Post-Retirement Earnings Limit for Fiscal Year 2002-2003 Was Raised to Yields Findings $24,934
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winter 2003 SEMIANNUAL NEWSLETTER FOR CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM BENEFIT RECIPIENTS Post-Retirement Teachers Earnings Limit Set Health Study on january 1, the post-retirement earnings limit for fiscal year 2002-2003 was raised to Yields Findings $24,934. with help from calstrs, nearly 133,500 female The earnings If you go over the limit in any fiscal teachers from california limit is applied year, your retirement benefit will be have been participating in the to public school reduced dollar for dollar by the ongoing California Teachers employment excess amount. Study. The study, organized by only; there is a consortium of scientists from There are several exemptions to the no earnings the California State Depart- limit. These exemptions have limit for ment of Health Services and various sunset dates, so be sure to employment universities throughout Califor- check the exemptions each year. outside public nia, seeks to enhance under- You may be exempt if you: schools. Keep in mind, however, standing of breast cancer that extra service such as teaching L retired on or before January 1, causes and prevention. summer school and intersession 2000, and teach in grades K–12 In this phase of the study, the started counting toward the limit in or participate in certain teacher research team confirmed: July 2002. preparation programs L Teachers have higher than This change is the result of new retired on or before July 1, 2000, expected rates of breast, legislation. SB 1983 by Senator and provide direct remedial endometrial and ovarian Soto, signed into law in September instruction to students in grades cancers, melanoma, lym- 2000, changed the basis for calcu- 2–12 phoma and leukemia and, lating the post-retirement earnings L return to CalSTRS-covered to an extent, thyroid limit from the All Urban California employment after a break in cancers. Consumer Price Index to the service of 12 or more consecu- increase in the average earnable tive months Teachers have low rates of salary of active members. With L fill an administrative position for cancers of the lung and teacher salaries increasing more up to one-half of the full-time cervix, and they have about quickly than the CCPI, the effect equivalent that is vacant because the same rates of colon will likely be higher post-retirement of an unanticipated emergency cancer as other California earnings caps in the future. situation women. continued on page 10 continued on page 6 CEO Notes BY JACK EHNES, CHIEF EXECUTIVE OFFICER contribution retirement plans reason for the most recent stock Who do you because these types of plans depend market decline is lack of investor trust? on the amounts held in each confidence because of scandals and individual’s account. These pension bankruptcies of major companies. calstrs moves forward in the plan benefits are market sensitive In fact, several of those incidences aftermath of corporate scan- and can rise or fall with economic have affected the portfolio. CalSTRS’ dals and financial market cycles. losses in Enron totaled about $47.5 setbacks million and losses in WorldCom Who can you trust? Not an easy Your Benefit is Not Affected about $263 million. While that’s a question to answer these days. Remember that your retirement small part of the $94 billion portfo- Lately our newspapers are filled plan is different from these defined lio, CalSTRS is aggressively pursu- with stories of corporate misdeeds. contribution plans. CalSTRS pro- ing financial market reforms and vides a defined benefit program, actively supporting passage of The impact of recent news is of which provides lifetime benefits federal legislation to ensure corpo- course not just interesting Sunday guaranteed by law and is never rate accountability. reading. Our financial markets have affected by economic cycles. been shaken to their core, and we Trust and integrity must be rebuilt are faced with an aftermath that has Benefit Enhancements are in the marketplace before the stock affected the financial resources of Unlikely market can fully recover. We have millions of Americans. Just as That said—a stock market decline an active voice in Washington to serious, recent events have raised does affect CalSTRS. When pension advocate our financial interests in fundamental questions about trust funds develop assets that exceed these corporate accounting reform in corporate America. their liabilities, benefit enhance- debates. We also unfortunately ments often follow. With pension recognize that there are times that Impacts of Recent Market plans throughout the country now we must litigate to pursue recovery Downturn facing reduced assets, it is unlikely of the system’s funds. In one such It’s not news to you that a market that benefit enhancements can be high profile case, the courts have downturn means that your personal added for some time unless more named CalSTRS as lead plaintiff in