
qualified plans and direct rollovers to be made to any designated
beneficiary. Therefore, CalSTRS will allow any designated benefi-
ciary of a member to make a direct rollover of eligible payments,
including registered domestic partners, who were previously
prohibited from making direct rollovers.
• Effective Janaury 1, 2007, a monthly benefit will be provided to
dependent children who become eligible on or after January 1,
2007, under Coverage B Survivor Benefits when there is no
surviving spouse or partner at the time of the active member’s death.
The Governor and Legislature occasionally make statutory changes
that may affect your CalSTRS benefits and that may affect any decision
you make concerning your career or retirement. CalSTRS makes every
effort to communicate these changes to our members, but legislation
can undergo rapid change.
To stay informed about any possible legislative benefit
changes, consult a variety of sources including the California State
Legislative Counsel Web site at www.leginfo.ca.gov or your union
or elected legislative representatives. You may also call CalSTRS at
800-228-5453 or visit www.CalSTRS.com.
4 • 1. Introduction • CalSTRS
11. 2. Your Membership and Benefits
W hether you are a full-time or part-
time educator, the California State
Teachers’ Retirement System provides you
Employees performing creditable service in a
charter school are subject to coverage only if the
charter of the school provides for participation
benefits and services to build a strong, in the CalSTRS Defined Benefit Program.
stable financial future.
This section includes an explanation of Mandatory Membership
membership and the basic benefits in the If you are employed to perform creditable
Defined Benefit Program and describes the service on a full-time basis, you will auto-
Defined Benefit Supplement Program. These matically become a Defined Benefit Program
programs are two of three components that member on the first day of employment.
can help you achieve the lifestyle you desire Full time is defined as the number of days
at the end of your working career. The third or hours in a school year that the employer
component is your own optional retire- requires a class of employees to work. For
ment savings, such as a 403(b) tax-deferred example, under a collective bargaining or
savings plan. CalSTRS offers such a plan, the employment agreement, an employer might
Voluntary Investment Program, which you require guidance counselors in a high school
can read about in Section 4, Building Your to work a specific number of days each school
Financial Future. year. Therefore, guidance counselors would
This section also explains the Cash Balance constitute a class of employees. For more
Benefit Program, an alternative retirement information about what constitutes full time
plan for part-time educators. and class of employees, see the glossary.
Many teachers and others who perform
Membership in the CalSTRS creditable service are not hired to work full
Defined Benefit Program time. For those educators hired to work
on a part-time, substitute or hourly basis,
The CalSTRS Defined Benefit Program CalSTRS offers an alternative retirement plan
is available to employees of the California called the Cash Balance Benefit Program.
public school system, kindergarten through However, providing the program is optional
community college, in positions that require for employers.
a credential, certificate, or permit or require Mandatory Defined Benefit Program
the employee to meet minimum standards membership requirements vary, depending on
adopted by the Board of Governors of the an individual’s employment status and whether
California Community Colleges. or not the employer offers the Cash Balance
Only activities identified as creditable Benefit Program to their part-time employees.
service are subject to Defined Benefit Program For details on the Cash Balance Benefit
coverage, that is, count toward years of service Program and part-time educators, see Section 3,
for CalSTRS retirement purposes. These activi- Benefits for Part-Time Educators.
ties include teaching, vocational or guidance
counseling, services related to school curric- Benefit Eligibility
ulum and a variety of administrative duties. You will be eligible for or vested with a
If you are a classroom teacher or are right to a lifetime retirement benefit when you
performing other activities that are creditable have accumulated five years of service credit
service, you may be a Defined Benefit Program under the Defined Benefit Program. You can
member as mandated by law or you may be retire as early as age 50 if you have at least
eligible to elect membership. 30 years of service credit. You can retire at
Member Handbook 2007 • 5
12. age 55 with five years of service credit. For Calculating Your Defined
information on the eligibility requirements Benefit Retirement
for disability and survivor benefits available
to active members, see Section 8, Disability Benefit Formula:
Benefits, and Section 9, Survivor Benefits. Service Credit x Age Factor x Final Compensation
= Retirement Benefit (Member-Only)
The formula for calculating a Member-Only
Defined Benefit retirement includes three
Membership When Cash Balance Is Offered elements: service credit, age factor and final
In school districts, county offices of education or community college districts that compensation. For details on calculating your
offer the Cash Balance Benefit Program, the following mandatory Defined Benefit Defined Benefit, see Section 6, Your Retire-
Program membership requirements apply: ment Benefit.
