The value of a CalPERS pension is much more than the balance indicated on your annual statement sent by PERS. Your pension includes both an employee account (shown on your statement) and an account contributed by the government job (it’s never show on your statement).
IRA Account / 401k Account / 457 Account
When you look at your account statement from an IRA account, brokerage account, 457 account from your job, or even a 401k account from an previous private sector job, it displays the account balance which is the amount you own. There is no secret amount or unvested amount to worry about except for a 401k in which you’re still employed at the sponsoring company. The same is not true for a CalPERS account. In some cases, the true value of your account is more than double the amount that you can withdraw if you left public sector employment.
Don’t Rollover Your Pension from CalPERS
The employer account is used to fund the monthly payments needed for the rest of your life (and your spouse or beneficiary if desired). It is not intended for those who are cashing out of their pension when leaving CalPERS covered employment. Basically, you’re never vested in that unlisted portion of the account unless you take out a monthly retirement benefit for the rest of your life.
Remember, you cannot withdraw one dime from CalPERS until you’ve separated from employment from all of your CalPERS covered jobs.
When Withdrawing from Retirement Account is Good
In most cases, it’s a very bad idea to withdraw funds from the pension rather than taking it out because you would be forced to forfeit the employer account. The only time it makes sense is if both you and your spouse (or other beneficiary) have a low life expectancy like from terminal illness. The only other time somebody would need to take money out of PERS is if they don’t have the minimum five years service credit for monthly retirement. CalPERS does not allow ex-employees to stay with less than five years.
For most people, it’s best to keep their money in CalPERS, because the cost of providing the monthly benefit in retirement is so high that the employer must pitch in to fund your monthly retirement benefits. You would never be able to fund an annuity that matches CalPERS if you withdraw from the pension.