As a retiree or an employee approaching retirement age in California, you may have heard that your CalPERS pension could be at risk if you are fired. Unfortunately, this question troubles many CalPERS members and causes them to worry about losing their pension benefits.
When you become a CalPERS member, you become part of a public retirement system that provides a defined pension benefit based on your years of service credit, final compensation, and age at retirement. While working, you contribute to the CalPERS fund, and your employer also contributes on your behalf.
Currently, in the last 20 years, CalPERS pension pays:
- 56% pays from investment earnings
- 32% pays from employer contributions
- 12% pays from employee contributions
CalPERS has specific rules and guidelines that must be followed to maintain your pension benefits. One of those guidelines is to meet the minimum years of service credit to qualify for a pension. Generally, this is five years, but it can vary depending on your specific plan.
Another guideline is to retire from service to be eligible to start receiving your pension benefit. For example, if you are fired, you can still retire from service and start receiving your pension benefits if you meet the eligibility requirements.
Do I Lose My CalPERS Pension If I Get Fired?
No, you do not lose your CalPERS pension if you get fired. If you get fired, you can receive a refund of your member contributions, roll over your funds to an eligible IRA, retire with CalPERS, or leave your contributions on deposit.
Now, we will analyze each case and your options.
Case 1: Receive a refund of your member contributions
If you get fired or decide to terminate your CalPERS membership, you can request a refund of your member contribution. To receive a refund, you need to complete all three conditions:
- It would be best to separate from all CalPERS-covered employment permanently.
- You plan not to enter employment with a new CalPERS-covered employer.
- In addition, you plan not to accept a job covered by another public retirement system located in California and
seek to establish reciprocity.
Remember, if you terminate your CalPERS membership and return to CalPERS in the future, you will start from the beginning.
You can refund member contributions, but employer contributions are not refundable. In that case, you will get your member contribution but not employer contributions!
Case 2: Receive a refund of your member contributions
If you get fired or decide to terminate your CalPERS membership, you can request to roll over your funds to an eligible IRA. The conditions are the same as when you refund your member contribution.
Conditions:
- It would be best to separate from all CalPERS-covered employment permanently.
- You plan not to enter employment with a new CalPERS-covered employer.
- You plan not to accept a job covered by another public retirement system located in California and
seek to establish reciprocity.
Please read our article to learn how to roll over to Gold IRA.
Please, to get a free PDF about Gold IRA, press the red button:
Case 3: Retire with CalPERS
If you get fired or decide to terminate your CalPERS membership and have a minimum retirement age and service credit, you can retire with CalPERS.
To retire with CalPERS, you need to accomplish one of the five eligibility cases:
- If you have Classic 1st Tier Formula type, the minimum retirement age is 50, and the minimum five years of service credit to retire.
- If you have Classic 2nd Tier Formula type, the minimum retirement age is 55, and the minimum ten years of service credit to retire.
- If you have the Mixed Tier Formula type, the minimum retirement age is 50, and you must have five years of service credit to retire.
- If you have the PEPRA Formula type, the minimum retirement age is 52, and you must have at least five years of service credit to retire.
- If you have Classic and PEPRA Formula type, the minimum retirement age is 50, and you must have at least five years of service credit to retire.
Case 4: Leave your contributions on deposit
If you get fired, you can take no action and leave your contributions on deposit. In that case, you will continue to earn interest at the current annual percentage rate and receive an Annual Member Statement every fall.
Find a new job after being fired and entering employment covered by a reciprocal retirement system. You may be eligible to establish reciprocity in that case.
Conclusion
It’s important to note certain circumstances under which a CalPERS member could lose their pension benefits, but these circumstances are rare. For example, if you are found guilty of a felony related to your job, you could lose your pension benefits. You could also lose your pension benefits if you falsely claim CalPERS.
In conclusion, getting fired from your job does not automatically mean losing your CalPERS pension benefits. However, it’s essential to understand the eligibility requirements and guidelines for maintaining your pension benefits. If you have any concerns about your pension benefits, contact CalPERS directly or consult a qualified retirement planning professional.
Please read our article to learn how to protect 401K during the recession.
Please, to get a free PDF about Gold IRA, press the red button:
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
At Promtfinance.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification.
Read more on Daniel Smith's biography page.
Contact Daniel: daniel@promtfinance.com