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How CalPERS pension is calculated and ways members can increase it
Summary
CalPERS outlined the three factors used to compute an unmodified retirement allowance — service credit, benefit factor and final compensation — and described options members can use to increase their pension.
CalPERS told early-career members that three factors determine a basic unmodified retirement allowance: total years of CalPERS service credit, the benefit factor (a percentage that depends on age and retirement formula) and the member’s final compensation (the highest average annual compensation over 12 or 36 consecutive months). "We use these 3 factors," presenter Raquel Lozano said, and multiply them to produce the unmodified allowance.
Why it matters: Knowing the components of the retirement formula helps members plan steps — for example, working longer, seeking raises, or purchasing service credit — that can increase a future pension.
The presentation used a hypothetical example to illustrate the calculation. Lozano described a member with a 2% at 62 retirement formula, 25 years of service credit and a final compensation of $4,366.67. Using those factors produced a monthly unmodified benefit of $2,183.84 in the example. The presenter cautioned the example is illustrative and encouraged members to use the myCalPERS retirement estimate calculator for personalized scenarios.
Lozano noted members can increase one or more calculation factors by earning more service credit, working longer (which can increase the benefit factor up to the formula’s maximum), or increasing final compensation through promotions or raises. The presenter recommended members run estimates in their myCalPERS account and consult publications or counselors for case-specific questions.