Employment Status Mandatory DB Membership Begins
Membership for
K-12 and/or county office First day of the pay period following employment to Part-Time Employees
of education on a part- perform creditable service for 50 percent or more of
time, hourly or daily basis the full time position. As long as your basis of employment
or contracted for more remains part-time, substitute or temporary, you
than 50 percent of full have the choice of participating either in the
time position: Defined Benefit Program or the Cash Balance
Community college district First day of the pay period following employment Benefit Program — if you are employed in a
hired on a part-time basis: to perform creditable service. Mandatory DB district that offers the CB Benefit Program. If
membership does not apply to temporary employees you choose the CB Benefit Program and your
of adult education or community college districts. basis of employment changes, you may auto-
matically become a member of the Defined
Benefit Program (see charts at left for noted
exceptions). For details on benefits for part-
Membership When Cash Balance Is Not Offered time employees, see Section 3, Benefits for
In school districts, county offices of education or community colleges that do not Part-Time Educators.
offer the Cash Balance Program, the following mandatory Defined Benefit Program
Part-Time or Substitute
membership requirements apply:
Employees Electing Defined
Employment Status Mandatory DB Membership Begins Benefit Program Membership
K-12/county office of First day of the pay period following the pay period Anyone who performs creditable service
education – part-time in which at least 60 hours of creditable service was in the California public school system is
hourly: performed. eligible to elect membership in the Defined
Benefit Program.
K-12/county office of First day of the pay period following the pay
education - part-time daily: period in which 10 days of creditable service was
If you are hired as a substitute or on a
performed. part-time basis and your basis of employ-
ment does not qualify you for mandatory
K-12/superintendent’s Same as above except for 100 or more complete membership, you may still elect to become
office/community college days during the school year
a member of the Defined Benefit Program.
district substitute:
Your employer must formally notify you
Community college district First day of the pay period following employment of your right to elect membership in the
hired on a part-time basis: to perform creditable service. Mandatory DB program within 30 days of hire.
membership does not apply to temporary employees
of adult education or community college districts.
6 • 2. Your Membership and Benefits • CalSTRS
13. www.CalSTRS.com
800-228-5453
You can elect membership only during a Employer Contributions
pay period in which you actually performed The employing school district, community
creditable service, and you must elect college district or county superintendent of
membership on the appropriate form schools contributes to CalSTRS an amount
provided by your employer. The effective equal to 8.25 percent of the creditable 2
date of membership is the first day of the pay compensation paid to every employee who
period in which the election is made. is a member of the Defined Benefit Program.
Employer contributions are not credited
Contributions to Your to individual member DB accounts but are
DB and DBS Accounts deposited in the Teachers’ Retirement Fund to
help fund the benefits payable to all members
Member Contributions and their beneficiaries.
As a member of the Defined Benefit
Program, you contribute 8 percent of your State Contributions
creditable compensation as identified in the The state of California contributes 2.017
Teachers’ Retirement Law. Your employer can percent of the creditable earnings from the
pay all or a portion of member contributions. fiscal year ending in the prior calendar year.
Contributions are withheld from your cred- Additionally, the state contributes an amount
itable compensation by payroll deduction and equal to 2.5 percent of the total credit-
credited to your Defined Benefit and Defined able compensation paid to all CalSTRS DB
Benefit Supplement accounts. For details on Program members during the fiscal year
your DBS account see Defined Benefit Supple- ending in the prior calendar year for the
ment Program later in this section. Supplemental Benefit Maintenance Account.
This is used to maintain the purchasing power
“Employer Pick-Up” of benefits at prescribed levels.
