Recent studies, accompanied by alarmed media reports, have suggested that public retirement systems have substantially understated future funding shortfalls. These studies rely upon questionable accounting methods to inflate the liabilities associated with public pension benefits. Unfortunately, we have learned that in at least one instance these reports have been used by financial advisors to encourage CalSTRS members to take financial actions that are likely not in their best interest.

Guaranteed Benefit

Your CalSTRS Defined Benefit is guaranteed by law, and protected by both the California and the U.S. constitutions. Based on our current projections, CalSTRS will have sufficient funds to pay benefits through 2045. If, in the worst case scenario, CalSTRS assets were depleted, the state would have a contractual obligation, enforceable in court, to pay the guaranteed benefits.

CalSTRS members should not take any action with respect to their own financial security simply because CalSTRS is facing a future financial shortfall—
especially, if someone suggests you should withdraw your CalSTRS funds and invest the money with them.

An average member with 25 years of service retiring at age 61 with average final comp had $136,000 in her account when she retired. Her benefit is $41,000 annually. So in 3 years and 4 months, she would have received as much in benefits as the value of her account.

Only members who no longer work for public schools can elect a refund from CalSTRS. Withdrawal of CalSTRS funds results in the refund of member contributions and a small amount of interest. Vested members who leave CalSTRS and obtain a refund do not receive the monthly lifetime benefit that is funded not only from member contributions, but contributions from their employers and the state, plus investment income.

Wise Supplemental Savings

CalSTRS encourages you to look into supplementing your CalSTRS benefits with your own investments through available payroll savings programs. An online information source about 403(b) accounts is www.403bCompare.com, which provides specific information on 403(b) products authorized to be sold to you through your employer.

Although 403bCompare is maintained by CalSTRS, the listing of a vendor or product on this site does not constitute an endorsement or warranty by CalSTRS or your employer; only that the vendor submitted the required information to be submitted and is therefore allowed to offer the product to you.

CalSTRS takes its mission to secure the financial future of California’s public educators very seriously. To stay informed about your benefits and current funding status please visit: CalSTRSBenefits.US.