The CalSTRS Difference

May. 31, 2011 William Yee
in

Clear and concise points about how and why CalSTRS is different from other public pension systems.

  • CalSTRS members receive no Social Security benefits.

    Benefits are based on a formula that rewards longevity and are determined by years of service, age at retirement and highest average compensation at retirement. Retired members generally do not receive employer-paid health care benefits after age 65.

  • The CalSTRS board does not have the authority to raise contribution rates unlike most other national and state pension plans.

    The Legislature and governor must approve any adjustments to CalSTRS contribution rates needed to address the changing economic environment.

  • CalSTRS member contributions are among the lowest in the U.S. and have been the same for close to 40 years.

CalSTRS Comparison with Other Pension Plans
(Percentage of Payroll)
Employee Social Security Employee Defined Benefit Employer Social Security Employer Defined Benefit State Total
CalPERS Classified
School Employees
(2011-12)1		 6.20% 7.00% 6.20% 10.92% N.A. 30.32%

Median Teacher Plan Not Covered by Social Security2

 N.A. 8.33% N.A. 15.24% N.A. 23.57%

CalSTRS
(2011-12)

 N.A. 8.00% N.A. 8.25% 2.348%3 18.598%
Sources/Notes
1 - CalPERS data for non-credentialed employees
2 - CalSTRS staff research 2011
3 - Current payroll rate is equivalent amount of 2.541% of fiscal year ending in prior calendar year

  • CalSTRS commitment to transparency has made it a leader among public pension funds.

    In 2006, CalSTRS established regulations and policies to ensure conflict-free investment decisions. These policies include:

    • Disclosure of placement agent relationships and payments
    • Restrictions on campaign contributions to board members
    • Preventive spiking measures that alert CalSTRS to significant late-career salary increases