Question 1

What is a replacement rate?

Accepted Answer

The replacement rate is the percentage of your final compensation that your pension replaces. For example, a 2% benefit factor with 30 years of service gives you a 60% replacement rate, meaning your pension would be 60% of your final compensation.

Question 2

What are the survivor benefit options?

Accepted Answer

CalPERS offers four retirement options: Unmodified (no survivor benefit, highest monthly payment), 100% Survivor (your beneficiary receives the same monthly benefit after your death), 75% Survivor, and 50% Survivor. Choosing a survivor option reduces your monthly pension. The reduction depends on your age and your beneficiary's age at retirement.

Question 3

Is there a PEPRA compensation cap?

Accepted Answer

Yes. PEPRA limits the compensation used to calculate your pension. For 2024, the cap is $146,064 for members covered by Social Security and $175,250 for those not covered. The cap is adjusted annually based on CPI. Compensation above the cap does not increase your pension benefit.

Question 4

Does the PEPRA salary cap affect my pension?

Accepted Answer

Yes, if your final compensation exceeds the cap. PEPRA limits the compensation used in the pension formula to a published annual cap that is adjusted yearly. Compensation above the cap does not increase your pension benefit, regardless of years of service. Classic formulas do not have this cap, though their compensation is subject to IRS Section 401(a)(17) limits.

Question 5

What is final compensation?

Accepted Answer

Final compensation is the average of your highest salary over a specific period, typically your highest 12 or 36 consecutive months depending on your formula. PEPRA members use a 36-month average; classic members typically use a 12-month average.

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