Retirement Benefits

5 Myths About Your CalPERS Retirement

Here are the top five myths about your CalPERS retirement

Myth 1

My retirement benefit will increase indefinitely with age.

Fact: Pension payments are calculated using a retirement formula based on years of service credit, age at retirement, and final compensation. All retirement formulas have a maximum benefit factor or “age factor,” ranging from age 50 to age 67. Once you reach the maximum age factor, your pension stops increasing unless you’re still working and earning more years of service.

Myth 2

There’s no timeframe to submit my retirement application.

Fact: Once you’re eligible to retire, CalPERS notifies you of your eligibility, but we don’t tell you when to retire. If you submit your application more than nine months after you stop working for a CalPERS employer, or retire from a reciprocal system, your retirement date can be no earlier than the first day of the month we receive your application. Not applying within this time frame can also affect your eligibility for retiree health and/or dental benefits, as well as the possibility of not having any unused sick leave used in your pension calculation.

Myth 3

If I work for two CalPERS employers, but only one of them reports payroll and service credit to CalPERS, I only have to stop working from the employer reporting to CalPERS when I’m ready to retire.

Fact: To be eligible to retire, you must stop working from all CalPERS employment, including all full-time, part-time, and overtime positions and any elected or appointed positions, even if the position is not being reported to CalPERS. If you work continuously in a position, even if it’s not being reported to CalPERS, you could be unlawfully employed and be required to change your retirement date and repay CalPERS for pension payments you received.

Myth 4

My highest salary earned during my CalPERS-covered employment will be used to calculate my retirement benefits.

Fact: It’s true that we use a 12-month or 36-month average of your highest annual compensation when you have all classic or all PEPRA service. However, if you have a combination of classic and PEPRA service, we use one final compensation amount for the service earned under your classic service and a second final compensation amount under your PEPRA service. We cannot use your PEPRA salary toward your classic service and vice versa.

Myth 5

If I have 100% vesting for retiree health benefits, it means that my employer pays 100% of my health benefit premiums.

Fact: If you’re 100% vested for health benefits, this means you receive 100% of the employer’s contribution toward your health premiums. You are responsible for paying any remaining health premium costs. Vesting criteria vary by employer, years of service, hiring date, and bargaining unit. Check with your employer for more information.

Getting ready to retire? Get your facts straight!

For more information on your retirement benefits, please review your specific member publication, as well as our publication Planning Your Service Retirement (PUB 1).