What is CalPERS?
CalPERS = California Public Employees' Retirement System
It's a defined-benefit pension. Unlike a 401(k) where you hope your savings grow enough to retire on, CalPERS guarantees you a set monthly income for life, based on how long you worked and your final salary. It's one of the biggest reasons people work for the State.
Contribution
7-10%
You pay from your salary (varies by job class)
State Contributes
13-16%
Additional employer contribution (on top of your salary)
Guaranteed For
Life
Your entire retirement, no matter how long you live
When Can You Retire?
There are two main formulas. Which applies to you depends on when you were hired.
If Hired Before 2013
- Age 50 + 5 years service: Can retire with reduced benefits
- Age 55 + any service: Can retire with full benefits
- Age 65 + any service: Can retire with full benefits
If Hired 2013 or Later
- Age 52 + 5 years service: Can retire with reduced benefits
- Age 57 + any service: Can retire with full benefits
What Does "Full Benefits" Mean?
You get 2-2.5% of your final average salary for every year of service. Example: Hired at 35, retire at 55 = 20 years. If your final salary is $75,000:
$75,000 × 20 years × 2% = $30,000/year for life
How Much Will You Actually Get?
The Formula
Final Average Salary × Years of Service × Benefit Percentage = Annual Pension
Example
- Hired at: Age 28
- Retire at: Age 58 (30 years of service)
- Final salary: $90,000
- Calculation: $90,000 × 30 × 2.5% = $67,500/year for life
Over a 35-year retirement: $2,362,500 guaranteed.
Why This Matters
A defined benefit pension is worth roughly 25-30% more than a 401(k) over your lifetime because: (1) it's guaranteed, (2) the State bears market risk, not you, (3) it includes healthcare to age 65, (4) there's no "running out of money" risk in retirement.
Healthcare & Other Benefits
Health Insurance
The State offers multiple health plan options (Blue Shield, Kaiser, Anthem, etc.). During employment: you pay a percentage, the State pays the rest. In retirement (age 65+): you move to Medicare but can stay on the State plan for retiree benefits.
Dental & Vision
Covered while employed. Some plans extend to retirees.
Life Insurance
Basic life insurance provided. Additional coverage available (usually 1-5x salary).
Paid Time Off
Typically 11-12 holidays, 3 weeks vacation (more with tenure), 2 weeks personal leave, additional sick leave.
Supplemental Retirement Accounts
457(b) and 403(b) plans available (similar to 401k) if you want to save additional money for retirement.
Common Myths About CalPERS
Myth: CalPERS is going bankrupt.
False. CalPERS is one of the most funded public pensions in the US. Your pension is guaranteed by law.
Myth: You need to work 30 years.
False. If you were hired before 2013 and reach age 55, you can retire with full benefits after just 5-10 years. The younger you are when hired, the better.
Myth: Your pension ends when you die.
False. You can choose survivor options that pay your spouse/beneficiaries after you pass.
Myth: CalPERS doesn't adjust for inflation.
False. CalPERS pensions get annual cost-of-living adjustments (COLA) to keep up with inflation.
State Pension vs. Private Sector 401(k)
| Feature | CalPERS (State) | 401(k) (Private) |
|---|---|---|
| Amount Guaranteed | Fixed amount (2-2.5% per year) | Unknown (depends on market) |
| Employer Match | State pays 13-16% (guaranteed) | 0-6% (varies by company) |
| Risk | State bears market risk | You bear market risk |
| How Long It Lasts | Your entire life | Until money runs out (or you die) |
| Annual Adjustments | COLA (inflation-adjusted) | None (fixed amount) |
| Vesting | 5 years (you own it after) | Varies (1-4 years typically) |
Start Planning Your State Career
Official CalPERS Resources
- • CalPERS Website: www.calpers.ca.gov (retirement calculators, contribution rates)
- • CalHR Benefits Info: 1-866-CalHR1 (1-866-225-4471)
- • Retirement Estimate: Log in to my.calpers.ca.gov with your PERS ID