Thinking about retiring?

The California Public Employees' Retirement System (CalPERS) plan is a defined benefit plan, which provides a retirement benefit based on the employee’s applicable retirement formula, age at retirement, years of service credit, and compensation. Full-time employees (or part-time employees working at least halftime), are automatically enrolled in the CalPERS Retirement Plan. To be eligible, a full-time employee must be appointed for at least six months and a part-time employee must be appointed for at least one year. Employees are required to contribute a percentage of their gross monthly salary per month. There is a cap on annual salary that can be used to calculate retirement benefits. The contribution is not subject to federal and state taxes. For additional information about the CalPERS defined benefit plan go to: www.calpers. ca.gov.

The benefit structure for state employees (including the CSU) is defined by statute. 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. The employer contribution is set annually by CalPERS based on annual actuarial valuations. The employee contribution depends upon the retirement benefit formula the employee is eligible. See Premiums/Rates for further details.

Part-Time, Seasonal, and Temporary (PST) Retirement Plan Employees who are not eligible for CalPERS retirement are required to participate in the PST Program administered by CalHR in lieu of Social Security. Employees enrolled in this program contribute 7.5% of their gross wages, on a pre-tax basis, to a retirement account that is available upon separation of employment

Pension Reform History

In 2010, the Governor signed SBX6 22, a pension reform bill creating new CalPERS retirement plans for individuals who are employed with the State of California for the first time on or after January 15, 2011 (applicable Unit 8 employees hired on or after July 1, 2011). CSU employees hired prior to January 15, 2011, are excluded from this provision.

On September 12, 2012, the Governor signed into law AB 340 the Public Employees’ Pension Reform Act (PEPRA). The legislation added, amended and repealed numerous sections of the Government code relating to the Public Employee’s retirement. Effective January 1, 2013 (July 1 2013 for public safety (R08), every new enrollment must be tested against the definition of “new member”, regardless of whether the enrollment is for a first-time CalPERS member or an existing CalPERS member. CalPERS refers to all members that do not fit within the definition of new member as a “classic members.” All existing CalPERS members as of December 31, 2012, retain the existing benefit levels for future service within the same employer. Because the new member determination is made on an appointment-by-appointment basis, classic members also must be tested against the “new member” definition upon each new appointment. See Eligibility for further details.

 

Further PEPRA details can be found on the CalPERS website

 

 

Retirement Benefits – All Employee Groups (Except Public Safety)

 

 

PEPRA Membership

Classic Membership

Employment and Membership

Hired by state and new CalPERS member on or after January 1, 2013.

Hired by state and new CalPERS member between January 15, 2011 and December 31, 2012

Hired by state and new CalPERS member prior to January 15, 2011

Retirement Formula

2%@62

2%@60

2%@55

Highest Benefit Factor

2.5%@67+

2.418%@63+

2.5%@63+

Vesting

5 years

5 years

5 years

Minimum Retirement Age

52

50

50

Salary used to calculate retirement

Average highest 36 months (subject to cap)

Average highest 36 months

Average highest 12 months

PEPRA Compensation Cap

2019

$124,180 for Social Security participants

$149,016 for Social Security non participants

N/A

N/A

401(a)(17) Compensation Limit

N/A

2019 $280,000

2019:  $280,000

Not applicable to employees with CalPERS membership prior to 7/1/1996

 

Retirement Benefits – Public Safety (Police Officer/Firefighter)

 

 

PEPRA Membership

Classic Membership​

Employment and Membership

Hired by state and new CalPERS member on or after January 1, 2013.

Hired by state and new CalPERS member between July 1, 2011 (January 15, 2011 for Mgmt) and December 31, 2012

Hired by state and new CalPERS member prior to July 1, 2011

Retirement Formula

2.5%@57

2.5%@55

3%@50

Highest Benefit Factor

2.5%@57+

2.5%@​55+

3%@50+

Vesting

5 years

5 years

5 years

Minimum Retirement Age

50

50

50

Salary used to calculate retirement

Average highest 36 months (subject to cap)

Average highest 36 months

Average highest 12 months

PEPRA Compensation Cap

2019: $149,016

N/A

N/A

401(a)(17) Compensation Limit

N/A

2019 $280,000

2019:  $280,000

Not applicable to employees with CalPERS membership prior to 7/1/1996

Note: There are exceptions to CalPERS membership benefit formula eligibility for employees with previous public agency or reciprocal agency employment. See Eligibility for further details.

For further information, visit the CalPERS web site. The following links provide specific information for the topics listed:

  • Members are eligible to retire at the age specified in their benefit formulas. CSU members become fully vested in their retirement benefits after five years of credited service.
  • Internal Revenue Code (IRC) 401(a)(17) provides dollar limitations on benefits and contributions under qualified retirement plans, including the California Public Employees’ Retirement System (CalPERS). Employees who first became members of CalPERS on or after July 1, 1996, are subject to the 401(a)(17) limit, which restricts the amount of final compensation that can be used to calculate the CalPERS retirement benefit. Employees subject to the limit are exempt from making contributions to CalPERS on earnings that exceed the current year maximum. However, campuses must continue to report the appropriate contribution code, even those above the maximum, so that these employees continue to earn service credit.