STRS Options
 

Option Choices Beginning 2007 - Several of the option choices available prior to January 2007 are being eliminated.  There are a new set of choices that teachers may make as to their retirement.

•  Unmodified Benefit - This allows a teacher to receive the maximum benefit (age factor X years X highest salary) but does not provide any survivor benefits.  This could be an easy choice for a single person, or a married teacher whose spouse has adequate funds from other sources.

•  100% Beneficiary Option - With this option the retiree receives less money per month, but a surviving spouse would continue to receive 100% of that amount in the event of the death of the retiree.  If the beneficiary dies first, the amount “pops up” to what would have been received if the unmodified benefit had been chosen.

•  75% Beneficiary Option - The 75% beneficiary option works like the 100% option except that the beneficiary would only receive 75% of what the retiree was getting under that option.  This also has the “pop-up” feature that is part of the 100% beneficiary option.

•  50% Beneficiary Option - This option works like the 100% & 75% options except that the beneficiary would only receive 50% of what the retiree was getting under that option.  This also has the “pop-up” feature.

•   Compound Option - The compound option will allow you to name one or more beneficiaries with an option choice for each.  This could be a way to provide for a disabled son or daughter. More details of these options can be found by visiting the CalSTRS website.

Pre-Retirement Election of an Option

Those age 55 or older are also eligible to retire from certain other California public retirement systems with less than five years of CalSTRS credited service if the member retires from both systems at the same time. Additionally, CalSTRS may use the salaries for service performed under the other retirement system to calculate the CalSTRS retirement benefit. However, if you perform creditable service with both retirement systems during the same pay period, we are required by law to use the CalSTRS salaries in the retirement benefit calculation.

Electing an Option Before Retirement

If you are eligible to retire, you may make a pre-retirement election of an option. This election is available if you do not yet wish to retire but want to ensure a monthly lifetime income to another person if you die before retirement. The monthly benefit paid to your beneficiary is based on the modified benefit that would have been paid if you had retired as of the date of death. At retirement, your benefit will be modified under the elected option.

Spousal Signature

If you are married, the form for pre-retirement election of an option must be signed by your spouse or the justification for non-signature of spouse form must be completed and returned with the pre-retirement election. If your spouse does not sign or the justification for non-signature is not received by CalSTRS, the pre-retirement election is not acceptable and will not be effective until the requirements are met. The election will be effective on the date signed only if it is received by CalSTRS within 30 days from the date you sign it. If the option beneficiary dies before you retire, the option is automatically canceled. The retirement benefit will be permanently reduced to pay for the period of coverage provided by the pre-retirement option.

When you retire, modification of your allowance will be made using the higher of the option factor in effect as of the date you elected the option or in effect on your retirement date.
The examples illustrate two members, one who chooses an option before retirement and another who waits until retirement to choose an option.
 

Option Choices Coming in 2007

One of the most important decisions you can make as you approach retirement is how to provide for your family after your death. CalSTRS offers a one-time death benefit to your survivors, but we have other ways to extend a lifetime benefit to those you care about.

• The Defined Benefit Program allows you to extend a lifetime monthly benefit to others after your death by selecting an option.
• The Defined Benefit Supplement Program and the Cash Balance Benefit Program have annuities that can provide ongoing benefits after you die.

CalSTRS is making some changes to simplify and enhance the current option and annuity choices. The changes affect members who retire on or after January 1, 2007.
For the Defined Benefit Program, a 75% Beneficiary Option, which distributes 75 percent of the member’s monthly pension to a beneficiary after the member’s death, is being added. The names of the other options are changing.

Here’s the breakdown on the DB options and the changes:

• Unmodified Benefit – Renamed the Member-Only Benefit, it provides a monthly pension to the member only. When the member dies, the monthly payments end, although a one-time death benefit is paid to a recipient the member had designated.

• Options 2 through 5 – These will not be available for selection after December 31, 2006-2007, although members who previously selected these options will be allowed to keep them.
  Under the following three options, if your option beneficiary dies before you, your benefit will increase to the Member-Only amount.

• Option 6 – Renamed the 100% Beneficiary Option, it provides for your option beneficiary to receive the full amount you were receiving.

• Option 7 – Renamed the 50% Beneficiary Option, it provides for your option beneficiary to receive half of what you were receiving. Under this option and the 75% Beneficiary Option, if your option beneficiary dies before you, your benefit will increase to the Member-Only amount.

• Option 8 – Renamed the Compound Option, it allows for various choices. You can name one or more option beneficiaries, with an option choice for each, plus retain a portion of your benefit as Member-Only