Take action now by purchasing nonqualified service credit, also known as “air time.”

You can purchase up to five years of nonqualified service credit if you are a CalSTRS member with at least five years of service credit. It costs less if you purchase service credit earlier in your career rather than later. However, even if you’re a few years away from retirement, it may still be worthwhile to purchase service credit.

Nonqualified service credit is not connected to any specific prior employment. It cannot be used to qualify for the career factor or one-year final compensation benefit enhancement.

To purchase nonqualified service credit, complete the Purchase of Nonqualified Service Credit form, available on myCalSTRS (select

Complete & Submit Forms) and at CalSTRS.com/forms, and mail it to CalSTRS. After we receive your completed form and verify your eligibility, we will mail you a billing statement with the exact cost to purchase additional service credit.

For more information, see the Purchase Additional Service Credit booklet, available at CalSTRS.com/publications.

PLAN TODAY. ENJOY TOMORROW.

Fall 2011

Your Money Matters

Purchase Nonqualified Service Credit Now

Inside:

2 Glendale Member Service Center to Open in January

3 Step Up Your Savings

4 Geocaching— It’s Catching On

5 Ask CalSTRS

8 Get the Facts on Social Security

9 Videos Can Help You Solve Your Retirement Puzzle

11 Teacher Feature

The more service credit you have at retirement—earned or purchased—the greater your pension will be.

To estimate the cost of purchasing nonqualified service credit, visit CalSTRS.com/calculators.

Also Inside:Considering a Career Change?

See page 6

Know the Consequences of Taking a Refund

Los Angeles-area members will soon enjoy greater access to CalSTRS.

CalSTRS Your Way Communicate with CalSTRS your way—attend a workshop, schedule a benefits counseling session or talk to a CalSTRS Pension2® advisor about supplemental savings. The Glendale center is conveniently located off the 134 freeway and is open year-round.

Just the Facts Location: 505 North Brand Blvd., Suite 200, Glendale, CA 91203Hours of Operation: 8 a.m. to 5 p.m. Monday through Friday and by appointment on Saturday.

Services:

•Individual and group counseling

•Member workshops

•Forms drop-off and review

•Walk-in assistance

• Publications, forms and applications

If an in-person visit is inconvenient, you can continue to contact CalSTRS online at CalSTRS.com/contactus or by phone at 800-228-5453.

Downey Office Closing With the opening of the Glendale Member Service Center, the Downey field office located at the Los Angeles County Office of Education will be closing in January. The Glendale center will provide the same resources and services to area members and retirees.

What’s Next Watch for more information on CalSTRS.com.

Glendale Member Service Center to Open in January

CalSTRS Mission: Securing the financial future and sustaining the

trust of California’s educators

Teachers’ Retirement BoardDana Dillon, Chair

Harry Keiley, Vice-ChairKathy BruggerJohn ChiangJerilyn HarrisBill Lockyer

Ana MatosantosBeth Rogers

Tom TorlaksonCarolyn Widener

Jack Ehnes, Chief Executive Officer

Christopher J. Ailman, Chief Investment Officer

David Lindgren, Editor

Baotran Bui, Designer

Statements in this publication are general and the Teachers’ Retirement Law is

complex and specific. If a conflict arises between information contained in this publication and the

law, any decisions will be based on the law.

Your Money Matters is published once a year for active CalSTRS members and

Cash Balance participants. Send your comments or suggestions to:

Editor, Communications CalSTRS MS 34

P.O. Box 15275 Sacramento, CA 95851

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CalSTRS Your Money Matters Fall 2011

Your CalSTRS retirement consists of three parts:

• Defined Benefit Program.

• Defined Benefit Supplement Program.

• CalSTRS Pension2—a voluntary supplemental savings program.

Step Up Your Savings

Supplemental SavingsYour income in retirement is a shared responsibility between CalSTRS and you.

Build supplemental savings through easy payroll deductions. The earlier you start, the higher the rewards will be. Already saving? Consider increasing the amount you set aside each month.

