Summer final California State Teachers Retirement System by alicejenny


									                                                                                                                           summer 2002


     Teaching Summer School or Intersession?
                      Exemptions Are Broad, But New Law Could Affect You

ON JULY 1, 2002, NEW STATE                           The exemptions from the limit are                      s  return to CalSTRS-covered
LAW STARTED THAT ALLOWS                              fairly broad. If you qualify for an                       employment after a break in
EXTRA SERVICE to count toward                        exemption, there is no limit to the                       service of 12 or more consecu-
CalSTRS retirement. For members                      amount you can earn in a school                           tive months after retirement
retiring in the future, this means that              year.                                                  s fill an administrative position for
summer school and intersession                                                                                 up to one-half of the full-time
                                                     You may be exempt in 2002/03 if
earnings now count toward calculat-                                                                            equivalent that is vacant because
ing CalSTRS retirement benefits. For                                                                           of an unanticipated emergency
retired members, this law affects the                s    retired on or before January 1,                      situation
post-retirement earnings limit. In the                    2000, and teach in grades K-12                    Disability retirement rules have not
past, the earnings limit was applied if                   or participate in certain teacher                 changed. For those receiving a
you worked in a public school, but                        preparation programs                              disability retirement, all income,
did not include extra service such as                s    retired on or before July 1, 2000,                regardless of the source, counts
summer school and intersession.                           and provide direct remedial                       against the earnings limit, and there
(Employment outside public schools                        instruction to students in                        are no exemptions from the limit.
still does not count toward the limit.)                   grades 2-12
                                                                                                                        If you have questions,
If you exceed the 2002/03                                                                                               please see information
fiscal year limit of $23,540                                                                                            posted on the CalSTRS
and are not exempt, your                                                                                                Web site (
CalSTRS allowance will be                                                                                               or call the CalSTRS Public
reduced dollar-for-dollar by                                                                                            Service Office at 800-228-
the amount over the limit.                                                                                              5453 to listen to Teletalk
The post-retirement earn-                                                                                               message 372.
ings limit applies whether
you are employed directly
by a school district, by a
third party or are working
as an independent
                                             CEO Notes
I’M PLEASED TO BE WRITING MY                  the day is done, it comes down to         Of course it’s important to remem-
FIRST COLUMN IN THE RETIRED                   making sure we provide an excel-          ber that one of the best features of a
EDUCATOR. Settling in to my new               lent pension plan to our members          defined benefit plan such as
position as Chief Executive Officer for       and do so with excellent service.         CalSTRS’ is that your benefit is
CalSTRS has been a busy and often                                                       guaranteed for life. No matter what
hectic experience, but, most of all, a        Portfolio is Strong                       turn the financial markets take, you
very welcoming one. I’m looking               You should be pleased to be a             can be assured your retirement
forward to the work ahead, which will         member of a retirement system with        benefits will not be affected.
be building on an already solid               the third largest investment portfo-
foundation. The California State              lio in the nation, valued at over         That said, in order for CalSTRS to
Teachers’ Retirement System is a              $100 billion. CalSTRS has a world-        achieve the best returns possible,
secure, well-respected pension fund,          wide reputation as a stable, depend-      we must factor some risk in our
thanks largely to the hard work of my         able and trustworthy pension plan.        investment plan. If we didn’t take
predecessor Jim Mosman, the dedi-             Part of the success is the CalSTRS        risk, we wouldn’t make a good
cated CalSTRS staff and the leadership        investment strategy, which is to          return. However, to minimize risk,
of the Teachers’ Retirement Board.            follow a disciplined approach in          we manage our assets so that the
                                              order to provide the best possible        portfolio is well diversified. No
As far as my top priorities as CEO                                                      individual investment is going to
                                              long-term returns. This ensures that
of CalSTRS, they will be focused on                                                     make or break our portfolio. Last
                                              CalSTRS can weather the inevitable
ensuring that our benefits are sound
                                              ups and downs of financial markets.                              continued on page 3
and our service, topnotch. When
                                                A B O U T          J A C K

