This Glossary can assist you in understanding some of the words and phrases you may encounter when visiting CalPERS On-Line.

You can browse through the entire Glossary or pick a letter below to find a specific word or phrase you need.

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Accrued Liability
The total dollars needed as of the valuation date to fund all benefits earned in the past for current members.

The Automated Communications Exchange System. This is the Internet-based program available to employers to complete electronic membership and payroll transactions.

Active Employee or Active Member
A person currently employed by the State of California, a CalPERS contracting public agency, or a school district.

Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two categories: demographic and economic. Demographic assumptions include such things as mortality, disability and retirement rates. Economic assumptions include investment return, salary growth and inflation.

Actuarial Interest Rate
The interest rate fixed by the Board for purposes of actuarial valuations of the System's assets and liabilities.

Actuarial Methods
Procedures employed by actuaries to achieve certain goals of a pension plan. These may include things such funding method, length of time to fund the past service liability and determining the actuarial value of assets.

Actuarial Valuation
The determination, as of a valuation date, of the normal cost, actuarial accrued liability, actuarial value of assets and related actuarial present values for a pension plan. These valuations are performed annually or when an employer is contemplating a change to their plan provisions. CalPERS valuations are based on the benefits that have been adopted, the actuarial methods and assumptions set by the Board, and the membership and financial data for each plan. The valuations compare the assets to the accrued liability for each plan, and determine the employer contribution rate for the coming year. Additional actuarial valuations are made throughout the year to determine the impact of benefit improvements, mergers and reclassifications, and legislated changes.

Actuarial Value of Assets
The actuarial value of assets used for funding purposes is obtained through an asset smoothing technique where investment gains and losses are partially recognized in the year they are incurred, with the remainder recognized in subsequent years. This method helps to dampen large fluctuations in the employer contribution rate.

Actuaries are intensively educated and their knowledge is used in many different fields in order to predict future events based upon past occurrences. There are health, insurance, and pension actuaries.

A monthly benefit payment issued monthly to a CalPERS retiree, beneficiary, or survivor.

Amortization Bases
Separate payment schedules for different portions of the unfunded liability. The total unfunded liability (or side fund) can be segregated by "cause", creating "bases" and each such base will be separately amortized and paid for over a specific period of time. This can be likened to a home mortgage that has 24 years of remaining payments and a second on that mortgage that has 10 years left. Each base or each mortgage note has its own terms (payment period, principal, etc.) Generally in an actuarial valuation, the separate bases consist of changes in liability (principal) due to amendments, actuarial assumption changes, actuarial methodology changes, and gains and losses. Payment periods are determined by Board policy and vary based on the cause of the change.

Amortization Period
The number of years required to pay off an amortization base.

A retiree, beneficiary, or survivor of the retiree or beneficiary receiving a benefit from CalPERS.

Annual Required Contributions (ARC)
The employer's periodic required annual contributions to a defined benefit pension plan, calculated in accordance with the plan assumptions.

A payment of a fixed sum of money issued to a benefit recipient.

Association Plan
A health plan offered through the CalPERS Health Program that restricts enrollment to members of a specific association or organization. Membership in the Association usually requires payment of monthly membership dues.

Actuarial Valuation System. This is the computer system used to perform actuarial valuations.

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Benefit Factor
A percentage (determined by your retirement formula and age) that is applied to your final compensation to determine your retirement benefit.

A person eligible to receive a benefit after the death of a member or other benefit recipient.

The CalPERS Board of Administration. The 13-member Board has fiduciary and plenary authority over the administration of programs and investments.


The California Department of Human Resources represents the Administration in collective bargaining negotiations with State employees. It also administers FlexElect, dental, and vision benefit programs for State employees, as well as the State Savings Plus Program offering supplemental retirement savings options.

A health plan participating in the CalPERS Health Program.

CalPERS Customer Contact Center. This is the first point of contact for our members and other interested parties.

The Consolidated Omnibus Budget Reconciliation Act is federal legislation that allows you or a family member to continue your health plan enrollment when coverage is lost. A loss of coverage could include separation from employment, marriage of a dependent, a dependent reaching age 26, or divorce or legal separation.

CalPERS On-Line Member & Employer Transaction System. This is our "corporate" database system where all membership information is stored.

Contracting Agency
A public agency, school district, special district, or county that contracts with CalPERS for retirement or health benefits.

Copayment or Coinsurance
The amount you pay out-of-pocket for a service provided by a health care provider.

Contribution Reporting System. This computer system includes information on members that is provided to CalPERS by their employers, including payroll, retirement contributions, and other employment information.

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Data Protection or Data Security
Measures to safeguard against modification, destruction, or disclosure of data by those not authorized to have access.