When you contribute directly to a 403(b) or 457 savings plan through a payroll deduction, you defer taxes on the money you contribute. You get more savings for your contribution dollars, and your earnings grow tax-deferred.

Pension2 CalSTRS Pension2 offers 403(b), Roth 403(b) and 457 plans.

Pension2 offers different investment options, such as the Easy Choice Portfolios—designed to match your risk tolerance with your time horizon. Or choose from more than 20 professionally selected investments with the Build Your Own Portfolio option.

TIAA-CREF, a national financial services organization and the leading provider of retirement services in the academic field, is the program’s record keeper.

For more information, contact Pension2 at 888-394-2060 or visit Pension2.com.

403bCompare 403bCompare makes selecting investments easier. Find objective, side-by-side comparisons of investment options and fees in one convenient location at 403bCompare.com.

403(b) + 457(b) Information Portal CalSTRS partnered with bWise Guys, LLC to create the 403(b) + 457(b) Information Portal. This self-navigation website is designed to help you find information about

the supplemental savings plans available through your employer. The website includes:

• Information on the basics of 403(b) and 457 plans.

• Required forms to enroll in and contribute to a plan.

•List of approved vendors.

•Savings calculators.

• Database of prescreened registered investment advisors.

Visit the 403(b) + 457(b) Information Portal at yourplan.CalSTRS.com.

By contributing through payroll deductions, you get more savings for your contribution dollars, and your earnings grow tax-deferred.

YearMonthly

ContributionReduces Take Home Pay By* Year End Value @7%

1 $50 $32 $6232 100 63 1,9113 150 95 3,9124 200 126 6,6765 250 142 10,256

6 300 173 14,709

7 350 221 20,0978 400 252 26,4839 450 284 33,94010 500 315 42,54111 550 347 52,36612 600 379 63,50213 650 411 76,04014 700 443 90,07815 750 475 105,72116 800 507 123,08230 800 507 541,979

*This hypothetical illustration assumes a combined 37% state and federal tax rate. It’s not meant to represent the performance of any investment product and should not be used to predict investment performance. Any taxes and expenses associated with an actual investment are not reflected. While taxes are paid when funds are withdrawn, investors are often in a lower tax bracket at retirement.

3

CalSTRS Your Money Matters Fall 2011

Geocaching—It’s Catching OnGeocaching is a game played outdoors with players, known as geocachers, who use GPS devices to find hidden containers called caches. Geocaching is a fun and active hobby for the whole family, and there are likely plenty of caches to hunt for near you.

Caching In Caches are hidden by other geocachers and are located on all seven continents—even Antarctica. Caches can be hidden anywhere, from a city street to the top of a mountain. According to geocaching.com, the world’s largest geocaching website, there are more than 1.4 million caches worldwide.

Caches usually contain logbooks for geocachers to sign. Caches may

also include small items for trade. If geocachers

take an item, they

Geocaching is a fun and active hobby for the whole family, and there are likely plenty of caches to hunt for near you.

are expected to leave another item of equal or greater value behind. Some items have unique tracking numbers that allow their whereabouts to be tracked online.

There are many variations of caches, including multi-caches, which comprise two or more locations, and puzzle caches, which involve puzzles for geocachers to solve. Caches also vary in size from nano (smaller than 10 milliliters) to large (20 liters or larger).

Hide and Seek The only gear you need is a GPS device that allows you to enter and track sets of coordinates called waypoints. You may not need to buy a separate device if your smartphone has built-in GPS capabilities.

To start geocaching, register at geocaching.com. Basic membership is free. Once registered, you can search for caches using different criteria, such as an address or postal code. You can also view a map that displays all of the caches within a radius you specify,

making it easy to plan your geocaching expeditions.

