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Your Retirement Calculation

Presenter 1: Welcome to the CalPERS Your  Retirement Calculation video. Before we get   to the main presentation, let’s take care of  some housekeeping items. To provide you with   a future reference, and make your note taking  easier, we’ve provided a learning guide for   this presentation. You’ll see the link to the  learning guide in the YouTube description box.   This video will stay posted here on YouTube,  so you can come back and watch again if you   need to. Please note that due the large number  of participants, even though the chat feature   is active, we won’t be able to respond  to member questions during this video. In today’s session we’ll discuss how your  retirement allowance is calculated. This   includes going over the three factors used in the  calculation of your monthly benefit. We’ll then   put it all together by showing you some example  calculations. Your CalPERS pension is a defined   benefit plan, which means that your pension  is calculated using a formula and not by how   much you’ve contributed to the system. There  are three factors that make up this formula. The first factor is Service Credit which is your  total years of service with all your CalPERS   employers.

Second is the Benefit Factor which  is the percentage of pay you’re entitled to for   each year of service credit that you’ve earned.  And third is the Final Compensation which is an   average of your highest monthly pay rate. When  you retire, we’ll multiply your years of Service   Credit by your Benefit Factor, and then multiply  that result by your Final Compensation which will   give your Unmodified Allowance. The Unmodified  Allowance is what you’ve earned and the highest   monthly amount you can receive when you retire.  For more information on the unmodified allowance   and the other retirement options available, read  our publication, Planning Your Service Retirement,   which is Publication 1. In the coming slides  we’ll review each factor in more detail. So, let’s begin with the  first factor, service credit. Service credit is earned during your time spent  on the job at a CalPERS-covered employer.

Service   Credit is earned on a fiscal-year basis, July 1  to June 30. Your service credit earned is based   on the manner in which you’re paid. If you’re  paid on an hourly basis, it takes 1,720 hours   to earn one full year of service credit. If  you’re paid daily, it’s 215 days of fulltime   work. And if you’re paid monthly, it takes only  10 months fulltime within a fiscal year to earn   your one year of service credit. If you earn less  than this, you’re earning partial service credit. This is an example of how service credit is earned  on a fiscal year basis for a member who’s paid on   a monthly basis. July 1st is the beginning of the  fiscal year. If you work full time in the month of   July, you’ll earn one tenth of a year of service  credit. If you continue to work full time through   the rest of the fiscal year, you’ll earn another  tenth of a year for each full-time month worked   until you get to the end of April, when you’ll  have a year of service credit.

Notice that you   only have to work ten months full time to earn  a full year of service credit. You can’t earn   more than a year of service credit in a fiscal  year so because you’ve earned a full year of   service credit by the end of April, you won’t  earn additional service credit in May and June. But most of us don’t start working on July  1st.You probably started working part-way   through the fiscal year and may have noticed  on your Annual Member Statement a fractional   number of years. Something like 22.525 or 7.783.  Let’s say in this example that you started working   full time in the middle of November. Since you  only worked half a month, you earned .05 of a   year of service credit for that month. You then  worked full time the rest of the fiscal year.   Notice that because you didn’t have a full  year of service credit at the end of April,   you continued to earn service credit in May  and June.

At the end of this first fiscal year,   you have .750 of a year of service credit.  If you continued to work full time then the   next statement would read 1.750, then  the one after that 2.750 and so on. So we’ve just covered how you earn CalPERS  service credit, but did you know that there   may be service credit that you’re eligible to  purchase? We encourage you to make any eligible   service credit purchases as early as possible  because it may save you money and you may be   able to pay it off prior to your retirement.  We’re going to look at the three most common   types of service credit purchases. First is  a Redeposit of Withdrawn Contributions. If   you were previously a CalPERS member,  left your CalPERS-covered employer,   and took a refund of your contributions and  interest, once you’ve come back into CalPERS   membership you can redeposit these funds plus  interest and restore those years of service   credit.

You may have worked for a CalPERS-covered  employer in a position that did not qualify you   for membership at the time. This may have been  a permanent/intermittent, part-time, temporary,   on-call, or seasonal position. Now that you’re a  member, you may be able to purchase Service Prior   to Membership. Additionally, if you served  in active military service, you may be able   to purchase up to four years of Military Service  Credit. All State and School members, as well as   members of Public Agencies that contract for this  benefit may be eligible. You may have served in   the military while employed by a CalPERS employer.  If you are granted a military leave of absence and   then return to CalPERS-covered employment, you  may be eligible to have service credit for the   time served on active military duty credited  to your account at no cost.

It’s important to   check into this as soon as you return to work  as this is not done automatically. You must   submit the Military Leave of Absence Request  form along with your DD-214. There are also   several less common types of service credit  that may be purchased, for example a layoff,   certain types of leaves of absences or time spent  in the Peace Corps or AmericCorps*VISTA Service.

