About Service Retirement

Service retirement is a lifetime benefit. To be eligible for a service retirement, in most cases you must be at least age 50 and have five years of service credit.

When you retire, your lifetime retirement benefit is calculated using a formula that includes using your years of service credit, age at retirement, and final compensation. Final compensation is your highest average full-time monthly pay rate for a 1-year or 3-year period. State and school members use the 1-year period. For local public agency members, your final compensation period is determined by your employer's contract with CalPERS.

Your retirement benefit formula is based on your membership category, which is determined by your employer (State, school, or local public agency); classification (miscellaneous, general office and others), safety, industrial, or peace officer/firefighter); and the specific provisions in the contract between CalPERS and your employer.

If you're not sure what formula you are in, you can check with your Personnel Office or review your latest Annual Member Statement.

While there are many variables in figuring your service retirement benefits, the basic formula is:

• Step 1: Calculate Percentage of Final Compensation
  Years of Service x Benefit Factor = Percentage of Final Compensation
• Step 2: Calculate Benefit Allowance

Service Not Coordinated with Social Security
Final Compensation x Percent of Final Compensation from Step 1 = Monthly Unmodified Allowance

Service Coordinated with Social Security
Final Compensation – $133.33 x Percent of Final Compensation from Step 1 = Monthly Unmodified Allowance

We reduce your final compensation by $133.33 because when Social Security became federally mandated, the Legislature ruled that the first one-third of maximum Social Security earnings would always be exempt from CalPERS contributions. At that time, the maximum Social Security earnings were $400 a month. The first one-third of $400 is $133.33.

When you retire, you can choose to receive the Unmodified Allowance (the highest amount payable) or you can take a reduction to that allowance and choose one of the options to provide a monthly lifetime benefit to your beneficiary after your death.

You can get more information by reviewing your Member Benefit Booklet. And, you can use our online Retirement Planning Calculator to see how various retirement dates can impact your benefit amount. If you are within three years of retirement, you can Request a Retirement Estimate online.

CalPERS staff can also assist you with an estimate of your retirement benefits and information on how retirement relates to health benefits, community property, and post-retirement employment. You can contact us at 888 CalPERS (or 888-225-7377) or visit your nearest CalPERS Regional Office for assistance.

CalPERS also offers Member Education classes to help you plan for a better and healthier retirement. You can find more information on these in our  Member Education area.

Rules for working after retirement

Many CalPERS retirees know they can work for a school district or any other CalPERS-covered agency up to 960 hours per fiscal year (July 1 through June 30) and still collect CalPERS retirement benefits. However, many retirees and employers don’t know that post-retirement jobs can only be in temporary or substitute positions. You cannot work in a permanent short-hour position (such as a regular 2-to-3-hour-a-day position) even if the hours add up to less than 960 per fiscal year.

Once CalPERS finds out that you are working in a regular position, you will be notified that you are violating CalPERS regulations and you may be forced to return the retirement money you received while also working in that post-retirement position.

CalPERS is required to enforce the rules set forth in the California Government Code and must take action to protect the integrity of the system.

If you choose to work in the private sector or are self-employed, there is no restriction on how much money you can make or how many hours you can work. Other rules apply if you are on disability retirement and under 55 years of age. Be sure to contact CalPERS before accepting employment.