  s      Became Chief Executive Officer of CalSTRS on             s    Is a native of Rochester, New York.
         February 4.                                              s    Holds a B.S. from Cornell University and a M.A. from
  s      Came to CalSTRS from Great-West Life & Annuity                Vanderbilt University.
         Insurance Company. Was the vice president for            s    Received awards as 1992 “State of Colorado Man-
         corporate affairs where he administered the company’s         ager of the Year” and the 1999 Career Service Award
         defined benefit and defined contribution plans.               from the Colorado Group Insurance Association as
  s      Was the insurance commissioner for the state of               well as recognition from the Colorado chapter of
         Colorado.                                                     AARP for outstanding public service.
  s      Served as board trustee of the Colorado Public           s    Lives in Sacramento with his wife Cindy and daugh-
         Employees’ Retirement Association for 11 years,               ters Amy and Lacey.
         including 6 years as chair and vice chair.               s    Enjoys the great outdoors (he’s an avid skier, hiker and
                                                                       camper) and reading good fiction.

page 2                                                                                                       r e t i r e d e d u c at o r
CEO NOTES cont. from page 2

year’s Enron collapse is a good
example of the value of diversifica-                               From the desk of
tion. In the period of CalSTRS’
decline in Enron stock value, those
losses were more than offset by                                    Marty Mathiesen
substantial gains in other areas.
As the third largest pension fund in
the U.S., however, we have an
obligation to deter wrongful corpo-
rate conduct when it undermines        SINCE 1996, I’VE HAD THE GOOD             system with more than 171,000
the integrity of financial markets.    FORTUNE OF SITTING ON THE                 retired members and beneficiaries.
That’s why CalSTRS recently was        TEACHERS’ RETIREMENT BOARD AS
                                                                                 This May, several representatives
named as lead plaintiff in a class     THE REPRESENTATIVE OF THE
                                                                                 came to talk to the board about
action lawsuit against                 RETIRED MEMBERS. I am a former
                                                                                 corporate governance issues in light, Inc.                    coach, athletic director, principal and
                                                                                 of the Enron scandal. The represen-
                                       assistant superintendent. I taught at
                                                                                 tatives included Margaret Foran, a
Customer Service Is Important          Cupertino High School, the same
                                                                                 vice president of corporate gover-
I also want to say a word about        school I attended myself. In fact I
                                                                                 nance at Pfizer. We’ve talked to Ms.
customer service here at CalSTRS.      was a member of the first graduating
                                                                                 Foran before about corporate gover-
You have worked hard for your          class in 1929.
                                                                                 nance issues. Impressed by the
retirement benefits, and you need to
                                       It is not just because I am a retired     knowledge and careful questioning
receive information that is clear,
                                       teacher that retirement issues are        she has received previously from the
comprehensive and timely. CalSTRS
                                       near and dear to my heart. My son         board, Ms. Foran said that she has
will continue our efforts to improve
                                       Marty and grandson Michael both           told her sister, a teacher and
service to you so that you can get
                                       graduated from Cupertino High             CalSTRS member, “You don’t need to
the information you need when you
                                       School and have taught in the same        worry. Your retirement is safe. The
need it.
                                       school district that I did. I have a      CalSTRS board is watching your
A large part of good service is        son, Pete who just retired from           benefits very carefully.”
spending time with customers so        CalSTRS. My grandsons Marty and
                                                                                 Many of us who are retired are still
that I can be aware of your con-       Kevin are also CalSTRS members.
                                                                                 active and busy in our lives, but we
cerns. I invite you to contact me      You can see that the issues surround-
                                                                                 are enjoying more leisure time than
directly to tell me what is working    ing CalSTRS benefits and services
                                                                                 we did as educators. It feels good to
and not working for you. I would       have direct impacts on my family
                                                                                 know that there are people who have
also be happy to speak to groups       and me.
                                                                                 come behind us, people like my sons
about retirement issues that affect
                                       You don’t get rich teaching school,       and grandsons, who are continuing
California’s educators. You can
                                       but you enjoy the kids. And after         our work educating California’s
contact me at CalSTRS; P.O. Box
                                       your years of service, you can enjoy a    student population. I hope you feel
15275; Sacramento, California
                                       secure retirement through CalSTRS.        good also, knowing that the TRB is
                                       As a board member, I’ve been              working hard on your behalf and
Thank you,                             impressed by how seriously the            theirs.
                                       other board members take their
                                                                                 Have a great summer and a great
                                       charge of overseeing a retirement
                                                                                 retirement. You’ve earned it!