investments, such as IRAs, 401(k)s money is contributed to CalSTRS. the class action lawsuit against or 403(b)s, have lost value. This is Homestore.Com, a California-based truly an unfortunate setback to CalSTRS Is Involved in Market company. Recently, the Justice everyone’s overall retirement in- Reforms Department secured guilty pleas come. Most affected are private CalSTRS is doing its part to help the from three key Homestore execu- sector employees who have defined market strengthen again. One continued on page 3 page 2 retired educator CEO NOTES cont. from page 2 We also know that we have no other We will be communicating this motives than to serve you. Our mission loudly throughout tives for their roles in a scheme to products are designed simply and CalSTRS, to our membership and fraudulently inflate the earnings of solely for your retirement benefit our business partners. In these days the company. with no hidden charges. This means of financial insecurity and mis- that we must protect your retirement deeds, we must sustain your trust assets with the utmost care and that CalSTRS will always serve your The CalSTRS Mission diligence. But trust must be earned, interests. Amidst this discussion of trust, I not just talked about. I pledge to you want to take a moment to discuss that all of us at CalSTRS will make CalSTRS’ mission. You might think this mission part of our daily respon- our mission is obvious—it’s to pay sibility in serving you. benefits. That certainly is one of our Jack Ehnes core responsibilities, but we see our relationship to you in much broader terms. The Teachers’ Retirement Board has developed the following mission statement: Who Do You Trust? Securing the financial future A recent USA Today/CNN/Gallup Poll (July 2002) asked, “Which and sustaining the trust of groups do you trust? California’s educators. The answers should be of no surprise to you. Teachers were rated To us at CalSTRS, this is a very very highly with an 84 percent rating. The bottom? Corporate CEOs powerful statement. We see our and HMO execs (23 percent and 20 percent respectively). Here’s responsibility in fulfilling this as the breakdown: advocating, developing, delivering and communicating a variety of More than 500 adults were asked which groups they trusted financial products and services to Catholic priests 45% provide a strong foundation for Teachers 84% your retirement. We will look to People who run Rich people 43% you for guidance as to how we can small businesses 75% continuously improve our service Journalists 38% Military officers 73% and offer new services that meet Government officials 26% your needs in these changing times. Police officers 71% We recognize that some of our Lawyers 25% members prefer face-to-face or Coaches of youth sports 68% Stockbrokers 23% telephone communications while Protestant ministers 66% others would prefer self-service CEOs of large corporations 23% through our Web site. Our mission Doctors 66% Managers of HMOs 20% statement says that no matter the delivery system, you come first, not Accountants 51% what is easier for us. Professional athletes 48% Source USA TODAY/CNN/Gallup Poll, July 5-8, 2002 winter 2003 page 3 New CalSTRS Web Site Makes Its Debut Click on www.calstrs.ca.gov to see the changes Stop by to see the new and improved CalSTRS Web site. You’ll see some dramatic changes as the site takes a leap forward in graphic presentation, navigational ease and readability. Use the drop-down menu to access each section more quickly. And don’t forget to visit the site from time to time to look for future improvements! Here’s the path for information of interest to retired CalSTRS members and benefit recipients. About CalSTRS Members DEFINED BENEFIT PROGRAM • Retirement Benefits • Disability Benefits Forms & Publications • Survivor Benefits • Working After Retirement • Reading Your 1099R • Glossary FAQs HOME LOAN PROGRAM • Program Summary • Approved Lenders • Interest Rates MEDICARE PREMIUM PAYMENT PROGRAM • Program Information • Program Forms • Related Sites TELETALK Need a CalSTRS form? You can now order forms by e-mail. Click on the Forms & Publications link on the Web site, then select the forms ordering button. Type in your name, shipping address and the number of forms you need. Ordering by phone is easy, too. Call 800-228-5453 and select option 3. page 4 retired educator New Law Allows Change to Option 6 and 7 Option Beneficiary when you retired, did you When Can You Change Your • if you get married after your select options 6 or 7? If so, there Option Beneficiary? retirement and had previously is a new law that started January 1 Once you retire, you can only chosen an unmodified allowance you should know about. change your option beneficiary For more information about chang- under the following four circum- Now under Options 6 and 7 if your ing your option beneficiary, listen to stances: option beneficiary dies before you Teletalk messages 369, 370 and do, you can name a new option • if your option beneficiary dies 378 by calling 800-228-5453 and choosing option 3.