CalSTRS Member Benefits - Ask Jack

Does CalSTRS provide protection from creditor attachments like federal ERISA plans?

Jack Ehnes — Tue, 08 May 2012 23:31:24 +0000

Although CalSTRS is not subject to the anti-assignment rules of ERISA or Internal Revenue Code Section 401(a)(13), the Teachers’ Retirement Law does provide protection from creditor attachments or what is referred to as an anti-assignment provision under Section 22006. This section of the law offers an exemption from creditors attempting to seek payment for debt by using a member’s pension benefit as payment.

May. 8, 2013

Why have all the postretirement earnings limitation exemptions been eliminated?

Jack Ehnes — Tue, 01 May 2012 17:47:59 +0000

The postretirement earnings limitation exemptions are set by the Teachers’ Retirement Law and contain a sunset date. That date is June 30, 2012. When a law contains a sunset date, it will expire or sunset on the determined date unless an extension in the law or the enactment of a new law occurs.

In the case of the postretirement earnings limit exemptions, legislation to extend the exemptions has not been enacted.

May. 1, 2013

What forms of compensation allowed in postretirement employment are not subject to the earnings limitation of $31,020?

Jack Ehnes — Mon, 23 Apr 2012 15:41:35 +0000

Any service that would have been creditable for CalSTRS before your retirement is subject to the earnings limitation, irrespective of whether you are employed directly by the school district or by a third party contractor. Non-creditable compensation including a fringe benefit, such as free parking is excluded from the earnings limitation.

Apr. 23, 2013

Could the use of bankruptcy at the state or local level be used to roll back the CalSTRS benefit?

Jack Ehnes — Fri, 13 Apr 2012 22:35:15 +0000

A lot of hyperbole has been written about what "ought" to be done with regards to reforming, or lowering the cost of, public pensions. However, that’s very different from what "can" be done, legally.

California case law and the California and U.S. constitutions have enshrined the concept of legally binding contracts. Under that concept, once a public entity enters into a contract with employees, it cannot rewrite that contract without the agreement of the employee. Therefore, according to current law, CalSTRS core pension benefits (retirement, disability and survivor benefits) are guaranteed by both the U.S. and California constitutions.

Apr. 13, 2013

Could you tell me the status of any ballot initiatives or Legislation that could change the existing CalSTRS pension?

Jack Ehnes — Wed, 11 Apr 2012 17:55:36 +0000

As of March 15, 2012 there were no initiative measures presently circulating for signature. There are however 24 Senate and Assembly Bills that call for some aspect of pension reform for public pension systems.

Apr. 11, 2013

The Governor’s 12-point pension proposal seeks to eliminate purchasing nonqualified service credit, when could this take effect?

Jack Ehnes — Mon, 02 Apr 2012 21:21:09 +0000

The year 2013 is the earliest any of the provisions within the Governor’s 12-point pension reform proposal could go into effect, including elimination of purchasing non-qualified service credit; that’s if the measures are adopted as written.

It’s important to keep in mind that while the Governor has introduced specific pension reform measures, all measures must first go through the legislative process before anything is certain.

Apr. 2, 2013

If passed, would the Governor’s 12-point proposal eliminate postretirement employment and would it include college instructors?

Jack Ehnes — Tue, 13 Mar 2012 16:35:14 +0000

Currently the Teacher’s Retirement Law restricts the amount you can earn in a CalSTRS-covered position after you retire without it affecting your retirement benefit. For example, if you return to work in a CalSTRS-covered position, you are subject to an earnings limitation of $31,020 per school year for 2011-12 unless you have an exemption from the earnings limit. However, the exemptions will expire June 30, 2012.

Mar. 13, 2013

Can you explain the impact of different retirement ages presented under the Governor’s pension reform proposal?

Jack Ehnes — Fri, 24 Feb 2012 16:32:44 +0000

Under current CalSTRS-offered benefits, the normal retirement age is age 60, and the minimum retirement age is generally attainable at age 55 with at least five years of service credit. If an educator has 30 years of service credit, he or she is able to retire even earlier at age 50.

Feb. 24, 2013

If the Governor's proposal is passed, would an instructor with more than 35 years have to forfeit the 2.4% benefit formula?

Jack Ehnes — Tue, 14 Feb 2012 17:10:02 +0000

Under the current benefit formula, members are entitled to a benefit based on age, final compensation and years of service credit at retirement. This benefit can be as much as 2.4 percent of final compensation per year of service credit.

Feb. 14, 2013

Can you explain what CalSTRS is doing about reports of pension spiking?

Jack Ehnes — Tue, 17 Jan 2012 23:25:48 +0000

CalSTRS takes pension spiking very seriously, which is why we have, and continue to aggressively pursue instances of suspected spiking. Our internal controls and processes to identify and resolve instances of spiking include regularly conducting school district audits and analyzing employer compensation reports to identify excessive increases that could affect the member’s final compensation factor.

Jan. 17, 2013