summer 2002                                                                                                     page 3
Prescription Drug Discount                                                         • You have reached your yearly or
                                                                                     monthly prescription limitation
                                                                                     and have to pay for your pre-
Program Could Save Money                                                             scriptions
                                                                                   • Your insurance does not cover a
                                                                                     certain prescription drug
                                                                                   • You have a deductible to meet
                                                                                     before your coverage begins

                                                                                   What is Covered?
                                           pharmacy provider and show your         Virtually every prescription medica-
                                           Medicare card and a valid prescrip-     tion is covered through the pro-
                                           tion. The pharmacy can only charge      gram. The only prescriptions that
                                           you a price that is no more than the    are not covered are over-the-counter
                                           Medi-Cal rate for that prescription.    medications and compound drugs.
law in effect since February 2000
                                           Over 5,000 pharmacies statewide         (Compound drugs are prepared by
allows Medicare beneficiaries who
                                           are Medicare providers, including       the pharmacist. Ask your doctor or
do not have prescription drug
                                           most large retail chains, but check     pharmacist if you aren’t sure.) How
coverage to receive their prescrip-
                                           with your individual pharmacy if        much you save varies depending on
tion drugs at a cost no higher than
                                           you aren’t sure.                        the medication and whether it is a
the Medi-Cal reimbursement rates
                                                                                   brand name or generic drug.
(along with a small processing fee of      There are no forms to fill out. When
15 cents).                                 you have a prescription filled, it is
                                           important that you show the phar-             For More Information
The Prescription Drug Discount
                                           macy staff your Medicare card           For general questions about the
Program was enacted through
                                           beforehand. If the prescription is      prescription drug discount pro-
legislation authored by Senator
                                           being phoned in by a physician’s        gram, contact the Health Insurance
Jackie Speier and was the country’s
                                           office, ask the office to notify the    Counseling and Advocacy Program,
first program of this kind. (The
                                           pharmacy that you are a Medicare        also known as HICAP at 800-434-
original legislation is set to sunset at
                                           patient.                                0222, or call Department of Health
the end of 2002, but current legisla-
                                                                                   Services at 916-657-4302. DHS also
tion—SB 1278—would extend the
                                                                                   has a Web site, (
program indefinitely.) The program         Use if you have no other                medicaredrugdiscount), which you
is administrated by the California         coverage…                               can visit to find out more about this
Department of Health Services. Use         This discount program is intended       program. This Web site also has a
it to fill prescriptions in California.    for those prescriptions whose entire    price calculator where you can look
If you live in another state, check        cost is paid by the Medicare recipi-    up the prices for 200 of the most
with the Eldercare Locator at 800-         ent. You must use your current          used drugs.
677-1116 to see if there is a dis-         insurance coverage if it would cover
count program available to you.            the prescription cost.                  If you believe your pharmacy is not
                                                                                   charging the correct Medi-Cal rate
How the Program Works                      Or if you have coverage, but…           and you would like to discuss filing
Anyone who is a Medicare benefi-           If you have other coverage, you can     a complaint, you can contact the
ciary and does not have prescription       still use the Medicare prescription     Department of Health Services by
drug insurance is eligible. All you        drug discount program if:               e-mail at or by
have to do is go to a Medi-Cal                                                     leaving a message at 916-657-4302.

