CalPERS Retirement in the CSU
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The California State University (CSU) supports the efforts of faculty and staff to plan a fulfilling, financially secure retirement. As part of its total rewards package, the CSU offers an array of retirement options to help employees meet their financial goals.
Retirement program eligibility is based on appointment type, duration, full-time equivalency (FTE) and previous public agency or reciprocal agency employment. The state-mandated retirement program is the California Public Employees Retirement System (CalPERS) and is coordinated with Social Security. Employees excluded from CalPERS membership are covered by the CSU Part-time Seasonal Retirement Plan.
There are also voluntary savings options for supplementing CalPERS.
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.
- Most student employment and instructors appointed to work in extension programs.
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.
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*)
|Information||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 11, 2011
Highest Benefit Factor
Age Retirement to Retire
Salary used to calculate retirement
Average highest 36 months (subject to cap)
Average highest 36 months
Average highest 12 months
*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.
Retirement benefits are calculated using a formula with three factors:
Service Credit X Benefit Factor X Final Compensation = Unmodified Allowance ($)
(Years) (% per year) (Monthly $)
- 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 participating in Social Security. 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.
- Employee contributions vary based on the employee’s retirement benefit formula and can change each year for those hired. Please contact your campus benefits office for details.
- Employer contributions are set by CalPERS each fiscal year.
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.
- Beginning in 2013, an additional Medicare tax of 0.9% is applied when an employee's wages and compensation exceed $200,000.
- 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 (see below for recent changes to retiree health and dental vesting).
- 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 or by visiting the CSU Retiree VSP Website. 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.
- For more information regarding CSU retiree benefits visit http://csuretirees.calstate.edu/.
NEW: 10 Year Retiree Health and Dental Vesting Period for New Faculty - Effective July 1, 2017
Who is subject to the new 10 year retiree health and dental vesting period?
- A new employee hired by the CSU for the first time into a Faculty (Unit 3) position who first becomes a CalPERS member on or after July 1, 2017. Both must happen on or after July 1, 2017.
- An employee working for the CSU prior to July 1, 2017 who became a CalPERS member after July 1, 2017 is not subject to the new 10 year vesting period.
- Prior state employment (non CSU) is not used to determine exclusion from the 10 year vesting period. It is not considered “CSU” employment.
- 10 Year Health and Dental Vesting Q & A for Employees.pdf
How is the 10 year service credit vesting period calculated?
- 10 years of CalPERS service credit as determined by CalPERS.
- CalPERS service credit includes credit earned at any CalPERS public agency including the State of California (including CSU) and public contract agencies.
CalPERS Retirement Education Resources and Publications
- CalPERS Education Center
- Guide to CalPERS Web Resources
- Planning Your Service Retirement
- 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
Applying for 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.
Planning for Retirement Checklist
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. For more information, visit the retiree section of CalPERS Online.
Refunds and Reciprocity
Leaving Employment (Refunds): Employees leaving CalPERS-covered employment but not retiring can either leave funds on account with CalPERS or take a refund of employee contributions.
Reciprocity (Changing Retirement Systems): Reciprocity allows employees to move from one retirement system to another without losing benefits. CalPERS reciprocal agreement with other California public retirement systems can allow employees to coordinate benefits between the two systems when at retirement.
Working after Retirement
Retired CalPERS employees can work as a retired annuitant in a temporary position and continue to receive retirement benefits. Employees do not need CalPERS approval. However, the California Public Employees Pension Reform Act (PEPRA) has the following restrictions which apply to CalPERS retirees returning to a CalPERS covered employer:
- In general, employees are limited to working 960 hours or less within a fiscal year (July 1 to June 30). Faculty are subject to work restrictions set by collective bargaining agreement.
- No other compensation or benefits in addition to the pay rate can be paid.
- Employees must wait 180 days after their retirement date before returning to work for a CalPERS employer (exceptions apply to public safety and faculty participating in the Faculty Early Retirement Program).
- No service credit is accrued or any additional retirement rights or benefits are available.
- The position must be classified as a temporary retired annuitant position (not a permanent, full-time or part-time position).
- Salary paid must be within the salary schedule for the position.
If employment does not meet all of the retired annuitant requirements, it can lead to a mandatory reinstatement from retirement. Also, the employee may be required to reimburse the amount of retirement allowance received while unlawfully employed.