Member Handbook 2002–2003 The CalSTRS Member Handbook was prepared by the staff of the California State Teachers’ Retirement System to assist CalSTRS Defined Benefit Program members in understanding their member benefits. The summarized data pertain to the Teachers’ Retirement Law and procedures effective January 1, 2003. The Member Handbook is intended as a ready source of information about CalSTRS and not as a legal document or a substitute for the law. If differences appear between the law and the handbook, the law must prevail. The State Teachers’ Retirement Law consists of Part State of California 13, also known as the E. Richard Barnes Act, Part Gray Davis, Governor 13.5 and Part 14 of Division 1 of the California Education Code. The law establishes the State Teachers’ Retirement Board Teachers’ Retirement Plan, which consists of the Gary Lynes, Chairperson CalSTRS Defined Benefit Supplement Program, Paul Krasnow Karen Russell, Vice Chairperson Defined Benefit Program and the CalSTRS Cash Jay Schenirer Balance Benefit Program. Part 13 includes the Carolyn Widener provisions of the CalSTRS Defined Benefit Program B. Timothy Gage, Director, Department of Finance and DBS Program and regulates all activities of the Steve Westly, State Controller California State Teachers’ Retirement System. Part Phil Angelides, State Treasurer 13.5 includes provisions concerning health care Jack O’Connell, Superintendent of Public Instruction benefits for CalSTRS members. Part 14 establishes an alternative plan for part-time educators, known as the Jack Ehnes, Chief Executive Officer Cash Balance Benefit Program. Christopher J. Ailman, Chief Investment Officer Permission is hereby granted to reproduce, copy, or duplicate the information in this booklet, provided credit is given to CalSTRS. Dial 800-228-5453 CalSTRS then press the numbers to access Teletalk Main Menu P.O. Box 15275 Sacramento, CA 95851-0275 1 23 Account Data Teletalk Statement of Account Financial Education Toll-Free ........................................... 800-228-5453 Order Forms/Brochures Local ................................................. 916-229-3870 TTY ................................................. 916-229-3541 4 5 0 Fax .................................................... 916-229-3879 Survivor Benefits Cash Balance Public Service Office Caseworker Benefit Program Web site ...................................... www.calstrs.ca.gov Table of Contents Letter from CalSTRS’ CEO ........................... 1 IV. What to Consider Before Introduction ................................................ 3 Retirement .................................. 19 Retirement Counseling ............................. 19 I. CalSTRS Membership ................. 5 Golden Handshake .................................... 21 Membership in the Defined Benefit Program ...................................... 5 Reduced Workload Program ...................... 21 Member Contributions ............................... 7 Concurrent Retirement ............................. 22 Defined Benefit Supplement Program ........ 8 Pre-Retirement Election of an Option ....... 22 Employer Contributions ............................. 9 Birthday Verification.................................. 24 State Contributions ..................................... 9 V. Service Retirement .................. 25 Service Credit.............................................. 9 When Can I Retire? ................................... 25 Annual Statement of Account.................... 10 Early Retirement Alternatives .................... 25 Communication With Employers and How to Calculate Your Defined Benefit Employee Organizations....................... 11 Retirement Allowance .......................... 26 Member Newsletters ................................. 12 Electing an Option .................................... 31 II. Early Career Years ................... 13 Guidelines for Service Retirement Application Process .............................. 38 If You Terminate Your CalSTRS- Covered Employment ........................... 13 What CalSTRS Does Upon Receipt of Your Retirement Application ................ 39 Survivor or Disability Benefits .................. 13 Direct Deposit ........................................... 39 Refund of Your Account ............................ 13 Health Insurance ....................................... 40 Less than One Year of Service Credit ........ 14 Post-Retirement Employment ................... 40 More than One Year of Service Credit....... 14 Returning to the Classroom? ..................... 41 III. Additional Benefits Reinstatement to Active Member Status ... 41 and Services ............................... 15 Beneficiary Designation ............................ 42 Financial Education Program .................... 15 VI. Disability Benefits Programs .. 43 Redeposits ................................................. 15 Before Filing a Disability Application ........ 43 Purchase of Additional Service Credit ....... 16 Reasonable Accommodation ..................... 43 CalSTRS Voluntary Investment Program ................................................ 17 Filing a Disability Benefit Application ....... 44 CalSTRS Home Loan Program ................... 18 Approval.................................................... 45 Long-Term Care Coverage ......................... 18 Disapproval ............................................... 45 Regional Counseling Services ................... 18 Steps in the Disability Process .................. 46 Coverage A or Coverage B ......................... 46 Coverage A Disability Allowance Program .............................. 46 Coverage B Disability Retirement Program ............................. 50 i VII. Benefits for Survivors .......... 53 IX. Cash Balance Benefit Coverage A or Coverage B ......................... 53 Program...................................... 65 If a Member Dies Before Retirement: X. General Information ............... 67 Coverage A ............................................ 53 Regional Counseling Services ................... 67 If a Member Dies Before Retirement: Coverage B ........................................... 56 Information Services ................................. 68 If a Member Dies After Retirement: Teletalk System ......................................... 69 Coverages A and B ................................ 59 XI. Glossary of Terms .................. 73 How to Report the Death of a CalSTRS Member or Benefit Recipient .................................. 59 Applications .............................................. 60 Payment of Benefits .................................. 60 VIII. Tax Information and Legal Issues ......................... 61 Tax Information ........................................ 61 Legal Issues ............................................... 62 ii Dear Reader, elcome to the California State Teachers’ Retirement System. I am pleased to present the Wlatest edition of the Member Handbook. Whether “Securing you are just beginning your career in education or are an experienced educator, this handbook will answer many of the the financial questions you have about your benefit coverage. The information in it can help you make informed decisions during future and your active career and prepare fully for your retirement. CalSTRS is the nation’s largest teachers’ pension fund and our sustaining dedicated, professional and conscientious staff work hard to improve service and responsiveness to your needs. Although we the trust of serve many—more than 686,000 active and retired members— we are committed to providing exemplary service to each and California’s every person who calls, writes or visits CalSTRS. educators.” Service to CalSTRS members and the security of the Teachers’ The CalSTRS Mission Retirement Fund remain our highest priorities. We look forward to assisting you throughout your career and retirement. Sincerely, Jack Ehnes Chief Executive Officer 1 2 Introduction To stay informed about any possible changes, you should consult as many sources as possible including the California State INTRODUCTION Legislative Counsel Web site (www.leginfo.ca.gov), the CalSTRS Web site (www.calstrs.ca.gov), the CalSTRS Public Service Office (800-228-5453), CalSTRS retirement counselors or your union and Welcome to CalSTRS. The elected legislative representatives. WCalSTRS Member Handbook Helpful Definitions provides an overview of the Creditable service and creditable programs and services compensation are terms that appear often administered by the California in this handbook. The simple description of “creditable service” is the work activities that State Teachers’ Retirement count toward years of service for CalSTRS System. It has been prepared retirement purposes. Creditable compensation, on the other hand, is the pay that members of to answer frequently asked the CalSTRS DB Program receive for creditable questions about your service that counts for retirement purposes. retirement system and to help The Teachers’ Retirement Law defines what counts and what does not count as creditable you understand the benefits compensation. and responsibilities of Another term that is used in this handbook is membership in the CalSTRS allowance, which refers to the monthly Defined Benefit Program. benefits paid under one of the CalSTRS retirement, disability or survivor programs. Changes in Benefits The glossary in Section XI will help to explain Active member benefit changes include an other concepts and terms you will find in this expansion