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CalSTRS Your Money Matters Fall 2011

How much of my CalSTRS pension comes from state funds?CalSTRS receives funds from a variety of sources. Over the last 15 years, state funds have provided an average of 9 percent of each benefit dollar paid. The rest of that average benefit dollar paid comes from:

•55% investment earnings

•18% member contributions

•18% employer contributions

Ask CalSTRSYour Questions About Benefits, Investments and More

What is CalSTRS doing to prevent pension spiking? Pension spiking is a serious issue that we’ve worked long and hard to address. We use—and continue to expand—a multi-faceted approach to prevent, detect and correct spiking, including school district audits, automated reviews and a hybrid plan design. In addition, two new initiatives will further enhance our anti-spiking efforts:

• Compensation Review Unit. A dedicated team tasked with identifying and resolving potential pension spiking cases improves our focus and efficiency in this important area.

Pension Abuse Reporting HotlineAnonymously report suspicions of pension abuse to CalSTRS.

• 855-844-2468 (toll free)

• CalSTRS.com/PensionAbuseReporting

• Pension Abuse Reporting Hotline. This toll-free hotline enables anyone—the public, CalSTRS members, school district and county office of education employees—to anonymously report suspicions of pension abuse to CalSTRS.

• Call 855-844-2468 to speak to CalSTRS staff or leave voicemail 24 hours a day.

• Visit the pension abuse reporting Web page at CalSTRS.com/PensionAbuseReporting.

55% Investment Earnings

18% Member Contributions

18% Employer Contributions

9% StateContributions

In cases where pension spiking is determined, we reduce benefits to the appropriate level as defined by the California Education Code and collect overpayments in a manner consistent with the law.

5

CalSTRS Your Money Matters Fall 2011

Even if you think you may not return to teaching, applying for a refund may not be in your best long-term financial interest. Before you apply for a refund of the contributions you have made to your CalSTRS account, carefully consider the consequences.

Considering a Career Change?

Taking a refund of your CalSTRS contributions can have serious consequences: • You forfeit all rights to CalSTRS

benefits, including survivor and disability benefits, unless you return to CalSTRS-covered employment.

• You lose all accumulated service credit. Service credit is a key component in the retirement benefit formula. Basically, the more service credit you have, the higher your retirement benefit will be. The only way to restore this lost service credit is by making a redeposit, which can be costly.

• You must earn one year of CalSTRS service credit since your last refund and have at least five years of service credit before being eligible for CalSTRS retirement benefits, unless you retire from certain other California retirement systems.

• You must also take a refund of your Defined Benefit Supplement account contributions, losing the interest those funds would earn until you retire. You cannot redeposit Defined Benefit Supplement contributions.

• Your refund may be taxed as income and subject to an

additional 10 percent federal and 2.5 percent state tax if you take a refund before age 59½ and do not roll over your account to a qualified retirement plan.

• Your membership date will change to your return date, and you will be covered under whatever program changes are in effect for new members (such as Coverage B for survivor and disability benefits even if you previously had Coverage A).

If you’re thinking about taking a refund this year, keep in mind:

• We encourage you to submit your Refund Application no later than November 15. If we receive your application after November 15, we cannot guarantee you will receive a refund by the end of the calendar year. An incomplete application could further delay the processing of your refund.

• A change in how you want your refund paid or a cancellation of your refund may have tax consequences if two tax years are involved. For example, if you receive a refund in December 2011, then return the refund amount in January 2012, your refund will be reported as income on your 2011 IRS 1099-R

form. You will be responsible for any taxes on those funds.

If you do not take a refund of your CalSTRS contributions and leave them in your account:

• You will be eligible for a lifetime monthly retirement benefit when you reach age 55 if you have five years of service credit, even if you never return to teaching.

• You can still receive a lifetime monthly benefit from CalSTRS with less than five years of service credit if you retire concurrently from certain other California retirement systems.

• Your contributions continue earning interest.

• You can designate a beneficiary to receive a lifetime benefit or lump-sum payment of your account contributions upon your death.

• Your accumulated service credit remains in your Defined Benefit account, meaning you do not have to start over from square one if you subsequently return to teaching.