of Member Contributions
Most employers participate in the How Interest is Credited
“Employer Pick-Up” Program under a provi- to Your Accounts
sion of the Internal Revenue Code (Section At the end of each fiscal year, interest is
414[h][2]). The member’s contributions to credited to the accumulated contributions and
CalSTRS are “picked-up” by the employer interest in each member’s Defined Benefit and
for the sole purpose of deferring income Defined Benefit Supplement accounts at the
taxes on that portion of compensation. The credited interest rate. Each credited interest
contributions must be deducted from your rate is adopted annually by the Teachers’
compensation and are considered creditable Retirement Board and is currently set at a rate
compensation for retirement purposes. that approximates the yield on two-year Trea-
These tax-deferred member contributions sury notes for the Defined Benefit Program
are credited to your account as “Employer- and the 30-year Treasury rate for the Defined
Paid Member Contributions.” Those Benefit Supplement Program. The current
contributions are taxable when returned rates, compounded daily, are 4.25 percent for
to you or a beneficiary in a lump sum or Defined Benefit and 4.75 percent for Defined
monthly benefit. For more information on Benefit Supplement accounts. These interest
taxes, see Section 10, Tax Information and rates are valid through June 30, 2007. The
Legal Matters. rates for July 1, 2007-June 30, 2008 are 5.25
percent for both Defined Benefit and Defined
Benefit Supplement accounts.
Defined Benefit Account
Interest is credited to your Defined Benefit
account primarily to provide a lump-sum
Member Handbook 2007 • 7
14. benefit to you if you terminate all creditable If you do not receive a Retirement Progress
service and withdraw your contributions or to Report in the mail, you can view and print your
your beneficiaries if you die without survivors DB and DBS statements of account online. Go
who are eligible for monthly benefits. to www.CalSTRS.com and log in or register to
As a Defined Benefit Program member, use myCalSTRS. You can also call us at
your retirement benefit will be calculated 800-228-5453 to request a statement.
using a formula established by law based Note: Retired members and benefit recipients
on your age, years of service credit and final do not receive a Retirement Progress Report.
compensation. The amount of total contri-
butions and interest in your Defined Benefit What’s on Your Annual
account is not used to calculate either your or Statement of Account
your beneficiary’s future monthly benefit. This Examine your annual statement carefully
is a lifetime benefit regardless of the funds you each year for accuracy and file it with your
have contributed to your account. important employment or financial records.
Your annual statement includes:
Defined Benefit Supplement Account • Beginning balances of your service credit
The credited interest rate for the Defined and contributions and interest credited
Benefit Supplement Program is not necessarily on member contributions as of July 1 of
the same as for the Defined Benefit Program. the previous school year.
The rate cannot be less than the rate for • Ending balances of your service credit
the Defined Benefit account. The interest is and contributions and interest earned on
included in the amount payable to you. member contributions as of June 30 of the
just-completed school year.
Borrowing Against Your Accounts • Information about the just-completed
State law does not permit you to borrow school year, July 1 through June 30, which
against your accumulated contributions and also includes:
interest on account with CalSTRS. – Interest credited on your accumulated
contributions.
Retirement Progress Report – Service credit you earned.
– Contributions credited to your Defined
Every year you receive a Retirement Prog- Benefit and Defined Benefit Supplement
ress Report that contains an annual statement accounts.
of account for your Defined Benefit and The service credit shown on your annual
Defined Benefit Supplement accounts and statement of account is based on the credit-
a retirement planning guide. The annual able compensation earned and annual earnable
statement of account is one of your most compensation for the full-time position as
important CalSTRS records and should be reported by your employer(s) to CalSTRS. The
reviewed carefully. member contributions are the contributions
The Retirement Progress Report is mailed to that your employer(s) reported to CalSTRS.
you, usually in late December. It gives your If you believe there is a discrepancy on
account status as of June 30 of that school year. your annual statement, contact your employer’s
The report is sent to the mailing address department that reports your time to CalSTRS.
on file with CalSTRS. You can update your Adjustments made to service credit
mailing address through your employer or and contribution data after June 30 will be
online at myCalSTRS. In addition to current included in your next annual statement of
members, Retirement Progress Reports are also account included in your Retirement Progress
sent to inactive members, that is, members Report. If you have purchased additional
who have a balance remaining in their service credit or redeposited contributions
Defined Benefit account, but did not perform that were previously refunded, the changes
creditable service during the prior school year. will first appear on your annual statement of
8 • 2. Your Membership and Benefits • CalSTRS
15. www.CalSTRS.com
800-228-5453
account for the school year during which the Less than One Year of Service Credit
final payment was made. If you have earned less than one year of
In addition to your DB and DBS statements service credit at the time of your death, a
of account, the annual statement included in refund of your accumulated contributions
the Retirement Progress Report provides: plus interest is paid to your death benefit 2
• An explanation of your Coverage A or recipient(s) or to your spouse or registered
Coverage B for disability and survivor domestic partner, if appropriate.
benefits.