If you’re considering purchasing service  credit, you should review the appropriate   publication which provides the types of service  credit available, eligibility for each type,   and what is needed to submit the request.  The publications are A Guide to Your CalPERS   Service Credit Purchase Options, Publication  12, or for military time, the Military Service   Credit Options, Publication 15. These  publications can be found on our website. If you believe you’re eligible to purchase service  credit, you can apply for service credit purchase,   through your myCalPERS account. Notice there’s a  service credit link. There you’ll find eligibility   requirements for the different types of  service credits you can purchase and links   to additional forms and publications. As you  go through the application process, you will   see an estimate amount of the cost to purchase  service credit. If we find you are eligible,   we’ll send you the service credit election  package. If you want to make the purchase,   you must make the election by  the expiration date provided. The next part of the calculation  is your benefit factor. Each of you works under formulas that define a  range of percentages used in your calculation at   retirement.

This percentage is called the Benefit  Factor. The Benefit Factor defines the percentage   of pay you’re entitled to for each year of service  credit. Benefit factors start at age 50 or 52,   depending on the formula you are under with your  employer, and when you were hired. If you’ve   worked for more than one CalPERS employer you may  have more than one retirement formula. If that   applies to you, we’ll calculate each separately  based on the service credit earned under each   formula and then add the totals together.  If you’re unsure of your retirement formula,   you can log in to your myCalPERS account.  Select Retirement Summary from the Retirement   dropdown tab, then scroll down until you see  service credit history.

This section provides   your retirement formulas, employers, and a  breakdown of your service credit by employer. Your benefit factor increases with each quarter  year of age or every three months, based on your   birthday. We call these birthday quarters.  For example, if your birthday is March 10,   your birthday quarters would be June 10 for the  quarter year, September 10 for the half year, and   December 10 for the three-quarter year. You may  want to pick a retirement date that coincides with   one of your birthday quarters in order to receive  a higher percentage of your final compensation.   You must retire on or after your birthday or  birthday quarter to receive an increased age   factor. Once you reach the maximum age for your  formula, your age factor no longer increases,   but you can increase your amount of service credit  and rate of pay, which increases your monthly   benefit when you retire.

If you’re a state and  local safety member under the 3% at 50 formula,   you don’t need to worry about the birthday  quarters because the percentage is fixed at 3%. Let’s take a look at an example of a formula  chart, in this case, the 2% @ 62 formula.   This formula applies to you if you were first  hired into a miscellaneous position on or after   January 1, 2013. If you’re under a different  formula, the numbers are a little different,   but the concepts are still the same. The  percentages you see within the chart are   the range of benefit factors available to you.  As you can see, on this chart, they start at age   52. This factor increases each quarter year from  your birthday, up to a maximum age which in this   example is age 67.

Using the birthday quarters, we  just went over, in this example, if your birthday   is March 10 and you retired at age 62, the benefit  factor would be two percent. Three months later on   June 10, the formula increases to 2.025%. Then  on September 10 it increases to 2.050%. If you   were to retire on September 9, just one day  before your birthday quarter increase, then   instead of the higher factor of 2.050% being used,  you would stay at the previous factor of 2.025%. To find the chart for your formula,   visit our website at www.calpers.ca.gov  and search for benefit factor charts. Now let’s go into the 3rd part of  the calculation, Final Compensation. First, it’ll be helpful to define what  compensation is, then we can talk about   final compensation. Compensation is  defined as payment to employees for   service performed during normal work hours or  for time during which employees use vacation,   compensatory time off, sick leave or other  types of leave. Your employer may report   items of special compensation in addition  to your base pay rate.

Special compensation   may include payment for special skills,  knowledge, abilities, work assignments,   and so on. Check with your employer to find  out what types of pay are reported for you. The final compensation used as part of your  calculation is based on your highest average   full-time monthly pay rate for either 12  or 36 consecutive months of employment,   depending on your employer’s contract and  when you first became a member. It is not   based on your earnings. For example, if you  work part-time, your earnings are lower,   we still use your full-time equivalent pay rate  to determine your final compensation although you   are earning less service credit working part-time.  Some Safety formulas have a cap on the percentage   of final compensation that can be received. The  final compensation for school employees who work   10 or 11 months a year will be calculated based  on the actual number of months worked within   the period to be used.

This averaging will  lower the final compensation. Additionally,   you may have time where you worked under  the Public Employees’ Pension Reform Act,   or PEPRA, and time where you didn’t, called  classic membership. If this situation applies   to you and you have service under both PEPRA  and classic membership, then the highest final   compensation earned under each formula will  be used to calculate the time in that formula. Let’s look at an example of a final  compensation calculation if you planned   to retire on November 1. In this example,  the final compensation period is 12 months. Final compensation starts on November 1 the  previous year, 12 months prior to your retirement   date. For the first 6 months from November 1 to  April 30, your pay rate was $4,400 per month,   for a total of $26,400. On May 1, you received  a raise so the last six months from May 1 to   October 31, your pay rate is $4,600 per month,  for a total of $27,600.

