Service Credit and Service Purchase
Chapter 357, Laws of 2011 (Senate Bill 1609) limits purchases of credited service for public service, leave without pay, leave of absence and active military service to 60 months and requires a member to have 10, rather than five, years of credited service in the state system to which the member belongs to elect to receive those credits. The bill also requires that the member not yet be eligible for a military retirement benefit. The legislation applies to the state retirement system, elected officials retirement system, the public safety personnel system and the correctional officers plan.
Chapter 158, Laws of 2011 (House Bill 461) repeals the authorization for members of the New Hampshire Retirement System to purchase credit for out-of-state service. The repeal affects all members—general employees, teachers, police and firefighters.
Chapter 408, Laws of 2011 (Senate Bill 1111) provides that purchases of service credit other than military service credit must be calculated at full actuarial cost after July 1, 2012. The full actuarial cost will be based on the plan’s assumed rate of investment return minus 1%.
SB 2153 broadens eligibility for purchases of service credit in the State Retirement System. In addition to existing law providing for the purchases of up to four years' credit for military service, this law adds eligibility to purchase service credit for employment as a permanent employee of a public employer within or outside the state, permanent employment by the federal government, service credit not previously granted for employer-approved leaves of absence, and months away from work while participating as a seasonal employee.
Senate File 2424, §52 (enacted), allows members of the Iowa Public Employee Retirement system to buy up to five years of service credit that is not tied to specific employment (air time) and allows members of the Municipal Fire and Police system to purchase service credit for military service at the actuarial cost of the service.
HB 1 of the 2008 Special Session prohibits purchase of air time in the Teachers Retirement System except for employees with more than 26 years service to purchase up to 10 months to make up full retirement eligibility. For state employees, the act prohibits the use of purchased service in determining eligibility for benefits.
Public Law 542 of 2008 (SB 837) allows law enforcement officers and firefighters to carry service credit and compensation from a prior retirement plan to a new retirement plan within the Public Employees Retirement System as long as they pay the additional cost of doing so; includes members of emergency medical services line personnel.
Chapter 300, Laws 0f 2008 (HB 2887), authorizes the purchase of an increased benefit multiplier for past judicial service for judges in the public employees' retirement system.
Act 1570 of 2007 (SB 112) broadens provisions for the purchase of out-of-state service for members of the Public Employees Retirement System. The existing provision allowed a members of five years' credited service to purchase up to five years' credit for out of state service. The new provision allows the same purchase if the purchaser is over 65 years of age, has two years of credited service with PERS, and has worked at least seven years out of state.
Chapter 407, Laws of 2007 (HB 1016), provides that no credit for prior service will be available to members who join the Mississippi PERS after July 1, 2007, until they have contributed to the system for at least eight years.
Chapter 41, Laws of 2007, broadens the ability of vested members of the Wyoming Retirement System to purchase service credit. The restriction to purchases to reflect certain kinds of prior, non-covered service were repealed. Under this act, any vested member may purchase five years service credit at its actuarial cost.
Chapter 259, Session Laws of 2006 (SB 235) requires that purchases of service credit be at full actuarial cost.
HB 11 provides for the purchase of service credit in the Utah State Retirement System for employment in a private school based in the U.S., including employment in a U.S. territory, if the purchaser was eligible for an employer-paid retirement benefit for the employment. Requires that the payments be made to the retirement system of which the purchaser is currently a member.
Chapter 635, Laws of 2006 (HB 406) permits any member of the Virginia Retirement System to purchase prior service credit for creditable service at a private institution of higher education if the private institution is merged with a public institution of higher education and graduates of the private institution are then issued new degrees from the public institution.