page 4                                                                                              r e t i r e d e d u c at o r
Your CalSTRS Benefit Can Be
Affected by Divorce
In California, your CalSTRS benefits are considered to be community             President Bush Proposes
property and may be affected if you obtain a divorce or legal separation—       Full Elk Hills Funding
even after you retire.
                                                                                As part of his annual
An Important Step                                                               budget proposal, Presi-
If you file for divorce or legal separation and there is a community property   dent Bush has included
interest against your CalSTRS benefit, you must make CalSTRS a party to
your legal action by filing joinder documents. This allows CalSTRS to           $36 million for the next
comply with any resulting court orders.                                         installment of the Elk Hills
                                                                                settlement funds. This
How Your Benefit Changes If Joined                                              represents the fifth of
The Teachers’ Retirement Law provides the time rule method to divide
community property interest for a member already receiving a monthly
                                                                                seven payments to
CalSTRS benefit. The most common time rule formula provides for the             CalSTRS. The settlement
former spouse to receive a portion of the member’s retirement benefits          funds are for the state
according to the following formula:
                                                                                school lands that were
                                                                                part of the Elk Hills Naval
  Service credit earned during the community period ÷ total years of            Petroleum Reserve sold
  member service credit ÷ 2 x benefit = former spouse’s share
                                                                                by the federal govern-
  EXAMPLE: Karen has 30 years of service credit and was married
  during 20 of those years. Her monthly unmodified benefit is                   ment in 1998. These
  $2,500. Using the time rule formula. Karen’s monthly benefit will be          funds must be used by
  reduced by $833.34. This benefit will be given to her former                  CalSTRS to help pay for
                                                                                purchasing power protec-
       20 ÷ 30 = 66% ÷ 2 = 33% x $2,500 = $833.34
                                                                                tion for retirees whose
                                                                                benefits have been
Community Property Booklet Available                                            eroded by inflation.
The CalSTRS publication Community Property Information, PAO 211, con-
tains details about the legal process; how your retirement and other benefits   CalSTRS’ Washington
can be affected; sample forms; a glossary of terms and more. To obtain a        representative will keep
copy, call the 24-hour CalSTRS automated telephone system and select
                                                                                an eye on this important
option 3. You can also view the booklet on the CalSTRS Web site at                                                             appropriation as it moves
                                                                                through Congress.

summer 2002                                                                                              page 5
        A Frequently Asked Question
           Where is My Monthly Benefit Payment?
CUSTOMER SERVICE REPRESENTATIVES FROM THE                       can continue to receive your statement. Use the Address
PUBLIC SERVICE OFFICE get lots of calls during the              Change Request. You can also use this form to cancel
beginning of the month from retirees asking about their         Direct Deposit altogether.
monthly benefit payment. Sometimes the calls come just
a bit early and the check is still in the mail or hasn’t been   If Your Benefit Check Is Sent by Mail
deposited in the bank quite yet. Other times members            Are you one of the nine percent who have their monthly
have forgotten to let CalSTRS know about a new address          benefit check mailed? If so, your checks are mailed by
or a bank change. Although rare, there are also times that      the State Controller’s Office in time for delivery on the
checks are lost or stolen or the deposit has been misdi-        first day of each month. If you have not received your
rected.                                                         check by the 5th of the month, please call CalSTRS at
Here’s some information about when your monthly
benefit is sent, how to report an address or bank change        If your check was undeliverable by the Post Office and
and what to do if your payment is not received.                 returned to CalSTRS, the check will be reissued. If your
                                                                check was stolen or lost after you received it, CalSTRS
If You Use Direct Deposit                                       can stop payment on the check and issue a replace-
Are you one of the 91 percent of CalSTRS benefit recipi-        ment. If your check was not received in the mail,
ents who use Direct Deposit? If so, your payment is             CalSTRS will mail a Lost Warrant Affidavit for you to
credited to your account on the first banking day of the        complete. It will take about two weeks from the date
month. If the first falls on a non-banking day, funds will      the Lost Warrant Affidavit is received by CalSTRS to
usually be credited to your account the next banking day.       process a replacement check.

