What kind of pension plan is CalSTRS and CalPERS?
CalSTRS and CalPERS are defined benefit plans that consists of the Defined Benefit (DB), Defined Benefit Supplement and the Cash Balance benefit programs. These programs provide guaranteed retirement, disability and survivor benefits to more than 3 million public servants and their families, including school teachers, firefighters, nurses, clerical workers and police. CalSTRS is currently the third-largest public pension fund in the US, with a value of $125 billion. The DB program guarantees lifetime retirement benefits based on age, years of service and final compensation at the time of retirement. The DB program also pays out disability and survivor benefits. The DB Supplemental Program and the Cash Balance Plan are hybrid DB/DC plans. Like DC plans, at retirement you have the money in your account, not a life-time monthly allowance set by a formula. Like DB plans, you cannot lose the principal in your account due to market fluctuations.