Chapter 214, Laws of 2006 (HB 2690), permits members of the Teachers', School Employees', and Public Employees' Plans 1, 2 and 3, the Public Safety Employees' Retirement System Plan 2, the Law Enforcement Officers' and Fire Fighters' Plan 1, and the Washington State Patrol Retirement System to purchase up to five years of service credit at time of normal or early retirement. The service credit purchased is not regular membership service and may not be used for purposes such as qualifying for improved early retirement benefits, such as the 3 percent per year reduction available to members of the PERS, TRS, and SERS Plans 2 and 3 with 30 years of service. The cost of the additional service credit is the actuarial equivalent value of the resulting increase in the member's benefit. The member may pay all or part of the cost of the additional service with an eligible transfer from a qualified retirement plan. The DRS must adopt rules to ensure that all purchases and transfers comply with the requirements of the federal Internal Revenue Code and regulations. Chapter 257, Laws of 2006 (HB 2680) provides that members of the Teachers Retirement System's Tiers 2 and 3 may make a one-time purchase of up to seven years of service credit for public education experience outside Washington's retirement systems. The education experience must have been covered by a government retirement plan, and the member must have earned at least five years of service credit in TRS 2/3. In addition, the member must not be receiving, or be eligible to receive, a retirement benefit from the other plan. The service credit purchased is considered membership service in TRS 2/3, and it thus may be used to qualify the member for retirement or early retirement. The member must pay a cost for the service credit equal to the actuarial value of the increase in value of the member's benefits. A member that purchases out-of-state service credit may not use credit in other state's retirement systems for the purposes of qualifying for retirement in Washington. A member may pay for all or part of the cost of a service credit purchase with an eligible rollover from an eligible qualified retirement plan.
Enrolled Act No. 47 (SF 91) allows any vested member of the Wyoming Retirement System a one-time purchase of up to five years at actuarial cost, for any prior FICA-covered employment or in the cases of law enforcement personnel or firefighters, under rules that the WRS board may establish.
HB 2029 revised the Arizona State Retirement System method of calculating the cost of the purchase of service credit from normal cost to actuarial present value; prohibits purchase of credited service for time employed in a prison while the member was incarcerated; increases the credited service an active member may receive for active military duty from 48 to 60 months; allows a member to purchase service credit for accrued vacation and sick leave at termination; permits purchase of credited service using 401(a) or 403(a) plans through a trustee-to-trustee rollover.
Act 1021 allows vested members of the Public Employee Retirement System to purchase up to five years out-of-state governmental service provided that the service to be purchased does not entitle the person to a retirement benefit from an out-of-state plan. Purchase cost will take actuarial considerations into account. Act 1027 allows vested members to purchase one year of service credit for every five years of compensated service in the Ark. National Guard or the Armed Forces Reserve. Act 2091 requires the boards of trustees of the Ark. Teachers and Public Employees plans to establish rules to recognize service credit members have earned in the retirement systems of federal government agencies.
SB 178 allows sick leave accrued as of the date of retirement, beyond the 90 days paid at retirement, to be used to purchase additional pension creditable service in the Stat Employees Pension Plan at the rate of 21 days per month for a maximum of 12 months.
Act 75 (SB 311) changed provisions for purchase of service credit. Previous law allowed any member of the Louisiana State Employee Retirement System who had one year of service credit to purchase up to five years of service credit at its actuarial cost. New law retains old law for persons who purchase such credit before June 30, 2005, and who pay for it by June 30, 2006. For all others, the new law requires five years of service credit (old law, one) before the purchase, and specifies that the purchase may count only toward calculation of benefits and not toward eligibility for benefits.
Chapter 90, Laws of 2005 (SB 2057) allows members of the Massachusetts Teachers Retirement System or the State-Boston retirement system who are or were employed as a teacher in a vocational-technical school or in a public school's vocational-technical program approved by the department of education, to purchase service credit for any period or periods of prior work experience in the occupational field in which the member became a vocational-technical teacher and which was required as a condition of the member's employment and licensure under regulations of the department of education. No credit shall be allowed and no payment shall be accepted under this paragraph until the member has completed 10 or more years of membership service. The creditable service allowable under this paragraph for any member shall not exceed 3 years.