• The name of your one-time death benefit One or More Years of Service Credit
recipient or recipients, formerly called If you have earned one or more years of
“designated beneficiary.” service credit at the time of your death, your
• The name of your option beneficiary named death benefit recipient(s) may be
or beneficiaries. eligible to receive a one-time death benefit
• Two estimates of your pension based on in addition to the refund of the accumulated
your age and account balance at the end of contributions and interest.
the previous school year if you are age 45 One-Time Death Benefit
or older. A one-time death benefit is payable to your
designated recipient or recipients under both
What if You Become Disabled? disability and survivor benefits, Coverage A
As a member of the Defined Benefit and B. The amount of the benefit depends
Program you have disability protection on your coverage and whether death occurs
under one of the CalSTRS disability benefit before or after retirement. If you do not name
programs, Coverage A or Coverage B. Once a recipient, your estate receives the one-time
you are vested and meet the eligibility death benefit. For more information, see
requirements, and you have a medically deter- Section 9, Survivor Benefits.
minable physical or mental impairment that For information on how dissolution of
prevents you from performing your usual marriage or termination of a registered domestic
job or comparable duties, you may apply partnership may affect your one-time death
for disability benefits. The impairment must benefit recipient designation, see Section 10,
be expected to last at least 12 continuous Tax Information and Legal Matters.
months. For details, see Section 8, Disability
Benefits. If You Terminate Your
CalSTRS-Covered Employment
What Happens When You Die? Termination of CalSTRS-covered employ-
The Defined Benefit Program provides ment and a subsequent refund of your
benefits to your survivors when you die either accumulated contributions plus interest
before or after retirement. Your survivors cancel any eligibility for monthly benefits
may be eligible to receive either a lump-sum from CalSTRS.
payment or monthly benefits with additional
benefits for dependent children. These bene- Survivor or Disability Benefits
fits provide a basic level of security for your Termination of CalSTRS-covered employ-
survivors. The benefit depends on the options ment for four consecutive months or more
you choose and whether you have Coverage may eliminate your eligibility for survivor or
A, Family Allowance or Coverage B, Survivor disability benefits. This time limit does not
Benefit. Therefore, it is important to keep apply to eligibility for service retirement.
a valid and current One-Time-Death Benefit
Recipient form on file at CalSTRS. For details,
see Section 9, Survivor Benefits.
Member Handbook 2007 • 9
16. Exceptions to the Four-Month Limit Consider a Refund Carefully
The four-month limit does not apply if you If you have fewer than five years of service
die during an approved leave of absence of up credit and do not plan to return to teaching
to 12 months for a reason other than disability and you are not eligible for retirement with
or military service. any of the California public systems listed
Eligible recipients may receive a one-time under Retiring From More Than One Public
death benefit and/or a monthly benefit under Retirement System in Section 6, you may be
the following two circumstances: considering a refund. However, if you are a
• If medical reports show that you became career teacher with substantial service credit,
incapacitated within four months of your or you are eligible for retirement with another
last day of service — and remained contin- California public system and are approaching
uously incapacitated to the date of death, or age 55, we highly recommend you learn more
• If you were receiving a disability benefit about the consequences of taking a refund.
under Coverage A.
Consequences of a Refund
• If you withdraw your contributions and
Refunding Your CalSTRS interest before age 59½, the distribution
Contributions may be subject to income tax and a 10
percent federal excise tax as well as a 2.5
Defined Benefit Account
percent state excise tax.
Your Defined Benefit Program contri-
• If you return to membership after taking
butions, plus interest, are refundable
a refund and later redeposit contributions
upon termination from all employment to
and interest:
perform creditable service in any California
– Your membership date changes to your
public school.
return date.
Upon receipt of a completed refund appli-
– You will be covered under Coverage B
cation, CalSTRS will refund all your Defined
for survivor and disability benefits even
Benefit member contributions, including
if you had Coverage A before.
tax-deferred member contributions under the
– You must accumulate a year of service
Employer Pick-Up Program, plus credited
credit before you are eligible for
interest on your money. Partial refunds are not
CalSTRS benefits.
permitted. Employer and state contributions
Important: If you return to membership
are not refundable.
and wish to receive full retirement benefits
It is important to note that a refund of
from your past membership with CalSTRS,
your contributions terminates your CalSTRS
you must fully buy back the service credit
membership and you will not be eligible for
represented in the refund.
any benefits from CalSTRS, including a life-
time monthly retirement benefit. More Refund Information
For more refund information, go to
Defined Benefit Supplement Account
www.CalSTRS.com or call 800-228-5453 and
If after termination of employment you have
order Refund: Consider the Consequences. You
not performed creditable service for six months
may also call CalSTRS and select the Teletalk
and you have received a refund of your Defined
option and then enter 700.
