The California State Teachers Retirement System (also known as CALSTRS) provides retirement, disability, and survivor benefits to teachers and their families. Benefits are provided to vested teachers who have served in California school districts, community colleges, and administration offices. Divorcing spouses may also be entitled to their former spouse’s CALSTRS pension. Read on to learn more about CALSTRS pension retirement division and how A People’s Choice can help you.
Overview of CALSTRS Pension Retirement Division
CALSTRS pension retirement is classified as community property if a spouse received the benefit while married. This means the petitioner or respondent in a divorce is required to divide his/her CALSTRS retirement with his/her spouse, unless the parties agree otherwise.
CALSTRS provides three different types of retirement plans: 1) Defined Benefit Program; 2) Defined Benefit Supplement; and 3) a Cash Balance Plan. Defined Benefit Plan participants receive a lifetime benefit based on their years of service credit, final compensation, and age. A Defined Benefit Supplement account provides additional funds to members upon retirement. The Cash Balance Benefit Program is designed for part-time teachers. Retired members can choose to receive a lump-sum payment of their account balance if it exceeds $3500 or roll it over into another retirement account.
How to Divide CALSTRS Retirement
There is a specific process that the petitioner and respondent must follow in order to join the CALSTRS pension to the divorce. Once the pension is joined, the couple can finalize a CALSTRS pension retirement division. Upon filing a divorce petition, CALSTRS must be served with legal documents indicating a party is claiming a community property interest in a CALSTRS pension/retirement. This process is known as a Joinder, and formally brings CALSTRS into the divorce proceedings as an interested party. CALSTRS has 30 days to file a response to the Joinder. The Joinder will put a legal hold on the retirement account. The CALSTRS member will not be able to make any account changes, including the designation of beneficiaries, during this time.
Segregation vs. Time Rule Division
There are two formulas for dividing a CALSTRS benefit account. The first formula, also referred to as the “Segregation Method” is used by members that divorce prior to receiving a retirement or disability benefit. The non-member spouse is awarded 50% of the member’s service credit, contributions, and interest accrued from the date of marriage to the date of separation. Non-member spouses can access their benefit (lifetime monthly benefit) under this formula when they reach 55. The second option, referred to as the “Time Order Rule,” is used by members who divorce before or while receiving a retirement or disability benefit. The non-member spouse will be awarded a percentage of the member’s monthly benefit. The percentage is calculated by CALSTRS based upon the service credit earned while married. Under this formula, the non-member spouse will receive his/her benefit after the member spouse retires.
We are often asked how a person’s Social Security may be impacted after receiving a CALSTRS pension. For the benefited spouse, since he/she did not pay into Social Security while working as a teacher, he/she will not receive Social Security upon reaching the age of eligibility. However, if the spouse vested into Social Security prior or after serving as a teacher, his/her Social Security benefit will be offset by his/her CALSTRS benefit. The non-teacher spouse can receive his/her Social Security benefit.
Contact A People’s Choice for more information about CALSTRS pension retirement division. We can help you prepare the required Joinder and Qualified Domestic Relations Order.