About the County’s Defined Benefit Pension Plan: retirement income for life*!
Working as an employee in the public sector (for organizations like the County of Santa Clara, a city, a school district, etc.) means that you don’t participate in certain opportunities that employees of private businesses and companies can offer their employees. Things such as profit sharing, stock options, and the like. However, in return for your service and dedication to the community, the County offers something much more valuable: a lifetime pension after you retire. Because there are a lot of questions for those who are new to government employment (even for many of us that are government employees) about how this works, a significant amount of detail follows. Please contact your Employee Services Agency Human Resources Recruiter/Representative with questions.
Guaranteed benefits
The County of Santa Clara offers its eligible employees what is called a Defined Benefit Pension Plan through the California Public Employee Retirement System, known as CalPERS. A Defined Benefit Pension is one that provides retirees with a regular income after they depart from County service. The important thing to know about Defined Benefit Pensions is that even though you will make regular contributions to your own retirement while you are employed, the amount both you and the County as your employer contribute does not determine your benefit after you retire. Rather, your retiree income from this plan will be calculated using a formula based on certain rules about when you were hired, your specific job classification, your length of service, your age at retirement, and other factors, such as bargained agreements between your union (if you are a member of a represented employee group) and the County. Defined Benefit Pension Plans do not rely on investment returns to determine your benefit, like a 401(k) plan. Instead, calculations using the employment factors and formula can ensure a lifetime retiree income. Your accrued benefits are guaranteed by state law.
Contributions, the formula, and CalPERS
When you come to work at the County of Santa Clara, both you and the County as your employer, will contribute to the Defined Benefit Pension Plan through payroll deductions. The amount you contribute is based on factors mentioned previously, such as your hire date, your job classification, negotiated agreements between bargaining units and the County, and more.
When you retire, you will receive a remaining lifetime income through CalPERS. Helping determine that monthly income is “the formula” – the defined component in this Defined Benefit Pension Plan. The formula includes the following:
- Your specific service credit – which is the length of service, meaning how many years you have been employed by the County.
- Your benefit factor (also known as the age factor) – which is the percentage of pay you are entitled to for each year of service. This is determined by your age at retirement and your specific retirement formula based on your employment classification at the time of hire. A Benefit Factor is expressed like these examples: 2%@62; 3%@50, and so on.
- Your average final compensation – which is the average annual salary over a specific period of time defined by your classification.
As an example, an employee with 15 years of service, who is 62 years old, with a benefit factor of 2% at 62, and an average final compensation of $82,000 would receive a lifetime monthly retirement benefit of: $2,050.
| Years of service | x | Benefit factor | x | Average final compensation | = | CalPERS yearly retirement benefit | CalPERS monthly retirement benefit |
| 15 | 2% | $82,000 | $24,600 | $2,050 |
This is a sample illustration only and not to be used to calculate your retirement benefit. Specifics may vary depending on your class.
Public sector organizations may operate their own Defined Benefit Pension Plan, or contract with third party plan administrators. The County’s Defined Benefit Pension Plan administrator is CalPERS. CalPERS is a department within the Office of the Governor. It is also the largest public pension fund manager in the country. Using a combination of employee contributions, employer contributions, and investments, CalPERS handles retirement payouts and health benefits for more than 1.6 million retired California public employees. Because of how the CalPERS system works, employees may receive benefits at a rate greater than their contribution.
It is important to note that your Defined Benefit Pension Plan picture is specific to you. Multiple factors can influence your retirement formula, so it's important to talk with your Employee Services Agency Human Resources Recruiter/Representative if you have questions about this benefit before accepting employment with us, and it is important to talk with an Employee Services Agency Benefits Department Representative once you begin your employment.
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* Lifetime pension based on vesting requirements.