Benefit account, CalSTRS will refund your
Defined Benefit Supplement account after you
respond to CalSTRS correspondence regarding
the payout. If you return to CalSTRS-covered
employment, you cannot redeposit your DBS
funds and only one withdrawal will be allowed
in a five-year period.
10 • 2. Your Membership and Benefits • CalSTRS
17. www.CalSTRS.com
800-228-5453
Redeposits – Restoring Former Local Service Members
Service Credit Local Service credit listed on a 2005/2006
annual statement in your Retirement Progress
Redepositing allows you to restore the
Report is not fully funded. You will receive
service credit represented by refunded contri-
only a maximum of $2.40 per year of 2
butions. If you return to teaching or other
Local Service credit toward your retirement
CalSTRS-covered employment or become
benefit. Please contact CalSTRS to fully fund
eligible for retirement with another California
this service.
public retirement system, you may elect
to buy back past Defined Benefit Program Cost to Redeposit
refunded service credit by redepositing your The amount you need to redeposit and the
prior refunded contributions plus regular benefits from restoring service credit will vary
interest. For a list of these other California depending on your individual situation.
systems, see Retiring From More Than One For example, a teacher who withdrew
Public Retirement System in Section 6. $10,000 (representing three years of service)
The longer the elapsed time between in May 1993 and wants to purchase those
refund and redeposit, the higher the redeposit years of credit in April 2007, would be
amount will be. required to redeposit $23,205.
You may not redeposit refunded Defined For more information on purchasing
Benefit Supplement contributions and interest. service credit, see Section 6, Your Retirement
Before you are eligible for CalSTRS Benefit. If you are considering a redeposit,
benefits, you must have earned at least one order the Purchase Additional Service Credit
year of service credit after you received the brochure from www.CalSTRS.com or call
most recent refund of accumulated retire- CalSTRS at 800-228-5453.
ment contributions, unless you are retiring Any redeposits must be fully paid by
concurrently with another California public December 31, 2010, if the restored service
retirement system. credit is to be used for longevity bonus
You may choose to restore a portion, rather eligibility.
than all, of the service credit you forfeited
when you took a refund. Defined Benefit
Redepositing does not re-establish your Supplement Program
earlier membership date or benefits that
Since January 1, 2001, each active
may have been available to you before you
Defined Benefit member has had established
received a refund.
for them a Defined Benefit Supplement
In some community property settlements,
account. This account will be available
a member’s service credit, contributions and
to you when you begin to take a Defined
interest are divided to create a separate account
Benefit monthly benefit or six months after
for the former spouse or registered domestic
you terminate CalSTRS-covered employ-
partner. If the former spouse or partner takes a
ment. The account receives funds from three
refund of his or her account, the member can
sources in addition to interest.
then choose to restore all or a portion of the
One source is 2 percent of your credit-
service credit awarded to the former spouse
able compensation, which is one-fourth of
or partner.
your contribution to CalSTRS. This amount
will automatically go into your DBS account
from January 1, 2001, through 2010. There
will be no change in the 8 percent retire-
ment contribution currently withheld from
your paycheck. The redirection of contribu-
tions to your DBS account will not affect your
CalSTRS DB retirement benefit.
Member Handbook 2007 • 11
18. In addition, since July 1, 2002, if you The DBS account beneficiaries are the same
earn more than one year of service credit in a as the beneficiaries named on your Defined
school year, your contributions and most of Benefit account. Defined Benefit Supplement
the employer contributions from your earn- account funds can be withdrawn only when
ings in excess of one year will be allocated to you die, become disabled, retire or six months
your DBS account. This provision will not end after terminating CalSTRS-covered service.
at the end of 2010, as does the redirection of Please note that you cannot borrow against
the member contribution mentioned earlier. your Defined Benefit Supplement account.
Lastly, some members receive special You can choose to receive the balance of
limited-term payments or compensation the contributions and interest in your Defined
intended to enhance their Defined Benefit Benefit Supplement account as a:
retirement benefits. Effective July 1, 2002, • Lump-sum payment – Only choice if you
member and employer contributions on these are receiving a refund or your account is
payments are credited to the Defined Benefit less than $3,500.