Laws 2005, First Special Session, Chapter 8, Article 2, Sections 1, 5, 6, 7, and 8 provide for service credit purchases for strike periods. This provision applies to members of any plan included under the Combined Service Annuity provision. Individuals who were on a public employee strike without pay may purchase service credit in the applicable plan for the strike period if payment is received within five years of the end of the strike. The purchase may be made within the first year by paying the employee and employer contributions that would have been made if there were no strike, plus interest. The employer may pay the employer share on behalf of the employee. During years two to five, a purchase can be made by paying full actuarial value. The employer is not permitted to pay any portion of a full actuarial value purchase. Service credit purchases are prohibited later than five years from the end of the strike.
HB 443 concerns the Public School Retirement System and the Public Education Employee Retirement System (PSRS/PEERS). It modifies the rule regarding allowing the purchase of qualified non-federal public employment to include such service in any state, and to include service that is covered by a retirement plan. Currently, only non-federal Missouri employment that is not covered by a retirement plan may be purchased. Effective August 28, 2005.
- Members must be vested (have five years of credit with PSRS/PEERS) before they can apply, and may not purchase more credit than they earn with PSRS/PEERS prior to retirement.
- In addition, members cannot purchase Social Security-covered service if that service is also being used to receive a benefit from another public retirement system (other than Social Security or military service). PEERS was formerly known as the Non-Teacher School Employee Retirement System (NTRS).
HB 104 provides that any retired member may be employed in a part-time position eligible to participate in the Teachers Retirement System (TRS) including part-time positions with the university system, and earn without loss of their retirement benefits, an amount not to exceed the greater of: (1) one-third of the sum of the member's average final compensation (AFC), plus annual increases equal to the increase in the consumer price index (CPI); or (2) one-third of the median AFC for members retired during the preceding fiscal year as determined by the TRS board.
These earnings are determined on a fiscal year basis, July 1 through June 30. A “retired member” is defined as a TRS member who has terminated all positions eligible to participate in the TRS, and who has received at least one monthly retirement benefit. Should a TRS retiree sign a full-time contract, retirement benefits will cease on the effective date of the signed, full-time contract. In addition, the member will be reinstated to active membership status. If a TRS retiree is employed part-time and exceeds the maximum permissible earnings, the monthly retirement benefit will be reduced dollar-for-dollar for each dollar above the maximum allowable. The TRS retiree's monthly benefit will be reduced beginning as soon as practical after the employer has reported the excess earnings. The TRS retiree's retirement benefit will be cancelled if their accumulated earnings over the maximum allowed exceed the gross monthly benefit amount. The TRS retiree will be reinstated to active membership status and contributions will be due on all earnings that exceed the gross monthly benefit amount.
HB 1017 clarifies that a member's noncontributory service counts toward vesting and disability benefit eligibility.
HB 3169 repeals Section 823.405 of the Government Code, which allows members of the Teacher Retirement System (TRS) with seven years of actual membership service to purchase up to three years of “air time” service. The service is not required to be related to any actual employment history with a public employer. Unless the agreement is terminated before all payments are made, members of TRS would be eligible to purchase service credit before January 1, 2006. SB 1176 applied a similar provision to the Employee Retirement Plan, reducing the maximum possible purchase of air time to 36 months after 2006, down from 60 months. The bill also provided substantial restrictions on the ability of Optional Retirement Plan members to purchase state service credit.
SB 1691 requires members, hired on or after January 1, 2007, making out-of-state service purchases to pay the full actuarial cost of such purchases.
Chapters 21 and 65, Laws of 2005 (HB 1269 and 1327), allow members of most state retirement systems who qualify based on membership service to purchase as much as five years additional service credit, effective July 2006. Members (or survivors) may purchase the additional service credit regardless of retirement type or membership status (active or inactive) as long as eligibility requirements are met. PERS Plan 2 and Plan 3 SERS Plan 2 and Plan 3 TRS Plan 2 and Plan 3 LEOFF Plan 2
PERS, SERS and TRS members may purchase additional service credit only if they are applying for early or alternate early retirement. LEOFF members may purchase additional service credit if they are applying for regular, early or alternate early retirement.
To purchase additional service credit, the member must pay, in a lump sum, the actuarial equivalent value of the increased monthly retirement benefit provided by the additional service credit. Payment may be made in with an eligible rollover, a direct rollover or a trustee-to-trustee transfer from an eligible retirement plan. A purchaser may also use after-tax dollars, such as those from a personal savings account, subject to IRS limitations.
