When you begin your employment, you may be covered by either the CalSTRS or CalPERS retirement system. Classroom teachers typically belong to CalSTRS. Other employees of public schools may be covered by CalPERS, depending on their classification. Regardless, if you change employment from a job covered by one system to employment covered by the other system, you may be able to choose whether to remain with the previous system or switch to the new one.
The rules can be complex, and your choice can have a significant impact on your retirement benefits, so make sure you understand your options before making a decision.
Make Your Election
If the new position is typically covered under a new retirement system, you must submit a Retirement System Election form to your employer within 60 days of your hire date if you wish to stay with your current retirement system.
If you move to the new system, you have two options:
- You can decide to have dual membership by keeping your account with the old retirement system and having your new job under the new retirement system. In this case, you could retire from both systems at the same time for a concurrent retirement. There are restrictions on this option, so be sure to contact CalSTRS or CalPERS for more information.
- You can take a refund of your contributions in your old system. Again, you need to find out what the restrictions are by contacting CalSTRS or CalPERS before making this decision. Caution: If you take a refund, you forfeit rights to retirement benefits under the system from which you took the refund.
If you do nothing, you will automatically become a member of the retirement system that covers your new position.
You pay 8% of your salary + 1.45% for Medicare (if you were hired on or after April 1, 1986, or if you opted to be covered by Medicare and if offered by your employer).
Your employer contributes 8.25% of your salary + 1.45% for Medicare, if applicable.
You pay 7% of your salary + 6.2% for Social Security + 1.45% for Medicare.
Your employer's contribution varies from year to year. Employer contributions decline when investment returns rise and increase when investment returns decline.
Calculating Your Benefit
Both CalSTRS and CalPERS calculate your retirement benefit based on your service credit (years of service) in the system, your retirement age and your final compensation.
With CalSTRS, you can retire at age 55 with five years of service or at age 50 with 30 years of service. If you have 25 years or more of service credit, your benefit is based on your highest average annual compensation earned for 12 consecutive months. If you have less than 25 years of service credit, it is based on the highest average annual compensation over 36 consecutive months. Districts have some discretion whether to base final compensation on the highest 12 consecutive months. In addition, CalSTRS offers a longevity bonus for members who have 30 or more years of service credit earned by December 31, 2010. Eligibility for the longevity bonus ends December 31, 2010. This change could affect you if you are close to earning 30 years of service credit. To learn more, visit www.CalSTRS.com.
With CalPERS, you can retire at age 50 with five years of service. Your benefit is based on the highest monthly pay rate for 12 consecutive months or 36 highest consecutive months per employer contract. CalPERS does not offer a longevity bonus.
Each retirement system applies a formula to determine the final benefit. For more information or to estimate your retirement benefit:
CalSTRS Member Services 800-228-5453 or www.calstrs.com.
CalPERS Customer Contact Center 888-CalPERS (or 888-225-7377) or www.calpers.ca.gov.