Supplement accounts. • Monthly payment – If the balance is
The funds in the DBS accounts earn at least $3,500, you may choose one of
interest at a rate set at the beginning of each the following annuity types to distribute
plan year, July 1 through June 30, by the payment over your and your beneficiary’s
Teachers’ Retirement Board, based on the 30- lifetime, based on the option you chose for
year Treasury rate. At the end of each year, if your Defined Benefit payment:
actual earnings exceed the board-set interest – Member-Only Annuity
rate, the board may declare an additional – 100% Beneficiary Annuity
earnings credit. – 75% Beneficiary Annuity
Contributions into the Defined Benefit – 50% Beneficiary Annuity
Supplement account will not affect your – Period-Certain Annuity
ability to make contributions into a 403(b) or – Combination of Lump-Sum Payment
similar tax-deferred savings plan. and Annuity
For details on the Defined Benefit Supple-
Access to DBS Funds ment account annuity options, see Section 6,
Funds available at retirement or at termina- Your Retirement Benefit.
tion of employment will vary, depending on
your salary, overtime compensation and the Changing Employment to a
interest the account has earned. All contri- Different Public Retirement System
butions and interest in your Defined Benefit
Supplement account will appear on your Occasionally, teachers or others who
DBS annual statement of account which is perform CalSTRS creditable service change
contained in your Retirement Progress Report. employment to positions that are subject to
Your funds will be available to you when coverage by another California public retire-
you begin to take a Defined Benefit monthly ment system. For example, a classroom
benefit or six months after you terminate teacher may take a position as a human
CalSTRS-covered employment. If you return resources specialist in the district office, a
to CalSTRS-covered employment after position usually subject to California Public
withdrawing your DBS funds, you will Employees’ Retirement System coverage. On
have to wait five years before you can make the other hand, a human resources specialist
another withdrawal. may decide to take a teaching position, a
position usually subject to CalSTRS coverage.
CalSTRS or CalPERS members who change
12 • 2. Your Membership and Benefits • CalSTRS
19. www.CalSTRS.com
800-228-5453
employment subject to coverage by the other • A school district.
system will have an opportunity to continue • The Board of Governors of California
coverage or change to the other system. Community Colleges.
The two systems are treated differently for • The state Department of Education as of
Social Security coverage. CalSTRS members January 1, 2002. 2
do not participate in Social Security, but • A local or state agency not listed above
CalPERS members do. Members of either (only applies to vested CalPERS members).
system are urged to contact the Social Security
Administration at 800-772-1213 to determine The election:
how the change will affect any Social Security • Must be made within 60 days of the date
benefit due the member. of hire into the new position.
• Must be done on the appropriate CalSTRS
If You Change to a CalPERS Position form provided by the employer.
If you are a member of the CalSTRS Defined • Is effective as of the date of hire into the
Benefit Program and become employed by the new position.
same or a different school district, commu- • Is irrevocable and applies to all service in
nity college district, county superintendent that position.
of schools or have limited state of California
employment to perform service that requires Dual Membership
membership in the California Public Employees’ Members of CalPERS who are employed
Retirement System, you may elect, within 60 on a full-time basis and accept part-time
days of the date of your new employment, to employment to perform creditable service
continue coverage under the CalSTRS Defined covered by the CalSTRS Defined Benefit
Benefit Program. If you do so, service in your Program can permissively elect membership
new position, normally subject to coverage by in CalSTRS and have their part-time service
CalPERS, would be treated as creditable service reported to CalSTRS.
under the CalSTRS Defined Benefit Program.
The election: Information on Both Systems
• Must be made within 60 days of the date To help you compare both systems, review
of hire into the new position. the benefit information in this handbook,
• Must be done on the appropriate form as well as the benefit information booklet
provided by the employer. provided by CalPERS. Both publications are
• Is effective as of the date of hire into the available from your employer.
new position. In addition, the CalSTRS brochure Join
• Is irrevocable and applies to all service in CalSTRS? Join CalPERS? outlines and contrasts
that position. the basic benefits of the two systems. For
a copy, visit www.CalSTRS.com, ask your
If a CalPERS Member employer or call CalSTRS at 800-228-5453.
