California Public Employees Retirement System Cal PERS California

California Public Employees’ Retirement System (Cal. PERS) & California State Teachers’ Retirement System (Cal. STRS) An overview of your retirement benefits and options Foresters Financial Services, Inc. does not work for any state or school.

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Explanation of your retirement benefit • Eligibility for retirement • Hired Pre-2013 vs. Post-2013 • Terms used • Benefit estimates • Income options

Eligibility rules for retirement Cal. PERS Normal Retirement • Hired Pre-2013 – Age 50 + 5 years service credit • Hired Post-2013 – Age 52 + 5 years service credit Cal. STRS Normal Retirement • Hired Pre-2013 – Age 50 + 30 years service credit or Age 55 + 5 years service credit • Hired Post-2013 – Age 55 + 5 years service credit • Reduced benefit election – Age 55 + 5 years service credit

A look at your statement Cal. PERS Cal. STRS Annual Member Statement shows years of service credit you’ve accumulated

How to estimate your contributions Cal. PERS Cal. STRS Prior to July 2014: 8. 00% 2014 -2015: 8. 15% 2015 -2016: 9. 20% 2016 -2017: 10. 25% • Cal. PERS members contribute 7% of their annual pay • • • Example: If your annual pay was $60, 000, your contribution for that year would be $4, 200 • Example: If your 20152016 pay was $60, 000, your contribution for that year would be $5, 520

How to calculate your defined benefit retirement Cal. PERS Cal. STRS Formula: Service Credit x Age (Benefit) Factor x Final Compensation Service Credit Factors: - Full vs. Part-time - Sick Leave Credit - Multiple Positions - Excess Service - Additional Duties Ability to Purchase Service Credit

How to calculate your defined benefit retirement (continued) Cal. PERS Final Compensation • Highest consecutive 12 month compensation Cal. STRS Final Compensation • Over 25 years of service, your highest yearly salary • Less than 25 years of service, average of highest 3 consecutive years

How to calculate your defined benefit retirement – Hired Pre-2013 (cont’d) Cal. PERS Cal. STRS Cal. PERS Age Factors: 2% @ Age 55 Cal. STRS Age Factors: 2% @ Age 60 Example – if Age 60, 28 years service credit and final compensation of $60, 000 ----------------------28 (Service Credit) x 2. 31% (Age Factor) x $60, 000 (Final Compensation) = $38, 808/year or $3, 234/month Example – if Age 60, 28 years service credit and final compensation of $60, 000 ----------------------28 (Service Credit) x 2. 00% (Age Factor) x $60, 000 (Final Compensation) = $33, 600/year or $2, 800/month

How to calculate your defined benefit retirement – Hired Post-2013 (cont’d) Cal. PERS Cal. STRS Cal. PERS Age Factors: 2% @ Age 62 Cal. STRS Age Factors: 2% @ Age 62 Example – if Age 60, 28 years service credit and final compensation of $60, 000 ----------------------28 (Service Credit) x 1. 8% (Age Factor) x $60, 000 (Final Compensation) = $30, 240/year or $2, 520/month Example – if Age 60, 28 years service credit and final compensation of $60, 000 ----------------------28 (Service Credit) x 1. 76% (Age Factor) x $60, 000 (Final Compensation) = $29, 568/year or $2, 464/month

Career factor for Cal. STRS Members hired pre-2013 • With 30 years service credit, you get an additional 0. 2% added to your Age Factor (maximum still at 2. 4%) Example: Member is 62 years old with 30 years service credit and final compensation of $60, 000. 30 (service credits) x 2. 4% (age factor 2. 27% + career factor 0. 2% = max 2. 4%) x $60, 000 (final compensation) = $43, 200/year or $3, 600/month

Choosing your Cal. PERS Retirement Payment Plan Option • Unmodified Allowance – Maximum to retiree: lifetime; nothing for survivors • Option 1 – lump sum payment of remaining member contributions payable to beneficiary after death • Option 2 (100%), 2 W, 3 (50%), 3 W or 4 – provides lifetime monthly benefits to your designated beneficiary (Results in a reduction to retiree’s monthly allowance) Example: Member is Age 60, has 28 years service credit and $60, 000 final compensation. If Unmodified allowance is $3, 234/month: Option 1: $3, 135 retiree Option 2: $2, 812 retiree / $2, 812 Bene Surv (Age 60) Option 3: $3, 008 retiree / $1, 504 Bene Surv (Age 60)

Choosing your Cal. STRS Retirement Payment Plan Option • Member – Only Benefit Maximum to retiree: lifetime; lump sum payment of remaining member contributions payable to beneficiary after death • 100%, 75% or 50% Beneficiary Options – provides • Compound Option lifetime monthly benefits to your designated beneficiary (results in a reduction to retiree’s monthly allowance) Example: Member is Age 60, has 28 years service credit and $60, 000 final compensation. If Member-only benefit is $2, 800/month: 100% Option: $2, 502 retiree / $2, 502 Bene Surv (Age 60) 75% Option: $2, 592 retiree / $1, 944 Bene Surv (Age 60) 50% Option: $2, 665 retiree / $1, 332 Bene Surv (Age 60)

Inflation adjustment calculations Cal. PERS • Maximum of 2% compounding – based on the CPI (consumer price index) • Will maintain at least 75% of purchasing power Cal. STRS • Non-compounding 2% • Will maintain at least 85% of purchasing power • Defined benefit supplement (DBS) account

How Cal. PERS & Cal. STRS affect your Social Security benefits Cal. PERS • Does contribute to Social Security • 40 quarters to be eligible (10 years full-time) Cal. STRS • Does not contribute to Social Security • WEP (Windfall Elimination Provision) • GPO (Government Pension Offset) • When should you apply for your benefits?

Supplemental Retirement Programs • 403(b) • 457(b) • Traditional IRA • Roth IRA • Which option(s) are best for you?

Excerpt from sample TRAK report

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