CalSTRS staff updated the board’s Benefits and Services Committee on how the concepts behind recently passed creditable compensation and creditable service simplification legislation will impact members and employers.

From a member’s standpoint, creditable compensation means the salary or other pay that they earn for work that qualifies for CalSTRS benefits. From an employer’s perspective, creditable compensation means the earnings that are reported each month to CalSTRS for active members.

The new law streamlines and simplifies creditable compensation and creditable service rules. The goal is to address the root cause of many audit findings, reporting corrections and benefit adjustments and overpayments—the complexity of existing requirements.

Changes are intended to minimize such benefit adjustments and overpayments, while also reducing administrative burden and misinterpretations by making the rules less ambiguous.

The new rules are expected to become effective July 1, 2027.

Once fully implemented, the new structure will help members, employers and CalSTRS staff with improving reporting accuracy; reducing administrative burden for employers and CalSTRS staff; and increasing consistency and equity in the treatment of earned compensation.