In the event the electronic payment does not reach your         If you change addresses, please send in an Address
bank, please verify with the bank that your payment has         Change Request. You can also send a letter or a post
not been received before you contact CalSTRS. If your           office change of address card. Address changes must be
bank confirms that it does not have your payment,               received in CalSTRS’ office by the first day of the month
CalSTRS will place a tracer on the transaction. Once your       for delivery of the next monthly benefit check to the new
funds are located, CalSTRS will either credit your ac-          address.
count or issue you a paper check, usually within 24 to 48
                                                                CalSTRS encourages the use of Direct Deposit. With
                                                                Direct Deposit, you receive your monthly benefit earlier
If you change banks, please don’t forget to notify              and replacement of a lost or misdirected electronic
CalSTRS. You will need to complete a new Direct Deposit         payment is much faster than replacement of a paper
Authorization form to authorize CalSTRS in writing to           check.
make the change. You will also be asked to send a voided
check with the form. The change will take 60 days after         To Order Forms
CalSTRS receives the form. A good rule of thumb is to           You can download the Direct Deposit Authorization
leave your old account open until your first payment is         and Address Change Request forms from the CalSTRS
deposited into your new account.                                Web site ( or order by phone at
If you change addresses, you should notify CalSTRS even
if your monthly benefit is directly deposited so that you

 sum 6
p a g em e r 2 0 0 2                                                                                   r e t i r e d e d u c at o r
                     Pension Income Taxed Unless
                        You Choose Otherwise
TAX SEASON HAS COME AND                                                            Supplemental payments are subject to
GONE. How did you do? If you                                                       tax withholding at the federal rate of
owed taxes or received a large                                                     27 percent and the state rate of
refund, now may be a good time to                                                  6 percent. Right now, you can either
think about whether you are having                                                 have taxes withheld at the 27 percent
the right amount deducted from                                                     and 6 percent rate or fill out the
your monthly benefit or supplemen-       you may be liable for California state    Income Tax Withholding Preference
tal check.                               taxes from other income, you can          Certificate to have no withholding.
                                         continue to request state tax with-       You cannot have taxes withheld at
Taxes on Monthly Benefits                holding from CalSTRS.                     another set rate.
Normally pension income is taxed at
the federal rate for a married indi-     Some members receive more than            Starting with the October payment,
vidual claiming three withholding        one monthly payment from                  tax withholding on your supplemental
allowances unless you have a tax         CalSTRS. For example, you could           payment will be based on your tax
preference on file. The California       receive your own CalSTRS payment          preference on file for your monthly
state tax is 6 percent. You can file a   and a payment as the option benefi-       payment. This change means the
form with CalSTRS that specifies         ciary of a deceased spouse. If you are    amount of withholding on the supple-
your tax preference, including the       receiving more than one monthly           mental payment can be different than
choice not to withhold taxes.            payment from CalSTRS, you can             the current established rates, but will
                                         elect a different withholding amount      be the same rate as your monthly
You can get the Income Tax               for each monthly payment. Just fill       payment. If you receive a supplemen-
Withholding Preference Certificate       out a separate form for each ongoing      tal payment, you may want to review
from the CalSTRS Web site                payment, indicating the type of           your tax preference in the upcoming
( or by calling       payment on the form.                      months to ensure it meets your needs.
800-228-5453 and selecting option
3. Fill out the form and return it to    Taxes on Supplemental Payments
                                                                                         For More Information
CalSTRS as soon as possible. It will     CalSTRS pays supplemental benefits,
take up to 60 days after your prefer-    separate from the monthly payment,        For information on income tax
ence is received by CalSTRS for the      four times a year to benefit recipients   withholding, read the IRS Publication
change to take effect.                   hardest hit by inflation. Those of you    575, “Pension and Annuity Income”
                                         receiving the quarterly supplemental      and the California Franchise Tax
You must live within the United                                                    Board Publication FTB 1005, “Pen-
                                         payments received your most recent
States or a U.S. possession to have                                                sion and Annuity Guidelines.” For the
                                         payments in the beginning of April
no federal income tax withheld from                                                IRS, view the publication online at
                                         and July. Those payments reflected
your pension. Federal law prohibits                                       or call 800-829-1040 to
                                         the increase to 80 percent of pur-
California from taxing pension                                                     request a copy. For the California
                                         chasing power enacted last year. The
benefits paid to those who reside                                                  State Franchise Tax Board, view the
                                         next payment is due in October.
outside the state. However, if you                                                 publication at or call
live outside the state and you feel                                                800-852-5711.