Deferred Group
A special group of CalPERS members, including Constitutional Officers, Legislators, Judges, and certain exempt employees separating from employment but not yet retiring. (See Deferred Retirement.)

Deferred Retirement
Refers to a Constitutional Officer, legislative employee, Legislator, or Judge who leaves employment but does not directly retire. The Retirement Law allows these members to continue some benefits. If this situation applies to you, you should contact CalPERS to ensure you follow all the steps needed to protect your benefits.

Defined Benefit Plan
CalPERS administers a defined benefit retirement plan. Benefits are based on a set formula, using years of service, age at retirement, and highest average salary for a 1- or 3-year period. This differs from a defined contribution plan in which benefits are determined not by a formula but solely by the amount of contributions to an account plus interest earnings.

Defined Contribution Plan
A type of savings plan that allows participants to make pre-tax contributions that accumulate tax-free. Contributions, plus any earnings, are not subject to State or federal taxes until withdrawn, in most cases after retirement. The amount paid is determined by the amount of contributions made and the rate of return on the investments chosen.

Those family members who meet the specific eligibility criteria for coverage in the CalPERS Health Program.

An inability to substantially perform the duties of your job due to illness or injury, which is determined to be permanent or of an extended and uncertain duration.

Domestic Partner
California law extends CalPERS benefits to the domestic partners of CalPERS members. Current and former domestic partners registered in California have the same rights, protections, and benefits - as well as the same responsibilities, obligations, and duties - provided to current and former spouses.

Domestic Partnership
In California, domestic partnership are formalized through a registration process with the Secretary of State's Office. A same sex union, other than marriage, validly formed in another jurisdiction which is substantially equivalent to a registered domestic partnership in California, may also be recognized for CalPERS benefits.


Entry Age
The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan or risk pool. In most cases, this is the same as the date of hire. (The assumed retirement age less the entry age is the amount of time required to fund a member's total benefit. Generally, the older a member is at hire, the greater the entry age normal cost. This is mainly because there is less time to earn investment income to fund the future benefits.)

Entry Age Normal Cost Method
An actuarial cost method designed to fund a member's total plan benefit over the course of his or her career. This method is designed to produce stable employer contributions in amounts that increase at the same rate as the employer's payroll (i.e., level % of payroll).

EPO or Exclusive Provider Organization
A type of CalPERS health plan that offers the same covered services as an HMO, however it's usually offered in a specific geographic area and can function slightly different. For example, an EPO could not require enrollees to select a primary care physician.

Employee Retirement Income Security Act (ERISA)
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for pension plans in private industry. For example, if an employer maintains a pension plan, ERISA specifies when you must be allowed to become a participant, how long you have to work before you have a non-forfeitable interest in your pension, how long you can be away from your job before it might affect your benefits, and whether your spouse has a right to part of your pension in the event of your death. Most of the provisions of ERISA are effective for plan years beginning or after January 1, 1975.

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A plan that has an established provider network but allows you the freedom to go to any doctor with the understanding that the plan will generally pay less if you choose a non-network doctor.

Fiduciary Trust or Responsibility
The power entrusted to a person or entity (fiduciary) to manage money or property for another person. Fiduciary responsibility requires that actions taken on behalf of the principal will be beneficial to the principal's interests.

Final Compensation
Your average salary for a specific period of time which is used as part of the formula to determine your retirement benefits. Final compensation, either a 1-year or 3-year period, is determined based on your membership date and employer contract.

Fiscal Year
CalPERS operates on a fiscal year calendar, which is July 1 to June 30 each year.

Fresh Start
When multiple amortization bases are collapsed into one base and amortized over a new funding period. At CalPERS, a fresh start is used to avoid inconsistencies that would otherwise occur.

Funded Status
A measure of how well funded a plan or risk pool is. Or equivalently, how "on track" a plan or risk pool is with respect to assets vs. accrued liabilities. We calculate a funded ratio by dividing the actuarial value of assets by the accrued liabilities. A ratio greater than 100% means the plan or risk pool has more assets than liabilities and a ratio less than 100% means liabilities are greater than assets.


Golden Handshake
An early retirement incentive program that provides you with additional age or years of service credit enabling you to receive a higher retirement benefit than otherwise possible.

Governmental Accounting Standards Board (GASB)
The mission of the Governmental Accounting Standards Board is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports.

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The CalPERS form used to enroll, change, cancel enrollment, or elect not to enroll in a health benefit plan.

Health Insurance Portability & Accountability Act. This federal law protects health insurance coverage for workers and their families when they change or lose their jobs. It also includes provisions providing national standards to protect the privacy of personal health information.

A Health Maintenance Organization is a health plan that provides care from specific doctors and hospitals that contract with the plan. Usually there are no claim forms to be completed and there is often a geographically-restricted service area.


