Value Your Defined Benefit

Learn why CalSTRS Defined Benefit is The Benefit of a Lifetime.

Understand the true value of your CalSTRS pension – a guaranteed lifetime retirement benefit.

As a vested member of CalSTRS, you will receive a CalSTRS lifetime monthly benefit—or Defined Benefit pension—when you retire. You are eligible for your CalSTRS retirement benefit once you reach age 55 with at least five years of service credit—or age 50 with 30 years of service credit.

With 29 years of service credit and retirement at age 61, the median CalSTRS benefit replaces 60 percent of a member’s final compensation.

Your retirement benefit is called a Defined Benefit —defined because it is based on a formula, not on how much you have contributed. Your retirement benefit will be a steady source of income and will be based on your age, final compensation and years of service credit at retirement—not the amount in your account.

If you are employed full time performing creditable service in a California public school or community college, your membership in CalSTRS begins on your first day of employment. You will contribute eight percent of your income to your retirement.

You’re also eligible for disability and survivor benefits.

Your Contributions

As a member of the Defined Benefit Program, you contribute eight percent of your creditable compensation as required by the Teachers’ Retirement Law. Your employer can pay all or a portion of your contributions.

Your contributions are withheld from your creditable compensation by payroll deduction and credited to the Defined Benefit program.

Your contributions must be deducted from your compensation and are considered creditable compensation for retirement purposes.

Your tax-deferred contributions are credited to your Defined Benefit Program balance as “Employee-Paid Member Contributions.” The contributions are taxable when returned to you or your beneficiaries in a lump sum or monthly benefit.

Member contributions have not been increased since 1972.

Employer Contributions

As a Defined Benefit Program member, your employing school district, community college district, participating charter school or county office of education contributes to CalSTRS an amount equal to 8.25 percent of your creditable compensation. Your employer’s contributions are not credited to your Defined Benefit balance on account but are deposited in the Teachers’ Retirement Fund to help fund the benefits payable to all members and their beneficiaries.

Employer contributions have not been increased since 1990.

State Contributions

Currently, the state of California contributes 2.541 percent of your creditable earnings from the fiscal year ending in the prior calendar year. Additionally, the state contributes an amount equal to about 2.5 percent of the total creditable compensation paid to all CalSTRS Defined Benefit Program members during the fiscal year ending in the prior calendar year for the Supplemental Benefit Maintenance Account. This account is used to maintain the purchasing power of benefits at prescribed levels.

The state contribution was 4.607 percent in 1998.

Contributions + Investments Fund Pensions

Contributions from member paychecks, employer payrolls, the state of California plus investment income earnings fund the retired members' benefits. Historically returns on investment earnings have contributed about 60 percent to retirement benefits.

How Interest is Credited to Your Accounts

At the end of each fiscal year, interest is credited to your accumulated contributions and interest in your Defined Benefit and Defined Benefit Supplement accounts at the credited interest rate. The credited interest rates are adopted annually by the Teachers’ Retirement Board.

Defined Benefit Program Balance

Interest is credited to your Defined Benefit Program balance on account primarily to provide a lump-sum benefit to you if you terminate all creditable service and withdraw your portion of contributions or to your beneficiaries if you die without survivors who are eligible for monthly benefits.

As a Defined Benefit Program member, your retirement benefit will be calculated using a formula established by law based on your age, years of service credit and final compensation. The amount of total contributions and interest credited to you are not used to calculate your future monthly benefit or your beneficiary’s future monthly benefit.

This is a lifetime benefit regardless of the amount of your contributions.