summer 2002                                                                                                        page 7
         ✆ PHONING            CALSTRS             FOR      INFORMATION              .   HERE    ’S     HOW       ✆

   Automated telephone systems are not popular with most people. Although impersonal, they do help
   businesses direct the many calls they receive more efficiently. To make calling the CalSTRS phone
   line easier, use this quick reference guide. You can cut it out and put it in a CalSTRS file, then use it
   to bypass the instructional messages the next time you need to call.
   CalSTRS modifies the telephone menu from time to time, so keep your eye out for future guides.

                ✁      P L E A S E C L I P A N D SAV E T H I S Q U I C K R E F E R E N C E G U I D E   ✁
   CalSTRS Public Service Office                                 PRESS 3
   To reach PSO call:                                            To order forms, booklets, statements of ac-
   Toll-free 800-228-5453                                        count, duplicate 1099Rs or to register for
                                                                 financial education planning workshops
   Sacramento Local 916-229-3870
   TDD 916-229-3541                                              PRESS 4
                                                                 To enter the extension of your disability or
   This is what you’ll hear:                                     survivor benefits caseworker
   Please listen carefully. There are new                        PRESS 5
   menu selections available. You have                           To receive information on the
   reached the California State Teachers’                        Cash Balance Plan
   Retirement System.                                            PRESS 0
    PRESS 1                                                      To speak with a Public Service Customer
   To obtain information on your account                         Service Technician

    PRESS 2                                                      PRESS  *
   To use our automated Teletalk system to                       To repeat this menu
   listen to recorded messages

    Use the Magic Words
    Let the CalSTRS Web site work its magic. Plug in to learn
    about CalSTRS benefits and services, view publications and order forms. And
    don’t let the lack of a computer stop you. Visit your local library.
    Nearly all of them provide Internet access and staff to help you.

page 8                                                                                                  r e t i r e d e d u c at o r
                                                                   370 How to change an option after Service Retirement

Let’s Talk                                                             due to dissolution of marriage, annulment or legal
                                                                   371 Service Retirement after reinstatement to active

Take your pick: CalSTRS retirement information is just
                                                                       status from an earlier Service or Disability Retirement
                                                                   372 Earnings limitations after Service Retirement
                                                             400 Disability Benefits
                                                             420 Coverage A, Disability Allowance and Rehabilitation
a phone call or mouse click away. Teletalk has more              424 Earnings limit
than 100 messages that help you understand your              450 Coverage B, Disability Retirement and Rehabilitation
CalSTRS benefits and services. What’s more, Teletalk             Program
is available 24 hours a day, seven days a week.                  454 Earnings limit

For recorded messages, just dial 800-228-5453 and            500 Death Benefits
                                                                 501 How to report a death to CalSTRS
press 2. Then, if you know the Teletalk message                  502 The importance of Beneficiary Designations
number you want, press 1 to bypass the messages.                 503 What documentation is required for payment of a
Otherwise, follow the prompts. And, if at any time                    lump-sum death benefit?
you get lost, back up by pressing #.                             504 Option Payee designation of a beneficiary
To read Teletalk messages online, go to                      520 Coverage A, Family Allowance Program
                                                                 522 Benefits payable at death of member, after Service and select Teletalk from the Quick
                                                                      or Disability Retirement
                                                             550 Coverage B, Survivor Benefits
Here are the general menu choices for Teletalk along             555 Benefits payable at death of member, after Service
with a list of messages that may be of particular                     or Disability Retirement
interest to retired members.                                 600 Increases in Benefits
                                                                  601 Annual Two-Percent Cost of Living Improvement
100 General Information                                           602 Quarterly Supplemental Payments
    102 CalSTRS office hours, location and telephone              603 Changes in Quarterly Supplemental Payments
        numbers                                                   604 Minimum Guarantee Monthly Allowance
    104 How to change your address with CalSTRS                   605 Surviving Remarried Spouse Reinstatement Program
    105 Direct Deposit: How to have your monthly check            606 Ad-Hoc Increase in 2000
        sent electronically to a financial institution            607 Expanded Minimum Guarantee Monthly Allowance
    106 What to do in the event of a lost check or missing        609 Longevity Bonus
        Direct Deposit payment
    107 How to have insurance premiums deducted from         650 Tax Liability
        your check                                               651 Monthly allowance tax withholding requirements
    109 Community property settlements                           652 Refund and Lump Sum distribution tax withholding
    111 Member Home Loan Program                                       requirements
    113 Subrogation information                                  653 How to request a duplicate or corrected 1099R
    116 CalSTRS/CaHLIF Zero-Down Preferred Program                     Withholding Statement
    117 No points, no fees Home Loan Program                     654 When will I incur an Income Tax liability?
                                                                 655 IRS Code Section 415, what it means to you
150 Membership, Service Credit and Contributions                 656 1099R information for pre-1989 retirees
200 Regional Counseling Services                             700 Refund of Contributions
250 Purchase of Additional Service Credit and Redeposits     750 Deferred Savings Program
300 Pre-Retirement Election of an Option                     800 Teachers’ Retirement Fund Investment
350 Service Retirement                                           801 Shareholder voting policy and procedures
    369 How to change an option after Service Retirement         802 Investment assets portfolio
          due to the death of an option beneficiary
                                                             900 Cash Balance Benefit Program