• Your Defined Benefit Supplement account continues to earn guaranteed interest.

6

CalSTRS Your Money Matters Fall 2011

Member Poll

Extremely Important 193 Responses, 79.1%

Very Important 31 Responses, 12.7%

Important 9 Responses, 3.7%

Not Important 9 Responses, 3.7%

Undecided 2 Responses, 0.8%

CalSTRS recently conducted an online poll asking members the following question:

How important is your retirement benefit in deciding whether to stay in education?

How Important Is Your CalSTRS Benefit?

244 Total Responses

The following are two typical refund scenarios that illustrate the consequences of taking a refund.

Educator Who Refunds and Returns to Teaching Tom taught for four years and then resigned to pursue other career opportunities. He did not think he would ever return to teaching, so he refunded his CalSTRS contributions of $11,200 in July 1995.

Tom subsequently returned to teaching and decided to redeposit his refunded contributions in September 2003. The cost to do so was $19,047, quite a bit higher than what he refunded due to the interest he must pay as part of his redeposit.

Educator With Six Years in the Classroom Cynthia taught for six years after college but now plans to open her own business. She is considering taking a refund of her $12,720 in CalSTRS contributions to start the business.

If Cynthia instead keeps her money in CalSTRS until she retires at age 60 and receives a $300 monthly retirement benefit for 10 years, she will receive $36,000 in retirement benefits—$23,280 more than her refund amount of $12,720.

CalSTRS understands that life and unforeseen events happen. However, it is generally in your best interest to avoid refunding your contributions unless absolutely necessary, particularly if you have five or more years of service credit.

If you are considering a refund, consult CalSTRS as well as an independent financial advisor before making any decisions.

CalSTRS processes hundreds of redeposit requests each year, many by teachers who took a refund but returned to teaching years later and decided to repay what they were refunded plus interest.

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CalSTRS Your Money Matters Fall 2011

Because California educators in CalSTRS-covered positions do not contribute to Social Security, you will not receive Social Security benefits for your CalSTRS-covered employment when you retire.

Get the Facts on Social Security

Steps to Take Now• Use the online retirement estimator tool at

socialsecurity.gov/estimator to get an estimate of your Social Security benefits.

• For more information, visit Social Security at socialsecurity.gov/gpo-wep or call 800-772-1213.

• Consider investing the part of your salary that would have gone to Social Security into a tax-deferred 403(b) or 457 supplemental savings account, such as CalSTRS Pension2.

• Read Social Security, CalSTRS and You at CalSTRS.com/publications.

However, if you otherwise qualify for Social Security, either through your own employment or as a spousal benefit, your monthly Social Security check may be reduced or eliminated because of two federal rules: the Windfall Elimination Provision and the Government Pension Offset. These rules will not affect your CalSTRS pension.

Windfall Elimination Provision• Affects your Social Security benefits that are based on

your earnings.

• May reduce your Social Security benefits, but it will not eliminate them.

Government Pension Offset• Affects your spousal, widow or widower Social Security

benefits that are based on your spouse’s earnings.

• May reduce or eliminate your spousal, widow or widower Social Security benefits.

Important Things to Consider• Your Social Security benefit may be affected by both

rules even if you take a refund of your CalSTRS contributions.

• Your annual Social Security statement is based on your projected income and does not include offsets. The amount may not be accurate.

• After you retire, contact the Social Security Administration when you receive your annual benefit adjustment each year. Your Social Security benefit may need to be adjusted.

Social Security, CalSTRS and YouAre You Counting on Social Security?

Windfall Elimination Provision Government Pension Offset

Affects your Social Security benefits that are based on your earnings.

Affects your spousal and widow/widower Social Security benefits that are based on your spouse's earnings.

If you are eligible to receive Social Security, you should apply. Even though the Windfall Elimination Provision may reduce your benefit, it will not eliminate it. For 2011, the maximum reduction is $3751.

