What teachers and employers contribute to CalPERS

California teachers do not pay a flat percentage into their pension. Instead, both the teacher and the school district contribute a percentage of the teacher's salary, and that percentage changes most years based on how well CalPERS investments perform and how many retirees the system is supporting.

As of 2024, teachers in most California school districts contribute around 10.25% of their salary to CalPERS. School districts contribute a separate amount — currently around 19% to 22% of payroll, though this varies by district and by when the district's contract was negotiated. These percentages are set by CalPERS actuaries and are not the same across all districts or all years.

The exact percentage you pay depends on which CalPERS "risk pool" your district belongs to and when you were hired. Teachers hired before 2013 are typically in a different contribution structure than those hired after. If you work in a district that has its own pension system instead of CalPERS — some large districts do — your contribution rate will be different.

Key Takeaways

  • Teachers contribute roughly 10% of salary to CalPERS, and school districts contribute roughly 19% to 22%, but both percentages change annually based on investment returns and system costs.
  • Your exact contribution rate depends on when you were hired, which CalPERS risk pool your district uses, and whether your district has its own pension system.
  • CalPERS publishes contribution rates each November for the following year, so you can find your district's rate by searching CalPERS contribution schedules online.
  • The percentage you contribute is not the same as the percentage of your final salary you receive in retirement — that depends on your years of service and your hire date.

How your pension benefit is calculated, not your contribution

The percentage that matters for your actual retirement check is different from what you contribute. Your pension benefit is calculated using a formula: years of service × age factor × final average salary. The age factor — sometimes called the "multiplier" — is what varies most by hire date.

Teachers hired before January 1, 2013 typically receive 2% per year of service at age 60, meaning a teacher with 30 years of service gets 60% of their final average salary. Teachers hired on or after January 1, 2013 receive 2% per year of service at age 62, and the final average salary is calculated over three years instead of one. This means newer teachers work longer to get the same percentage of pay in retirement.

Your final average salary is based on your highest-earning years. For teachers hired before 2013, it is usually your highest single year. For teachers hired after 2013, it is your highest three consecutive years averaged together. Overtime, bonuses, and certain other pay may or may not count depending on your contract and CalPERS rules.

Why contribution rates change every year

CalPERS sets contribution rates based on two things: how much money the system needs to pay current retirees and disabled members, and how much investment income CalPERS expects to earn. When stock markets perform poorly, CalPERS needs more money from current workers and employers. When markets perform well, rates can hold steady or even decrease.

CalPERS also adjusts rates when the number of retirees grows relative to active workers, or when retirees live longer than expected. These changes are published in November each year and take effect the following July. Your district's payroll office receives the new rate and adjusts your paycheck accordingly.

This is why your contribution percentage might be 10.25% one year and 10.50% the next, or why your district's employer contribution jumped from 18% to 21%. It is not a choice by your district or union — it is a calculation by CalPERS actuaries based on the system's financial health.

Where to find your specific contribution rate

CalPERS publishes contribution schedules on its website, organized by employer and by risk pool. You can search for your school district by name and see the exact percentage for the current fiscal year. The rates are updated each November for the July-to-June fiscal year that follows.

Your pay stub should also show your CalPERS contribution as a separate line item. If you want to know the rate for a future year, CalPERS typically releases preliminary rates in September, though they are not final until November. Your union representative or your district's human resources office can also tell you the current rate and explain how it applies to your salary.

If you work part-time or in a position that is not covered by CalPERS — some substitute teachers and certain other roles are not — you will not contribute and will not earn a CalPERS pension. Your contract or job description should state whether your position is CalPERS-covered.

How contributions affect your take-home pay

Your CalPERS contribution comes out of your gross salary before taxes, which means it reduces your taxable income for federal and state income tax purposes. A 10.25% contribution on a $65,000 salary is about $6,662 per year, or roughly $256 per biweekly paycheck. This amount is deducted automatically and goes directly to CalPERS.

You do not have a choice about whether to contribute — it is mandatory for all CalPERS-covered positions. You cannot opt out, reduce your contribution, or direct it elsewhere. The money is held in your CalPERS account and used to fund your pension when you retire, along with investment earnings on that money and the employer contribution.

If you leave teaching before you are vested — typically after five years of service — you can request a refund of your contributions plus interest. If you stay until retirement, your contributions become part of your pension benefit calculation, but the percentage you contributed is not the same as the percentage of your salary you receive in retirement.

Comparing California teachers' pensions to other states

California's pension system is one of the more generous in the country, particularly for teachers hired before 2013. The 2% at 60 formula means teachers can retire at 60 with a substantial percentage of their final salary. Many other states require teachers to work until 62, 65, or even longer, or offer a lower percentage per year of service.

However, California teachers also contribute a higher percentage of salary than teachers in some other states. The combination of contribution rate and benefit formula varies widely. A teacher in Texas might contribute less but also receive less in retirement; a teacher in New York might work longer but receive a similar final benefit. The trade-off depends on the specific state system.

If you are considering moving to another state or comparing your pension to a spouse's or family member's, the contribution rate alone does not tell the story. The benefit formula, the years required to vest, the age at which you can retire, and how your final salary is calculated all matter equally.

What happens to your contributions if you leave before retirement

If you leave a CalPERS-covered teaching position before you reach five years of service, you are not vested. You can request a refund of all your contributions plus interest, and you will have no pension from that employer. The interest rate is set by CalPERS and is typically around 7.25% annually, though it varies by year.

If you leave after five years but before retirement age, your contributions stay in CalPERS and you earn a deferred pension — a smaller monthly check starting at your retirement age. The longer you work, the larger that deferred pension becomes. You do not lose what you contributed; it remains in the system earning investment returns.

If you move to another California school district, your years of service and contributions combine into one CalPERS account. If you move out of state, you can still keep your CalPERS account and collect a deferred pension later, or you can request a refund. Some states allow you to transfer CalPERS service credit to their own pension system, but this is rare and requires specific agreements.

Frequently Asked Questions

Does my contribution percentage stay the same every year?

No. CalPERS adjusts contribution rates annually based on investment performance and system costs. Your rate might stay the same for several years, then increase or decrease. The new rate takes effect each July and is published by CalPERS in November of the prior year.

Can I contribute more to increase my pension?

No. CalPERS does not allow voluntary additional contributions to increase your benefit. Your pension is determined by the formula — years of service, age factor, and final average salary — not by how much you contributed. If you want to save more for retirement, you can use a 403(b) plan or other retirement savings outside CalPERS.

What is the difference between what I contribute and what I get in retirement?

Your contribution percentage (roughly 10%) is what comes out of your paycheck. Your retirement benefit percentage depends on your hire date and years of service. A teacher hired before 2013 with 30 years of service gets 60% of final salary, regardless of whether they contributed 10% or 12% over those years. The contribution funds the system; the formula determines your check.

If I move to a different school district, do I start over?

No. All California school districts use CalPERS, so your years of service and contributions combine into one account. Your vesting clock and service credit continue uninterrupted. If you move out of state, your CalPERS account stays separate and you can collect a deferred pension later.

Why is my contribution rate different from my coworker's?

If you were hired in different years, you may be in different CalPERS risk pools with different contribution rates. Teachers hired before 2013 and after 2013 also have different formulas and contribution structures. Some districts also negotiate different rates in their contracts. Check your pay stub or ask your district's payroll office for your specific rate.