More educators than ever are saving for their financial future through Pension2®, the CalSTRS defined contribution program offering low-cost 403(b) and 457(b) plans to California school employees.

Since launching in 2008 with a few hundred participants, Pension2 has grown to nearly 35,000 participants and manages more than $2.5 billion worth of assets. These funds are independent of the CalSTRS Investment Portfolio supporting members’ defined benefit pensions, which provide a guaranteed monthly income.

Pension2 is a retirement plan similar to a 401(k) and is available to eligible public school employees from prekindergarten through community college. CalSTRS established the program to provide low-cost 403(b), 457(b), Roth 403(b), and Roth 457(b) options. These plans enable participants to contribute a portion of their salaries to retirement savings accounts, helping ensure a more secure retirement.

Financial experts recommend those considering retirement should aim to replace 80% to 90% of their final annual income. A CalSTRS defined benefit pension provides an average of between 50% and 60% of that income, and voluntary programs such as Pension2 are designed to help close retirement income gaps.

Pension2 is not the only program available to educators. By California law, any willing provider can offer a retirement savings program, and many school districts offer dozens of choices. Not all plans are equal and many come with higher fees and terms that make it difficult to access or move funds.

Unlike many other providers, CalSTRS Pension2 is a revenue-neutral program, which means CalSTRS does not make a profit from Pension2. Other companies may also offer for-profit, costly annuities that may not be a good choice for teachers and their beneficiaries.

Among the tools available to CalSTRS participants is 403bCompare, which allows teachers to easily look up their employers' offered 403(b) plans to see how their fees and costs compare.

CalSTRS staff have noted that ongoing outreach has produced a nearly 17% average annual increase of Pension2 participants since 2008 and they hope to reach even more teachers in the near future.

For more information on how Pension2 works, check out CalSTRS informational videos. If you have questions or would like assistance, call 888-394-2060 or email Pension2@CalSTRS.com. You may also schedule a virtual, telephone or in-person appointment with Pension2.