Chapter 363, Laws of 2005 (SB 5522), affects all plans in the Public Employee Retirement System by allowing members who are injured while acting in the course of employment to receive up to two years of lost service credit. A member seeking lost service credit must apply for reemployment within ninety days of when the member is able to return to work and benefits under Title 51 (Industrial Insurance) have ceased. The member must also make the required employee contributions within five years of resumption of service or prior to retirement, whichever comes sooner. If the member does not restore contributions within that time frame, the member must pay the actuarial value of the resulting increase in the benefit.
H.B. 2029 provided that the formula used to calculate the cost to purchase the service credit is changed to a single standard based on the actuarial present value of the additional benefit. Payment for credited service may be via a rollover contribution of the member's accrued vacation, sick leave or overtime pay as long as certain conditions are met.
Act No. 538 (House Bill 480) allows a member to purchase up to three additional years of creditable service by paying the full actuarial cost. Application and payment must be made in conjunction with and simultaneously with the member's application for retirement. Creditable service shall not be used to obtain 10 years of service for vesting purposes or to qualify for a benefit at age 60.
Chapter 232, Laws of 2004, (SB 1446) amended the requirements for Military Service to permit accrual of military service in the case of survivor benefits. Former law required a member to leave active PERSI service and assume active military duty within 90 days, and return to active PERSI service from military duty within 90 days. There was no provision for crediting military service in case of a member on active military duty who might be killed. This amendment provided for military service from date of active duty to date of death.
H.F. 2262 allows members of the Iowa Public Employees Retirement System on unpaid leave to purchase IPERS service credit. A member on an unpaid leave of absence, other than under the Family Medical Leave Act (FMLA) and military leave qualifying under the Uniformed Services Employment and Reemployment Rights Act (USERRA), cannot earn IPERS service credit. Service credit may be purchased for period of the unpaid leave.
A member whose wages are reduced due to a reduction in hours or lay-off may replace contributions to IPERS that would have been paid on the higher wages. This change only applies to members who receive a layoff notice and stay in IPERS covered employment by exercising bumping rights. It does not apply to laid off members who completely leave IPERS covered employment, or who voluntarily take a lower paying position prior to receiving a layoff notice, without the exercise of bumping rights. This is limited to reductions in pay for the eligible group beginning January 1, 2002 through June 30, 2005.
Act 349 (HB 980) allows purchase of up to five years of service credit for members with one year of service, requires that the purchase cost offset the increased actuarial cost to the system based upon the purchaser's current salary, repeals various provisions for the purchase of specified kinds of previous service, and permits purchases in one-month increments until 12/31/04.
SF 676, the 2004 Omnibus Retirement Bill extended the sunset date on the service credit purchase provisions for prior military service for various retirement plans to 2006, removed a prohibition against purchase if the individual is entitled to a current or deferred military pension, and modified a prior prohibition on purchases that were credited by another defined benefit plan to prohibit the multiple purchase of the same military service credit period in more than one Minnesota defined benefit pension plan.
Chapter 216 (SB 338) makes changes to eligibility requirements for Out-of-State Service and Modifications purchases.
Out of State: Members who had prior service with a public employer in another state or with the federal government may apply to purchase that time as creditable service with NHRS at any point before they retire. (Previous law restricted the opportunity to make purchases to only those who had a break in service between that job and joining NHRS of no more than 18 months and to those who applied within 5 years of joining NHRS.) Modifications: Members who worked for their employer (a municipality, school district or other political subdivision) before their employer joined NHRS can now apply to buy that service at any point before they retire, as long as they joined NHRS within a year of the date their employer joined.
- These purchases will not count toward eligibility for the Medical Insurance Subsidy.
- The cost of the purchases is calculated on the employee's share plus the employer's share of contributions, as a percentage of the member's current base pay.
