Retirement

What Is CalPERS

California Public Employee Retirement System, also known as CalPERS, offers a 'defined benefit' plan which provides lifetime benefits that are calculated using a 'defined formula', rather than contributions and earnings to a savings plan. Retirement benefits are calculated using a member's years of service credit, age at retirement, and final compensation (average salary for a defined period of employment). There are a variety of retirement formulas that are determined by the member's employer (State, school, or local public agency); occupation (miscellaneous (general office and others), safety, industrial, or peace officer/firefighter); and the specific provisions in the contract between CalPERS and the employer.

How Your Retirement is Funded

Three sources fund a defined benefit plan like CalPERS. First, employees generally make contributions into the system. The percentage of your contribution is fixed by statue and varies from about 5 to about 11 percent of your earnings, depending on the plan type and whether you are covered by Social Security. The second funding source is earnings from the investment of system assets in stocks, bonds, real estate, and other investment vehicles. The amount contributed from this source fluctuates from year to year. The balance of the funding is provided by employer contributions.

CalPERS Membership Eligibility

Positions that mandate CalPERS Membership:

• Full-time appointments that exceed six months
• Half-time appointments averaging 20 hours per week for one year or longer
• Appointments of 3 consecutive quarters at 7.5 units or more
• Already a CalPERS member (without exclusions)

Employees not eligible for CalPERS membership are enrolled in the CSU Part-Time/Seasonal/Temporary Retirement Program (PST).

Note: if an employee works more than 1,000 hours in a fiscal year under the same employer, CalPERS membership is required effective the month following this threshold.

Retirement Formulas

Did you know that not all CSU employees qualify for the same retirement formula? Factors that determine your retirement formula may include your classification, original hire date, original hire date with a State agency, and original CalPERS Membership date. Non-safety CSU employees who are members of the CalPERS system are in the 'State Miscellaneous, First Tier' plan.

Retirement Formula Charts

• State Misc. 2% at 55

• State Misc. 2% at 60

• State Misc. 2% at 62

• State Safety 2.5% at 55

• State Safety 2.5% at 57

• State Safety 3% at 50

Employee Contributions

Employees Hired Before January 1, 2013

Benefit Plan: Miscellaneous Tier 1

Applies To:

Employee Contribution
5% of monthly salary, less an exclusion allowance of $513 for coordination of Social Security.

Benefit Plan: Peace Officer/Firefighter

Applies To:
Public Safety (R08)

Employee Contribution
0%

Applies To:

• Public Safety MPP (M80)
• Firefighters (R09)

Employee Contribution

• 8% of monthly salary, less an exclusion allowance of $238.

Employees Hired or CalPERS Membership After January 1, 2013:

Benefit Plan: Miscellaneous Tier 1
Applies To:

Employee Contribution
6% of monthly gross salary (exclusion allowance for coordination of Social Security is not included).

Benefit Plan: Peace Officer/Firefighter

Applies To:
Public Safety (R08)

Employee Contribution
9%

Applies To:

• Public Safety MPP (M80)
• Firefighters (R09)

Employee Contribution
9% of monthly salary, less an exclusion allowance of $238.

How Your Retirement Benefit is Calculated

Three factors are multiplied together to calculate your service retirement:

• Service Credit
• Benefit Factor
• Final Compensation Rate

Service Credit

You earn service credit for each year or partial year you work under CalPERS membership. A full-time employee who works at least 10 months per fiscal year will earn 1.0 years of service credit. For each month of full-time employment, .10 years of service credit is earned. Part-time employees accrue service credit on a pro-rated basis.

Benefit Factor

Your benefit factor is the percentage of pay to which you are entitled for each year of service. It is determined by your age at retirement and the retirement formula you qualify for.

Final Compensation

Final compensation is your average full-time monthly pay rate and special compensation for your 12 or 36 months of employment (depending upon your hire / membership date). The full-time pay rate is used, not your earnings. If you work part-time, your full-time equivalent pay rate will be used to determine your final compensation. For example, if an employee works half-time (.50), and earns $2,000 per month because the actual pay rate is $4,000 per month, the pay rate used for final compensation calculation purposes would be $4,000 per month.

Final Compensation Cap

Employees with hire or membership dates after July 1, 1996 through December 31, 2012, an annual Compensation Cap is set by the Internal Revenue Service. This is referred to as the 401(a)(17) limit.

Social Security Adjustment

CalPERS Members whose service is coordinated with Social Security do not pay contributions into CalPERS on the full amount of their earnings. As a result, if your CalPERS service is coordinated with Social Security, your final compensation rate will be reduced by $133.33 to compensate for the fact that contributions are not made on the full amount of earnings. This is a one-time adjustment used in your retirement calculation, it is NOT a monthly reduction to your retirement allowance.

So where does the number $133.333 come from? When Social Security was first coordinated with CalPERS back in the 1960's, the legislature decided to exempt the first one-third of maximum Social Security earnings from CalPERS contributions. Back then, maximum Social Security earnings were $4,800 per year, which is $400 per month. One third of $400 is $133.33, and it's been that amount ever since.

CSU Retiree Medical and Dental

Medical, dental and vision coverage can continue into retirement for eligible employees and their eligible dependents if:

• You retire at age:
  • 50 or later with at least five years of qualified service (2% @ 55 or 2% @ 60)
  • 52 or later with at least five years of qualified service (2% @ 62)
• You were eligible for medical and dental benefits while an active employee, and
• You retire within 120 days of separation.

Eligible dependents include spouse, domestic partner, children up to age 26, and disabled children over age 26. Certain restrictions apply.

If you retire less than 30 days after your separation date from employment, your medical coverage will continue automatically. If you retire between 30 and 120 days after your separation date from employment, contact HR Services for more information.

Medical:

The cost to the retiree for medical coverage will depend on which plan and the level of coverage the retiree chooses.

As a CalPERS retiree, when you qualify for Medicare Part A, you must sign up for Medicare Part B. Do not enroll in Medicare Part D because the CalPERS prescription drug plan is as good or better than what is available under Medicare Part D. If you enroll in Medicare Part D, your CalPERS health plan will be canceled until you are dis-enrolled. If you are still working and covered under a Group Health Plan, or covered by a spouse's or domestic partner's Group Health Plan, you do not need to enroll into Medicare Parts A & B at age 65.

• CSU Retiree Health & Medical Plans and Rates

Dental:

If you are currently enrolled in the DeltaCare USA Enhanced (HMO) plan your dental coverage as a retiree will be reduced to the DeltaCare USA Basic plan. If you are enrolled in the Delta Dental Enhanced Level II (PPO) plan your dental coverage as a retiree will be reduced to the Delta Dental Basic plan. Currently, CSU pays the full cost of the Basic level dental coverage for eligible retirees and their eligible dependents.

Vision:

Retirees may elect to enroll in the CSU Retiree Voluntary Vision Plan at the time of retirement, within 60 days of their retirement, within 60 days of loss of coverage on another vision plan, or during any subsequent open enrollment period. The monthly premium will be fully paid by the retiree.

Life Insurance:

CSU-paid life insurance (if applicable) does not continue into retirement. Retirees are provided the option to continue paying their employer paid and voluntary life insurance if they contact Standard Life Insurance Company within 30 days of retirement.