If you paid Social Security taxes on substantial earnings2 for:

• Up to 20 years, this provision reduces the 90 percent factor of the Social Security computation formula3 to 40 percent.

• 21 to 29 years, the 40 percent factor increases incrementally from 45 percent to 85 percent.

• 30 or more years, you are exempt from this provision.

If you qualify for a spousal, widow or widower Social Security benefit based on your spouse’s earnings, that benefit will be offset by two-thirds of your CalSTRS retirement benefit.

Example: Assume your expected spousal Social Security benefit is $600 and your CalSTRS pension is $900. Two-thirds of your $900 CalSTRS pension is $600. Under the Government Pension Offset, you would subtract the $600 (two-thirds of $900) from your $600 Social Security benefit. In this example, the spousal, widow or widower benefit would be eliminated ($600 – $600 = $0).

Note: These provisions affect your Social Security benefit only, not your CalSTRS retirement, disability or survivor benefit or your eligibility for Medicare. These provisions will still apply if you take your retirement benefit as a lump sum.

For more information, go to socialsecurity.gov (under Information For, select Government Employees from the drop-down list). There you can find details, including calculators, to help you determine how these federal rules might affect you. You can also find more information at CalSTRS.com (select Members, then Social Security, CalSTRS and You) or in the CalSTRS Member Handbook.

1 The amount of reduction depends on your years of Social Security earnings and the amount of your CalSTRS benefit. If your pension is relatively low, the reduction can be no more than half your monthly benefit.

2 The Social Security Administration redefines substantial earnings each year. For 2011, $19,800 is considered substantial earnings.

3 For 2011, the formula is 90 percent of the first $749 of average earnings, 32 percent of the next $3,768, and 15 percent of the balance. The dollar value of each part is adjusted annually.

If you are counting on Social Security to supplement your CalSTRS benefit,

read this carefully. Because you do not pay into Social Security on your

CalSTRS earnings, Social Security law may reduce your Social Security

benefit. In brief, the provisions are:

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CalSTRS Your Money Matters Fall 2011

Online member educational videos are now available on CalSTRS.com. These videos give you the opportunity to learn about your CalSTRS benefits at your own pace.

The initial set of videos covers the following topics:

• The Gap. Provides an understanding of the difference between your CalSTRS benefit and your personal financial income goals in retirement. Get tips on how to minimize or close your “gap.”

• Beneficiary Options. Explains how you can provide financial protection for your loved ones.

• Defined Benefit Supplement. Explains your Defined Benefit Supplement account, which provides additional savings for retirement, how you can build your account, and the choices you have to receive your funds at retirement.

Attending CalSTRS workshops and group counseling sessions is a great way to learn more about your CalSTRS benefits as well as retirement planning.

Videos Can Help You Solve Your Retirement Puzzle

CalSTRS Offers Workshops and Group Counseling Sessions

CalSTRS Fundamentals Workshop This 1½-hour workshop presents the essentials of CalSTRS membership and benefits as the foundation of a personal financial plan. Learn how your pension is calculated, about your survivor and disability benefits, and how to set up a supplemental savings plan for retirement.

CalSTRS and You Group Counseling Session This interactive 1½-hour session with a benefits counselor focuses on financial planning in order to help you fill in the gap between your CalSTRS benefit and what you will need to retire.

This session includes an explanation of the online tools CalSTRS offers and provides you with an opportunity to ask questions specific to your situation as well as benefit from hearing questions from your peers.

Register for a workshop at CalSTRS.com/workshops or call 800-228-5453 and select option 3. Register for a group counseling session by contacting the local benefits counseling office in your area. For a list of local benefits counseling offices, visit CalSTRS.com/localoffices.

View these videos any time at CalSTRS.com (select Multimedia). We will continue to expand our video library and will keep you informed about new videos as they become available.

9

CalSTRS Your Money Matters Fall 2011

myCalSTRS is your online resource to access and manage your personal information on file with CalSTRS. myCalSTRS offers the convenience of conducting business online any time.

myCalSTRS, Your Online Resource

Go Online, Save Time With myCalSTRS, you can:

• Access your Retirement Progress Report.

