CalPERS Retirement Benefits

California Public Employees Retirement System

The California Public Employees Retirement System (CalPERS) offers a defined benefit retirement plan. It provides benefits based on members years of service, age, and final compensation. In addition, benefits are provided for disability death, and payments to survivors or beneficiaries of eligible members. By statute, the California State University (CSU) participates in the CalPERS program. Membership is mandatory for those CSU employees who are eligible.

CalPERS uses contributions of the employer and the employee as well as income from investments to pay for employee retirement benefits. Employee and employer contributions are a percentage of applicable employee compensation and are made on a pre-tax basis; federal and state taxes are deferred until benefits are paid. Any investment return on an employee’s account is also tax-deferred. The investment of contributions are managed by CalPERS; therefore, employees do not bear any investment risk. Employee benefits grow with years of service and final average salary.

The following summary is subject to change at any time. For the most current and detailed information, employees can visit the CalPERS website or call CalPERS at (888) 225-7377. Members may log into MyCalPERS to manager their account online.

Employees Eligible for Membership

• Full-time appointments that exceed six months.
• Half-time appointments (50 percent or more) for one year or longer.
• Temporary faculty are required to enter CalPERS membership commencing with the third consecutive semester appointment at half time or more.
• Part time or intermittent employment is covered by CalPERS upon completion of 125 days or 1,000 hours of service within a fiscal year.

Exclusions

Most student employment and instructors appointed to work in extension programs.

Retirement Benefits

Service retirement is a lifetime benefit. Employees can retire as early as age 50 with five years of CalPERS pensionable service credit unless all service was earned on or after January 1, 2013, then employees must be at least age 52 to retire. There are some exceptions to the 5-year requirement.

Pension Reform

The California Public Employees’ Pension Reform Act (PEPRA), which took effect in January 2013, changes the way CalPERS retirement and health benefits are applied, and places compensation limits on members. The greatest impact is felt by new CalPERS members.

As defined by PEPRA, a new member includes:

• A member who first established CalPERS membership prior to January 1, 2013, and who is rehired by a different CalPERS employer after a break in service of greater than six months
• A new hire who is brought into CalPERS membership for the first time on or after January 1, 2013, and who has no prior membership in any California public retirement system
• A new hire who is brought into CalPERS membership for the first time on or after January 1, 2013, and who is not eligible for reciprocity with another California public retirement system

All members that don’t fall into the definitions above are considered classic members. Classic members will retain the existing benefit levels for future service with the same employer.

PEPRA is a complex law that can generate many questions. For more information, visit CalPERS website.

Retirement Benefits Chart (for all but Public Safety employees*)

*Public Safety employees should contact their campus benefits office for detailed information.

**There are exceptions to CalPERS membership benefit formula eligibility for employees with previous public agency or reciprocal agency employment.

Employees can view the applicable retirement benefit formula chart by choosing one of the membership benefit publications below. Employees uncertain of their benefit formula can contact their campus benefits office.

• State Miscellaneous & Industrial Member Benefits
• State Safety Member Benefits

Retirement benefits are calculated using a formula with three factors:

• Service Credit - Total years of employment with a CalPERS employer. This could include other types of service credit such as sick leave and service credit purchase. Employees can view their Annual Member Statement by logging in to my|CalPERS to view service credit.
• Benefit Factor - Percentage of final compensation for each year of service credit, based on an employee’s age at retirement and retirement formula(s).
• Final Compensation – Employee’s highest average full-time monthly pay rate for 12 or 36 consecutive months of employment, depending upon the employee’s benefit formula (if the employee pays into Social Security, $133.33 per will be deducted from the employee’s final compensation)
• Unmodified Allowance - Highest benefit payable

Note: Any unused sick leave is converted to additional service credit if the employee retires within 120 days of separation from employment. Eight hours of sick leave equals one day (.004 of a year of service). It takes 250 days of sick leave to receive one year of service credit (.004 x 250 = 1 year).