Changes to a CalSTRS Position
Certain members of CalPERS who subse-
quently are employed to perform CalSTRS
creditable service can elect within 60 days
of their new hire date to continue coverage
under CalPERS for all subsequent CalSTRS
creditable service. This applies to CalPERS
members employed by:
Member Handbook 2007 • 13
20. 14 • 2. Your Membership and Benefits • CalSTRS
21. 3. Benefits for
Part-Time Educators
T his section is for the part-time educator.
As a part-time educator you have access
to all the benefits that CalSTRS offers.
• What is the contribution rate for the
plan and does the employer also make
contributions?
However, your part-time status presents you • Is there a minimum requirement to be
with special considerations in retirement eligible for benefits?
planning. As a part-time educator, you have • Does the plan charge administrative fees?
additional decisions about which retirement • Is there a guaranteed annual interest rate?
plan coverage to choose, as well as issues • Does the plan have a record of sound
to consider that are unique to part-time investment experience?
employment. • When does the plan permit distribution of
your account?
Retirement Plans for
Public School Employees Retirement Options for
Federal law requires all employees to be Public School Educators
covered under a retirement plan. California Defined Benefit Program
state law requires all public school employers Members of the CalSTRS Defined Benefit
to provide the CalSTRS Defined Benefit Program who are employed on a part-time or
Program. For employees in certificated posi- adjunct basis are a distinctive group within the
tions whose time base is less than half-time, CalSTRS system. Your retirement benefit calcu-
public school employers must also offer lation uses the same components as a member
either Social Security or another retirement who works full time: age factor, final compen-
program as an alternative to Social Security. sation and service credit, as described earlier in
The CalSTRS Cash Balance Benefit Program, Section 2, Your Membership and Benefits.
described later in this section, is one example However, for you, two of those compo-
of an alternative to Social Security. Your nents, final compensation and service credit,
employer may offer other alternative retire- are determined differently from full-time
ment programs. See your employer for full educators. Your final compensation and
details about the specific programs it offers. service credit depend on the amount you
Choosing the Plan That’s Right for You would have earned if you were working full
If your basis of employment is less than 50 time in your position. This amount of work is
percent of full-time, here are some questions called full-time equivalent and this amount of
that may help you decide which retirement compensation for the full-time equivalent is
plan coverage is best for you: called earnable compensation.
• Do you plan to be a career teacher? Full-Time Equivalent
• Does teaching provide you supplemental The full-time equivalent is the time that
income or is it your primary source of a member who is employed on a part-time
income? basis would be required to work in one school
• Prior to teaching, did you have employ- year if he or she were employed full time
ment that required you to pay into Social in that position. For members employed in
Security? a community college or as an adult educa-
tion instructor on a part-time basis, the FTE
must be identified specifically in either the
Member Handbook 2007 • 15
22. collective bargaining agreement or in the employing district’s established FTE for your
employment agreement. The FTE stated in type of employment. If you see a discrepancy,
the agreement must be at least the minimum contact that employer’s office that reports
number of days or hours specified by law. earnings to CalSTRS.
Note: The FTEs listed below are minimum stan-
dards; your individual FTE could be higher if your Calculating Earnable Compensation
employer requires full-time employees to work more Your earnable compensation (also known as
days or hours in that same activity in a school year. compensation earnable) is not the salary you
It is important to make sure that your actually were paid, but what you would have
employers determine your FTE properly. been paid if you worked full time in that posi-
Different assignments, even with the same tion. Therefore, you take the hourly or daily
employer, may have different FTEs. Refer rate for that position and multiply it by the
to your employment agreement or collec- full-time equivalent for the position to deter-
tive bargaining agreement to obtain your mine your earnable compensation.
Calculating Final Compensation
Minimum Full-Time Equivalent Another key component of your retirement
calculation is final compensation. Your final
If you are a: Then the minimum FTE is:
compensation is equal to the highest average
Part-time community 525 instructional hours, plus annual earnable compensation for three
college instructor mandatory office hours, if paid consecutive years, or 12 consecutive months if
Community college 875 instructional hours, plus you have earned 25 years of service credit.
adult education instructor mandatory office hours, if paid
Calculating Service Credit
K–12 teacher or any other person who 175 days or 1,050 hours For part-time and adjunct faculty, service
works directly with pupils, including an credit for one school year is equal to how
instructor in an adult education program much you actually earned in an assignment
Part-time Community College and Adult Education Instructor Service Credit
In one school year, Juanita teaches as a community college instructor for 262.5 hours, which is half of the FTE in her district. She also works as
an adult education instructor for 350 hours or 40 percent of the FTE for that position.