•View your account balances.

• Manage your one-time death benefit recipient information.

Complete and Submit Forms OnlineComplete and submit CalSTRS forms on myCalSTRS. The benefits of submitting your forms online include:

•Guided instructions

Online Direct Deposit Statements CalSTRS is going green with online statements for direct deposit benefit payments. Going online is sustainable and cost efficient. Less paper and postage saves CalSTRS thousands of dollars every month.

•Reduced errors

•Faster processing

Also, you can follow the status of forms you submit.

Retire Online Fill out and submit your Service Retirement Application online with step-by-step instructions.

Register Today Start using myCalSTRS today at CalSTRS.com. Registration is easy and provides immediate and secure access.

• Verify eligibility and find forms to purchase service credit.

• Make a preretirement election of an option.

• Update your mailing address, email address and other contact information.

• Request electronic delivery of newsletters, notifications and statements.

• Ask questions and receive prompt, secure answers.

Join Our Online Community Visit CalSTRSBenefits.Us to stay connected and learn more about plan funding. Also visit us on Facebook at facebook.com/CalSTRS and Twitter at twitter.com/myCalSTRS.

10

CalSTRS Your Money Matters Fall 2011

You may know that the 12 regional U.S. Federal Reserve banks serve as the operating branches of our nation’s central banking system. What you may not know is that these regional banks offer a wide range of free educational resources for the classroom:

Free Classroom Resources From the Federal Reserve

“I have thought about enrolling in a 403(b) plan, but have not done so yet. I did recently open up an IRA. I think it is a good idea to enroll in supplemental savings plans. You never know what the future holds, and I want to be adequately prepared for my retirement.” —Amanda Hartman

Resources

•Lesson plans•Publications•Videos•Activities•Games

Topics

•Personal Finance•Banking•Economics•Government•History

There’s something for every grade level—from kindergarten to high school. To access these resources, visit federalreserveeducation.org.

TeacherFeatureAsked at Ridgepoint Elementary School in Sacramento, CA:

Do you have a supplemental savings plan?

“I have a Roth IRA and have been contributing to it each month for almost 10 years. My hope is to be able to retire comfortably someday and know that when I need to withdraw money from this account, it will be tax-free.” —Elizabeth Payne

11

CalSTRS Your Money Matters Fall 2011

View your Retirement Progress Report for 2010-11 on myCalSTRS at CalSTRS.com.Paper reports will be mailed in December. To save on postage costs, you’ll notice a slightly smaller format this year.

Enhanced Reporting You’ll find we enhanced your online report this year by adding a breakdown of your earnings, contributions, earnable compensation and service credit by employer and by assignment. Now you can view how much you were paid for a particular assignment and how

much service credit you earned. You can also verify your contract rate (earnable compensation) reported by your employer.

Verify Your Information Does your service credit accurately reflect what you believe you have worked? Be sure to verify the accuracy of the information reported to us by your employer—you’re the check and balance between your employer’s reporting and our compilation of data in your account. If you find a discrepancy or have a question, contact your employer.

Retirement Progress Reports Now Online

PRSRT STD

U.S. POSTAGE

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PERMIT NO. 25

SACRAMENTO, CA

WEBSITES CalSTRS.comClick Contact Us to email

403bCompare.com

Pension2.com

CalSTRSBenefits.Us

CALL 800-228-5453 7 a.m. to 6 p.m.Monday through Friday

888-394-2060CalSTRS Pension2®Personal Wealth Plan

855-844-2468 (toll free)Pension Abuse Reporting Hotline

WRITE CalSTRSP .O. Box 15275Sacramento, CA 95851-0275

VISIT Member Services100 Waterfront PlaceWest Sacramento, CA 95605

FAX 916-414-5040

CalSTRS Resources

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CalSTRS Your Money Matters Fall 2011