Final Compensation Caps

Employees who became members of CalPERS on or after 7/1/1996, are subject to the IRC 401(a) (17) limit, which restricts the amount of compensation that can be used to calculate the CalPERS retirement benefit. For 2018, the limit is $275,000.

Employees who become new members of CalPERS on or after 1/1/2013, and deemed PEPRA members, are subject to a compensation cap of $121,388 if subject to Social Security, and $145,666 for employees who are not subject to Social Security (i.e., Public Safety). These amounts represent the maximum salary that can count toward final compensation and calculation of retirement benefits for employees that are placed in the 2% at 62 retirement formula. 

Retirement Contributions

·    Employee contributions vary based on the employee’s retirement benefit formula and can change each year for those hired:

·    Employer contributions are set by CalPERS each fiscal year.  2017/2018 employer contribution rate:

Social Security

As a member of CalPERS, employees also participate in Social Security.

• Social Security and Medicare taxes are withheld from an employee's paycheck.
• Withholding rates are 6.2 percent for Social Security and 1.45 percent for Medicare.
• Social Security maximum taxable earnings is $128,400, for 2018.
• There is no limit for Medicare.
• As of January 2013, individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) pay an additional 0.9 percent in Medicare taxes.

Social Security Resources

• Social Security FAQ - This official site includes questions and answers about Social Security benefits.
• Social Security Administration (SSA) website

Other Retirement Benefits

Health, Dental, Vision, Employer-Paid Life Insurance and Various Voluntary Benefits

• CSU retiree medical and dental benefits are available to employees (and their eligible dependents) who retire within 120 days from the date of separation from employment.
• Vision Insurance does not automatically continue into retirement. Vision insurance is a voluntary benefit and to continue it into retirement an employee must request enrollment by completing the VSP Retiree Vision Enrollment Form which is available at the campus benefits office. Once enrolled, the premiums will be deducted from the former employee's retirement check.
• Employees may port the employer-paid life insurance plan, voluntary life insurance plan, and critical illness plan and pay for premiums once retired. Employees must already be enrolled in these plans at the time of retirement.

CalPERS Retirement Education Resources and Publications

• Planning Your Service Retirement
• Planning for Retirement Checklist
• Service Retirement Election Application
• Service Credit Purchase Options
• Special Power of Attorney
• State Miscellaneous and Industrial Member Benefits
• State Safety Member Benefits
• When you Change Retirement Systems
• CalPERS Education Center
• Guide to CalPERS Web Resources
•  

Applying for CalPERS Service Retirement

Employees can apply for service retirement online, in person, or by mail. It is recommended that employees begin planning for retirement one year before retirement.

 To file electronically, employees can log in to my|CalPERS. Go to the Retirement tab, select Apply for Retirement, and follow the steps for submitting your application and required documents online to CalPERS.

There are a number of benefits to filing for retirement electronically:

• Easily and securely submit an application 24 hours a day.
• Leave the online application and return at any point to complete it.
• Prior to submission, review and edit information.
• Receive confirmation that the application has been successfully submitted.
• Submit additional required documents online.
• Use the Electronic Signature to eliminate the notary requirement for the member signature.

For step-by-step instructions on filling out a paper service retirement application, employees can review the Service Retirement Election Application (PUB 43) or take the instructor-led or online Member Education class, Completing Your Retirement Application. For additional assistance, employees may make a one-on-one appointment at a CalPERS Regional Office. Employees may submit a hard copy retirement application and required documents in person at a CalPERS Regional Office or by mail.

Contact CalPERS at 888 CalPERS (or 888-225-7377) with retirement application questions.

CalPERS Retirement Check Deductions

The difference between gross and net pay differs in retirement than it does for active employees. There are fewer deductions taken. The following are examples of deductions that are NOT taken from retirement checks:

• Social Security Tax
• Medicare Tax
• CalPERS Contributions
• Union Dues
• Parking Fees

Also, all voluntary deductions cease. This can include life insurance, long term care, credit unions, and charitable contributions.