Inactive Member
A member not currently working for a covered employer, but has member contributions on account.

Institutional Investor
An organization whose primary purpose is to invest its assets or those held in trust by it for others. Includes pension funds, investment companies, universities, and banks.

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Judges' Retirement System. The retirement system for judges appointed or elected prior to November 9, 1994.

Judges' Retirement System II. The retirement system for judges appointed or elected after November 9, 1994.


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Legislators' Retirement System. The retirement system for Legislators, Constitutional Officers, and Statutory Officers.

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An employee who qualifies for membership in CalPERS and whose employer has become obligated to pay contributions into the Retirement Fund. Also describes CalPERS retirees, survivors, beneficiaries or anyone receiving a benefit.

Member Provider
Physicians or hospitals that contract with a CalPERS health plan to provide medical services to members of that plan.


Normal Cost
The annual cost of service accrual for the upcoming fiscal year for active employees. The normal cost should be viewed as the long term contribution rate.

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Open Application Period
A period of time determined by the Board when you can enroll in the CalPERS Long-Term Care Program.

Open Enrollment Period
A period of time determined by the Board when you can enroll or change health plans, or add eligible family members who are not currently enrolled in the CalPERS Health Program.


PA or Public Agency
Public agencies are cities, counties, special districts, and other local government entities that contract with CalPERS to provide retirement or health benefits to their active employees and retirees.

This is the Public Employees' Medical and Hospital Care Act, which directs the administration of the CalPERS Health Program. It is part of the California Government Code, starting at Section 22751.

Pension Actuary
A person who is responsible for the calculations necessary to properly fund a pension plan.

This is the Public Employees' Retirement Law. It is part of the California Government Code and governs CalPERS programs and services, starting at Section 20000.

This is the Public Employees' Retirement System, another acronym sometimes used in place of CalPERS (California Public Employees' Retirement System).

Full, complete, absolute.

Preferred Provider Organization. A CalPERS health plan with an established provider network that allows maximum benefit coverage when using its contracted physicians and hospitals. The plan may reduce benefits when you use providers outside of the set provider network.

Preferred Provider
A doctor, laboratory or other medical or care group that provides services to health plan members.

Present Value of Benefits
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned in the future for current members.

Program Participant
A person enrolled in one of CalPERS programs.

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Reciprocal Agreement
An agreement between two public retirement systems on coordination of benefits.

Retired Member
A member currently receiving a benefit from CalPERS. Also known as an annuitant, which can be a retiree, beneficiary, or survivor who is receiving a benefit.

Retirement Information Benefit System. This is a computer system where information on our benefit recipients is stored.

Risk Pooling
Risk pooling is the process of combining assets and liabilities across employers to produce large risk sharing pools.

Rolling Amortization Period
An amortization period that remains the same each year, or does not decline.

R Street Project
Also known as the CalPERS Headquarters Expansion Project. This four-year project included the development of an additional headquarters building for CalPERS main offices in Sacramento as well as some residential and light retail development at the site.

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California State Controller's Office.

Service Credit
Your credited years of employment with a CalPERS employer. This amount of service is credited to your CalPERS account and used as part of the formula to determine your retirement benefits.

State Street Bank. This is the master custodian for CalPERS investment funds and the administrator of our supplemental savings programs.

Those people or entities who have an interest in the performance of CalPERS, i.e., organizations, the Legislature, and taxpayers.

Strategic Planning
Long-term planning (at least five to 10 years out) that includes consideration of the external environment and future trends.

California State Teachers' Retirement System, also known as CalSTRS.

State Treasurer's Office.

A condition existing when the actuarial value of assets exceeds the present value of benefits. When this condition exists on a given valuation date for a given plan, employee contributions for the rate year covered by that valuation may be waived.

Supplement to Original Medicare Plan
For CalPERS members in Social Security and over age 65, Medicare becomes the primary payer of claims and the supplemental CalPERS health plan covers any costs not paid by Medicare.

A dependent eligible to receive a benefit upon a member's death.

Another name often used for CalPERS or the California Public Employees' Retirement System.


Trust Fund
A fund whose assets are managed by a trustee or a board of trustees for the benefit of another party or parties. Applicable State and federal law and the instrument establishing the trust govern the fund.

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Unfunded Liability
A plan or risk pool with an actuarial value of assets below the accrued liability is said to have an unfunded liability and must temporarily increase contributions to get back on schedule. A plan or risk pool with an actuarial value of assets in excess of the accrued liability is said to have excess assets (or is overfunded) and can temporarily reduce future contributions.


See Actuarial Valuation.

Vested or Vesting
The right to specified benefits granted to eligible employees after a fixed period of employment and membership.

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A check or voucher that an employee or retiree receives each month as compensation for their work or retirement benefits.


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Dated: 05-03-2013