SB 426 allows members of the Public Employee Retirement Association to purchase up to 12 months of "air time" even if they have already purchased the limit of 12 months of service credit for time not earned (for example, through military service." Such time can be used to meet requirements to achieve maximum retirement benefits.
SB 1345 broadened the definition of military service for which the Oklahoma Public Employees Retirement System may grant military service credit. The bill adds language that allows military service credit if the member served during a period of war or combat military operation other than the conflicts listed in the statute. The war or combat military operation must have lasted for a period of ninety (90) days or more. The member must have served in the area of responsibility of the war or combat military operation and only the service time while in that area of responsibility may be used as credited service for retirement. A member who served on active duty for training only is excluded from claiming a military service credit unless the member was discharged from that duty for a service-connected disability. The burden of proof is on the member to provide adequate documentation of such service including exact dates served in the specified are of responsibility, and the proof must be provided in the time and manner required by the System.
HB 1036 provides that a member's cost to purchase credited service will be based on compensation and the actuarially-determined rate for the member's age in order to cover the full cost of the increased benefit. The previous purchase provisions did not cover the cost of the additional benefits.
HB 263 provides an early retirement incentive by offering the possibility for members of the State Retirement System to purchase up to five years service credit on condition that the purchaser retire immediately after the purchase. The amount of time purchased must be sufficient to allow the purchaser to retire immediately with no actuarial reduction in benefits. The purchaser's employer may share the cost of the purchase, but the purchaser must pay at least 5% of the cost, which is the actuarial cost of the service. The purchaser must previously have at least five years of service credit before the purchase.
HB 2535 (Chapter 172, Laws of 2004) provides that a member who applies for early retirement in PERS or SERS Plan 2 or Plan 3 may, at the time of retirement purchase up to five years of additional service credit. The cost of the additional service credit is the actuarial equivalent value of the resulting increase in the member's benefit. A member may pay all or part of the cost of the additional service credit with an eligible transfer from a qualified retirement plan. Additional purchased service credit could not be used to qualify a member for the three percent per year early retirement reduction available to members of PERS and SERS Plan 2 or Plan 3 with 30 years of service.
HB 254 allows PERS members who were temporary employees of the legislature before July 1, 1979, to claim that service. Prior to July 1, 1979, temporary legislative employees were not allowed in PERS. The new law allows PERS members to claim this service. The service must be claimed no later than July 1, 2003, or by the date of retirement if sooner. A member is eligible to receive up to 10 years of credited service for service as a temporary employee of the legislature of the state or territory during legislative sessions before July 1, 1979. Members claiming this legislative service must pay the full actuarial cost of the associated pension and health benefits.
SB 2094, Chapter 546, allows Public Employee Retirement System members to purchase up to three years' credit for service performed as a volunteer in AmeriCorps.
SB 98 sets maximum purchase of service credit in Public Employees' Retirement Association (PERA--state employees, and many teachers and local government employees in Colorado) for non-covered employment at 10 years; allows employees of new affiliates to purchase the total number of years they worked for the newly-affiliated employer, under certain conditions; allows purchases of service credit for employment by a foreign employer, all effective November 1, 2003.
SB 277 allows any member of PERA who is furloughed from July 2002 through June 2004 to have his highest average salary calculated based on full salary. Members must pay the member contribution on the unpaid salary, and if the member does so, the employer must pay the employer contribution, but payments are not required until three months prior to retirement. HB 1327 continued through June 2005 provisions, scheduled to expire, to allow school districts that declare a critical shortage of nonlicensed personnel to hire PERA retirees to work full time in nonlicensed positions with no reduction in PERA retirement benefits. The program is similar to one that allows retired teachers to return to work, upon declaration of a critical shortage, with no diminution of benefits.
SB 143 protects the retirement benefits of those State employees who take military leave in order to serve in Operation Noble Eagle, Operation Enduring Freedom and Operational Iraqi Freedom. This will assure that the employee will not realize a reduction in pension benefits because of a reduction in their salary during a period of time that might fall in their highest three years of earnings.