We take the total amount   of $54,000 and divide it by 12 months to arrive  at the average final compensation of $4,500. If   you’re under a 36-month final compensation,  the averaging process works the same way. Now let’s talk about the final compensation  adjustment. If you don’t contribute to Social   Security, there is no adjustment. Also, if you’re  a school member or a new PEPRA member with a   public agency or California State University,  you are not subject to the final compensation   adjustment. If, however, you contribute to  Social Security while working under your CalPERS   employer, then you’ll be subject to an adjustment  to your final compensation, which is $133.33. The   amount you contribute into CalPERS is not based on  your full monthly earnings, there is an excluded   amount.

Because of this excluded amount, there  is an adjustment made to your final compensation.   The adjustment is the same no matter how much  you earn. This is a one-time adjustment during   the calculation process. It is not a monthly  deduction to your retirement check. If you’re   subject to the adjustment, it’s automatically  calculated in your retirement estimates. If we use the average final compensation of  $4,500, we calculated in our earlier example and   subtract the $133.33, this results in an adjusted  final compensation of $4,366.67. This adjusted   final compensation is then used to calculate your  pension. If you have multiple CalPERS employers,   you may have some service that is coordinated  with Social Security and some that isn’t.   The adjustment is applied ONLY to service  that is coordinated with Social Security. Now that we’ve looked at each  of the factors that go into your   pension calculation, let’s put it all together.

First a quick review of what was just  covered. Your retirement calculation   is based on a formula. The three factors in  this formula are your years of service credit,   the benefit factor based on your age at  retirement, and final compensation. Any   increase in one or more of the three factors can  mean a higher pension at retirement. To help us   make a little more sense of this, let’s look at a  retirement calculation with some numbers added in.

In this example, you work for an employer who  contracts for 2% @ 62 retirement formula. You   have 25 years of service credit, and the benefit  factor is 2% based retiring at age 62. Multiply   25 years by 2% benefit factor which results  in 50% final compensation. We then multiply   that 50% with the adjusted final compensation of  $4,366.67. This provides your monthly unmodified   retirement benefit of $2,183.34 per month. So  what would happen if you decide to wait another   six months before you retire? You will have  increased your service credit to 25.6 years   and because you waited six months, your benefit  factor increases to 2.050%. We multiply these   together to equal 52.4% of final compensation.  You’ve stayed six months longer under your higher   payrate which increased your final compensation  to $4,566.67. When we multiply that with 52.4%,   we get the unmodified allowance or your monthly  retirement benefit of $2,396.59. By waiting six   more months to retire, your unmodified allowance  or pension increases by about $213 a month. Now that you know the basics of how your  retirement is calculated, you’ll want to run your   own numbers. The Retirement Estimate Calculator  found in your myCalPERS account allows you to run   various scenarios, such as if you took a higher  paying position, or maybe you want to see the   difference between retiring at age 62 or waiting  until 65.

You can run estimates for both scenarios   and more using the calculator. And you can save  your estimate scenarios for review in the future. If you have specific questions that weren’t  answered, there are several ways you can   contact us. Log into your myCalPERS  account and send a secure message. Schedule a virtual or in-person  appointment. Select the appointment   reason provided that best fits your needs. Another way to contact us is by phone. Our CalPERS   representatives are available from 8-5  Monday through Friday. In most cases,   they can assist you in a single call.  Call us at 888 CalPERS (888-225-7377). This video will stay posted here on YouTube,   so you can come back and catch what you might  have missed.

All our previous videos are also   available on our YouTube channel. You’ll also  have access to the link for the learning guide. Our presentation today was intended to provide  you information on your retirement calculation.   Please note that CalPERS is governed by  the Public Employees’ Retirement Law. The   information in this presentation is general.  The Retirement Law is complex and subject to   change. If there is a conflict between  the law and the information presented   in this presentation, all decisions  will be based on the law. Later today,   you’ll receive an email with a short evaluation.  Please answer all the questions as it’s important   for us to get your feedback to help us  improve these presentations. Thank you   for taking time out of your day to attend  this presentation and have a great day.
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As found on YouTube

Retirement Community Arizona

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Retirement Tips – After Retirement | Jim Cale

My name is Jim Cale. I work in the member
education device here at CalPERS. We all obtain something out of our task
simply paying benefits, whether it'' s sociability of our associates, the
challenge of doing good job. There'' s something that we'' re leaving it
Simply paying advantages, so you want to think regarding replacing that as you
Approach retired life. For many years I'' ve talked with a surprising number
of people who'' ve reinstated from retirement due to the fact that when they got there,
they discovered it was uninteresting as well as so they went back to function. Yeah you want to
make certain the cash'' s in position and the advantages are in place, that'' s what makes
it feasible, but after that you desire it to be pleasurable. So place some thought right into that
.

As found on YouTube

Retirement Community Arizona

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