CalPERS Retirement Complete Guide: Everything California Public Employees Need to Know
The definitive guide to CalPERS retirement. Understand your benefits, make informed decisions, and maximize your California public pension.
Key Takeaways
- 1CalPERS is the largest public pension fund in the United States
- 2Your pension depends on service credit, age factor, and final compensation
- 3PEPRA members (hired after 1/1/2013) have different rules than Classic members
- 4CalPERS health benefits are separate from your pension and have eligibility requirements
- 5Diversifying beyond your CalPERS pension provides additional retirement security
Understanding CalPERS: The Basics
The California Public Employees' Retirement System (CalPERS) is the largest defined-benefit public pension fund in the United States, managing retirement and health benefits for over 2 million California public employees and retirees.
- Over $450 billion in assets under management
- Serves state employees, school districts, and local public agencies
- Provides defined benefit pension - your retirement income is guaranteed by formula
- Also administers health insurance for many public employers
- Member contributions and investment returns fund the system
Classic vs PEPRA Members
Your membership type determines your benefits, contribution rate, and retirement eligibility. The Public Employees' Pension Reform Act (PEPRA) of 2013 created different rules for newer employees.
- **Classic Members**: Hired before January 1, 2013 with existing public retirement membership
- **PEPRA Members**: Hired on or after January 1, 2013, or returning members with break in service
- Classic members typically have better formulas (2% at 55 or 2% at 60)
- PEPRA members use 2% at 62 formula with lower compensation caps
- Contribution rates differ between Classic and PEPRA
- Reciprocity rules may preserve Classic status when moving between public employers
How Your CalPERS Pension Is Calculated
Your CalPERS pension is calculated using a formula: Service Credit × Benefit Factor × Final Compensation = Annual Pension. Each component significantly impacts your retirement income.
- **Service Credit**: Total years and months of CalPERS-covered employment
- **Benefit Factor**: Percentage based on your formula and retirement age
- **Final Compensation**: Highest average annual pay (1 or 3 years depending on formula)
- PEPRA cap on pensionable compensation ($151,549 in 2024 for non-SS members)
- Unused sick leave can add to your service credit at retirement
- Part-time work earns proportional service credit
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CalPERS Retiree Health Benefits
CalPERS health benefits are separate from your pension and depend on your employer's contract and your years of service. Not all CalPERS members are eligible for retiree health coverage.
- Employer must contract with CalPERS for health benefits (not all do)
- Typically need 10-20 years of service for full employer health contribution
- Health vesting based on your employer's specific contract
- Medicare becomes primary at 65; CalPERS plan becomes secondary
- Can enroll spouse and dependents in coverage
- Premiums vary by plan, coverage level, and region
CalPERS Retirement Payment Options
When you retire, you'll choose a benefit payment option that determines your monthly income and what your beneficiary receives after your death.
- **Unmodified Allowance**: Highest monthly payment; provides 50% to eligible spouse
- **Option 1**: Slightly reduced; provides 100% of your remaining contributions to beneficiary
- **Option 2**: Reduced payment; 100% continues to beneficiary after death
- **Option 3**: Moderately reduced; 50% continues to beneficiary after death
- **Option 4**: Custom percentage to beneficiary (25%, 50%, 75%, or 100%)
- Option choice is irrevocable after first check - choose carefully
Strengthening Your Retirement Beyond CalPERS
While your CalPERS pension provides guaranteed lifetime income, it has limitations. The 2% annual COLA may not keep pace with actual inflation, and your pension cannot be left to heirs beyond survivor options. Many California public employees enhance their retirement security with additional savings.
- CalPERS 457 Deferred Compensation Plan available to most members
- No 10% early withdrawal penalty on 457 plans when you separate from service
- 457 plans can be rolled to IRA at retirement for greater investment flexibility
- Gold IRA provides inflation protection that CalPERS COLA may not match
- Diversify beyond a pension dependent on California's economic health
- Augusta Precious Metals specializes in 457-to-Gold IRA rollovers
Frequently Asked Questions
1When can I retire from CalPERS?
PEPRA members can retire as early as 52 with reduced benefits, with full benefits at 62. Classic members can retire at 50-55 depending on their formula. You need at least 5 years of service credit to be eligible for a pension.
2What happens to my CalPERS pension if California goes bankrupt?
CalPERS benefits are protected by the California Constitution. Even if local agencies have financial troubles, the state has historically upheld pension obligations. However, diversifying retirement savings provides additional security.
3Can I collect CalPERS and Social Security?
Yes, but with potential reductions. If you have Social Security from other employment, the Windfall Elimination Provision (WEP) may reduce your Social Security benefit. CalPERS itself is not affected.
4How do I check my CalPERS account?
Access your myCalPERS account at my.calpers.ca.gov to view service credit, salary history, benefit estimates, and health plan information. You can also update beneficiaries and request retirement estimates.
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