summer 2002                                                                                                            page 9
                           How to Appoint a
                        Durable Power of Attorney
                                Trustee Cannot Act On Your Behalf

THE DURABLE POWER OF                                                          Additionally, the Education Code
ATTORNEY is one of the most                                                   places another important prohibi-
important documents you may never        You should have                      tion on trusts. Your trustee cannot
need. If you want a loved one to act                                          automatically act on your behalf in
on your behalf in the event you           a DPOA on file                      managing certain pension matters,
become incapacitated, a Durable                                               such as changing your address,
Power of Attorney is a legal docu-       even if you have                     direct deposit designations or tax
ment that grants power to someone                                             withholding preferences. However,
else to make decisions for you.
                                             a trust.                         a person named under a Durable
                                                                              Power of Attorney can. Therefore,
                                                                              you should have a DPOA on file
There is No Standard Form              This form is also available by phone   with CalSTRS even if you have a
When it comes to Durable Power of      or on the Web.                         trust. The person named under the
Attorney forms, you have many
                                                                              DPOA can be your trustee or
choices. An attorney can draft a
                                       Revocable or Living Trusts             another person altogether.
DPOA, and forms are available that
you can buy and fill out yourself.     As part of their estate planning,
For your convenience, CalSTRS also     some benefit recipients establish      Estate Planning
has a Special Power of Attorney        revocable or living trusts. They       Advanced planning can help make
form that you can use. You can         assign their property to the trust     handling your affairs go smoothly
order it by phone or download it       and designate a trustee to adminis-    for you and your loved ones. You
from the CalSTRS Web site.             ter it. Often recipients name them-    may wish to consult a financial
                                       selves as the trustee with another     planner or attorney for advice about
                                       person designated as a successor       these issues.
CalSTRS Needs Affidavit For            trustee in the event they become
Each Request                           incapacitated. CalSTRS members
Unless the DPOA expressly allows       are not prohibited from assigning or        For More Information
them to rely on a photocopy or         depositing their monthly benefit
facsimile, CalSTRS staff must review                                          Remember, download forms on the
                                       payment in a trust’s bank account or
either the original or a certified                                            Web at or order
                                       designating a trust to be the desig-
copy of the DPOA to make sure it                                              by calling 800-228-5453 and
                                       nated beneficiary. (The designated
has not been altered. The person                                              pressing 3.
                                       beneficiary would receive the lump-
acting on your behalf must also        sum death payment.) The Educa-
submit an affidavit that affirms       tion Code, however, prohibits a
authority to act on your behalf each   trust from being an option benefi-
time he or she makes a request.        ciary. (An option beneficiary would
CalSTRS has a Declaration of           receive an ongoing monthly allow-
Attorney in Fact form for this use.    ance.)

