Take a Closer Look

Review the details of what makes up the Retirement Benefit Formula. It’s very important for you to learn and understand the value of your Defined Benefit Program.

Service Credit

Service credit is the number of school years, including partial years, which you have worked and paid into CalSTRS:

• You earn service credit every day you work or are on paid leave.
• You can earn up to 1.00 service credit for every year you teach. If you work less than full time, your service credit for the year may be less than 1.00.

If you earn extra service credit for additional duties, your CalSTRS contributions and most of your employer’s contributions that exceed one year will go into your Defined Benefit Supplement account.

The more service credit you have, the greater your CalSTRS retirement benefit. The Defined Benefit Program rewards classroom longevity.

Age Factor

Age factor is a percentage based on your age at the time you retire. The age factor is set at 2 percent at age 60. It is decreased if you retire before age 60 and increased up to 2.4 percent at age 63.

The higher your age factor, the higher your retirement benefit.

Final Compensation

Final compensation is your highest average annual ernable compensation if you have at least 25 years of credited service at retirement or if it is included in a written collective bargaining agreement and all costs are paid by the employer or the employee, or both. Otherwise, the period is three consecutive years (36 consecutive months) with fewer than 25 years of service credit.

Inflation Protection

Starting September 1 after the first anniversary of your retirement date, your benefit will automatically increase each year at 2 percent of your initial benefit. If inflation erodes the purchasing power of your retirement benefit to 85 percent or less of your initial monthly benefit, you will receive an additional quarterly payment from CalSTRS.

Defined Benefit Supplement

Your Defined Benefit Supplement account provides additional income for you at retirement. You will receive your Defined Benefit Supplement account funds:

• At retirement.
• If you receive a CalSTRS disability benefit.
• If you’re no longer a CalSTRS member and request a refund.

From January 2001 to December 2010, one-fourth of the 8 percent of your earnings you contributed to CalSTRS for your retirement went into this account. Contributions on any compensation you earn from more than one year of service credit in a school year continue to go into your account.

Your designated beneficiaries will receive your remaining CalSTRS funds when you die.

Review CalSTRS Member Handbook to learn more.