Percent Time Minimum Actual Full-Time = Service Credit
Worked FTE Earnings Rate Earned
Community College Instructor 50% (262.5 hours) 525 hours $15,000 ÷ $30,000 = .500
Adult Education Instructor 40% (350 hours) 875 hours $10,800 ÷ $27,000 = .400
Total Service Credit = .900
Juanita would earn .900 of service credit for the year.
Part-time K–12 Teacher Service Credit
During the school year, Janet taught 30 percent of the FTE for K–12 teachers in her district, or 315 hours. The full-time pay rate was $42,000.
Because she worked every day of her 30 percent teaching contract, she earned $12,600 for the school year.
Percent Time Minimum Actual ÷ Full-Time = Service Credit
Worked FTE Earnings Rate Earned
K–12 Instructor 30% (315 hours) 1,050 hours $12,600 ÷ $42,000 = .300
Janet would receive .300 of service credit for the year.
16 • 3. Benefits for Part-Time Educators• CalSTRS
23. www.CalSTRS.com
800-228-5453
divided by your earnable compensation for Working for Multiple Employers
that assignment. When a member works
multiple assignments, service credit is the sum Kali works part time at two high schools and a community college. He has 8.95
of the service credit earned in each individual years of service. If he continues to work for all three employers during his last
assignment, up to one year of service credit in three years before retirement at age 63, here is how his final compensation would
be calculated:
a school year.
Employer Earnings Service Credit
Raising Your Defined Benefit A $ 3,360 .100
Retirement Amount B 30,250 .500
C 6,563 .250
Increasing Service Credit
Total $40,173 .850
with Additional Assignments
If you work on a part-time or adjunct Kali’s annual earnable compensation is: $40,173 ÷ .850 = $47,262
basis, you may wish to consider taking on Monthly final compensation is: $47,262 ÷ 12 = $3,938
additional assignments to earn more service To increase his retirement benefit, Kali could terminate the employment where he
credit if you are not earning one full year receives the lowest annual pay rate and his retirement benefit would be higher.
of service credit under your existing assign- Employer Earnings Service Credit
ment. Service credit can now be earned for A $ 3,360 .100
activities such as teaching summer school B 30,250 .500
and intersession, paid office hours, attending Total $33,610 .600
staff development days and serving as a
coach, band director, yearbook editor or Kali’s annual earnable compensation is: $33,610 ÷ .600 = $56,017
Monthly final compensation is: $56,017 ÷ 12 = $4,668
department chair. Extra service will count
as additional service credit and will be However, if Kali also terminates the position with the next lowest annual pay rate,
included in calculating your total service his final compensation would be even higher.
credit for that school year. However, when Employer Earnings Service Credit
you near retirement, be sure to consider B $30,250 .500
another factor — final compensation. Total $30,250 .500
Consider Final Compensation Kali’s annual earnable compensation is: $30,250 ÷ .500 = $60,500
If Working for Multiple Employers Monthly final compensation is: $60,500 ÷ 12 = $5,042
As a part-time educator, when you Here’s the impact of the three alternatives on Kali’s retirement benefit calculation:
have more than one employer, your earn-
Monthly final compensation is calculated by dividing annual earnable
able compensation is the sum of all your compensation by 12 months.
actual salaries divided by the sum of all
your service credit earned for the school Works all three jobs:
year. Your final compensation is the average Service Credit Age Factor Monthly Final Compensation
annual earnable compensation during your 11.500 x 2.4% x $3,938 = $1,087 per month
final compensation period, which is gener-
ally your last three years of employment. Terminates job with Employer C at the lowest annual pay rate:
When salary rates and service credit vary Service Credit Age Factor Monthly Final Compensation
within a school year, your final compensa- 10.750 x 2.4% x $4,668 = $1,204 per month
tion may be lower, which can lower your or $117 more per month
retirement benefit. This means it is possible
to earn a larger retirement benefit if you Terminates all jobs except one with Employer B
reduce the number of employers you work at the highest annual pay rate:
for during your final compensation period. Service Credit Age Factor Monthly Final Compensation
The example in the box shows how the 10.450 x 2.4% x $5,042 = $1,265 per month
calculation can affect the retirement benefit of or $178 more per month
a part-time educator.
Member Handbook 2007 • 17