p a g e 10                                                                                     r e t i r e d e d u c at o r
Enron Doesn’t Affect Benefit
whether your Defined Benefit allowance would be affected. The answer is a
resounding no.
Your retirement allowance is based on a formula set by law, not on the
overall value of the CalSTRS investment portfolio. So in the case of Enron or
any other CalSTRS investment, fluctuations in the investment portfolio will
never affect your allowance amount.
Here are the facts on CalSTRS’ investments in Enron: CalSTRS owned 2.02                       Legislative Summary
million shares in Enron on June 30, 2001. Since then, all Enron shares have
been sold. During the time Enron stock lost its value, the overall CalSTRS                    At this time, there is no
investment portfolio gained $2.2 billion. Overall CalSTRS’ losses in Enron                    legislation to report that
were $47.5 million, which represents a small fraction of the over $101
billion portfolio.                                                                            affects CalSTRS retired mem-
So rest assured that your monthly benefit is secure, no matter what happens
                                                                                              bers and beneficiaries.
to the CalSTRS investments. If you haven’t already done so, read the CEO
Notes on page 2 for more about CalSTRS’ investment strategies

                       Thinking about a home loan or refinance?
                                        Think about the CalSTRS Home Loan Program

                                   Competitive interest rates on a variety of mortgage loan programs, including:
                        s     CalSTRS Conventional 30 or 15-year Fixed Rate Program    s   CalSTRS No Points, No Fees, Program      s

                                                    s   CalSTRS/CaHLIF Zero Down Preferred Program     s

                                      Ask about the new program—CalSTRS/CaHLIF 80-17 Program
                      Borrow 80 percent of the loan value with an additional 17 percent financed through a “silent second.”
                            Visit the home loan program page at or call a CalSTRS-approved lender for details.

                                                            CalSTRS-APPROVED LENDERS

                                         CALFED:   800-CALFED-7     s    Countrywide Home Loans:   800-877-5626
                         CUNA Mutual Mortgage Corporation: 800-356-5626         s     First Mortgage Corporation: 877-595-1998
                               North American Mortgage: 800-700-6262       s   Wells Fargo Home Mortgage: 909-680-3685

summer 2002                                                                                                                      page 11
                                                                                                       PRSRT STD
                                                                                                      U. S. POSTAGE
                               P.O. Box 15275                                                            PA I D
                               Sacramento, CA 95851-0275                                              Permit No. 25
                                                                                                     Sacramento CA

how to reach us
Write CalSTRS at:
California State Teachers’ Retirement System
P.O. Box 15275
Sacramento CA, 95851-0275
Call CalSTRS Public Service Office:
916-229-3541 for TDD
Browse CalSTRS Web site at:
When contacting CalSTRS, be sure to
include your Social Security number.

 CalSTRS Vision Statement
 CalSTRS is committed to lifetime security and             Jack Ehnes, Chief Executive Officer
 service that meets the changing needs of California’s     Christopher J. Ailman, Chief Investment Officer
                                                           Sherry Reser, Managing Editor
 State of California                                       Linda Riley, Editor
 Gray Davis, Governor
                                                           Statements in this publication are general and the
 Aileen Adams, Secretary, State and Consumer
                                                           Teachers’ Retirement Law is complex and specific. If a
 Services Agency
                                                           conflict arises between information contained in this
 Teachers’ Retirement Board                                publication and the law, any decisions will be based on
 Gary Lynes, Chair                                         the law.
 George W. Fenimore, Vice Chair                            The Retired Educator is published twice a year for retired
 Paul G. Krasnow                                           members and benefit recipients of the California State
 Marty Mathiesen                                           Teachers’ Retirement System. Comments or suggestions
 Karen Russell                                             may be directed to: Editor, Public Affairs, MS #34, P.O.
 Jay Schenirer                                             Box 15275, Sacramento, CA 95851
 Carolyn A. Widener
 Phil Angelides, State Treasurer                              printed on recyled paper
 Kathleen Connell, State Controller
 Delaine Easton, Superintendent of Public Instruction
 B. Timothy Gage, Director, Department of Finance

To top