'Chapter No. 2003-399, Laws of 2003, in effect for one year only, allows members of the Florida Retirement System to buy credit under the system for up to 10 years of out-of-state public service and allows members to buy up to an additional 5 years of in-state service in public employment or in accredited nonpublic schools and colleges. (In addition to temporarily raising the limit on out-of-state service credit purchases from 5 to 10 years, the act temporarily removes the aggregate 5-year limit that otherwise applies to purchases of in-state and out-of-state service credit, combined.)
HB 461 provides that employees who retired and returned to work with a participating agency prior to August 1, 1998, may be eligible to purchase the period of reemployment, if the following conditions are met: Retirement from one of the retirement systems administered by the Kentucky Retirement System and re-employment before August 1, 1998 in a regular full-time position, earning less than the maximum permissible earnings under the Federal Social Security Act; participation in a second retirement account effective August 1, 1998; at least 48 months of service if age 65 or older, or at least 60 months of service if under age 65, in a second account in the systems administered by Kentucky Retirement Systems.
Chapter 486, PL 2003, permits members of the judicial, state employee, and teachers' retirement plans who were required to take days off without pay during FY 2002, to elect to pay the member contributions and interest in order to include what would have been their earnings in those days as earned compensation. A decision to do so must be made at the time of retirement, and the cost will be deducted from the retiree's first check. Already retired persons may also make the election.
SB 245 allows members of a State retirement or pension system to receive military service credit for service with the Maryland National Guard when they are called to active duty on the same basis that they would receive such credit for inactive duty under current law.
Chapter 1, Laws of 2003, First Special Session, allows for the continuation of benefits for employees of the Legislative Coordinating Commission (which supervises several legislative staff agencies) in case they are required to take leave without pay before June 30, 2005. For the first 80 hours of such leave in each fiscal year, benefits will continue to accrue for vacation, sick leave, health care, seniority, and service and salary credit in the pension plan. Employers may (but are not required to) make employer contributions to a defined contribution plan. Uncertain whether employee contributions are allowed.
Other state appointing authorities may allow employees to take up to 1040 hours leave without pay before June 30, 2005. Benefits other than pension benefits will accrue as above. Employer and employee contributions must be made for pension benefits to accrue. Employers may pay employee contributions on behalf on the employee through the period.
Chapter 12, Laws of 2003, First Special Session, authorizes the continuation of accrual of pension benefits in the cases of local government employees' voluntary reduction in hours and voluntary leaves [intended to assist local government to reduce budgets]. In the case of voluntary leaves, the employee may make contributions during a leave in order to accrue credit, but if that is done, the employer must make applicable contributions.
The legislature appears to have intended to make comparable provision for extended leave for teachers, but according to the Minnesota Legislative Commission on Pensions and Retirement, the legislation may be misdrafted. (Summary of the 2003 First Special Session Pension Provisions, June 10, 2003.)
SB 23 allows veterans the right to purchase credit in the retirement system. Eligible members may apply to purchase up to 3 years of prior military service. Cost = the member's annual compensation at the time of purchase, multiplied by the sum of the member and employer contribution rates in effect at the time of purchase, multiplied by the years of service to be purchased. The current rates for each group:
- Employee: 5% + 5.9% = 10.9%
- Teacher: 5% + 4.06% = 9.06%
- Police Officer: 9.3% + 12.11% = 21.41%
- Firefighter: 9.3% + 20.68% = 29.98%
HB 397 allows transfer of service in the Legislative Retirement System and the Consolidated Judicial Retirement System to the Teachers and State Employees' Retirement System (TSERS) , effective January 1, 2004, and after completion of five years membership service in TSERS.
HB 331 Clarifies current law to state that for members of the state employees, teachers, or local government employee retirement plans to purchase out-of-state service, the required membership service must be performed after the out-of-state employment in order to qualify for a purchase. If a member has membership service prior to the out-of-state service, the member must complete a total of five years of membership service and must return to service for a least one year in order to be eligible to purchase the out-of-state service. Changes allowable purchases from one year of out-of-state service for each two years of service in this System to one year of out-of-state service for each year of service in this System (with a maximum allowable of 10 years of out-of-state service).
SB 2057 allows a participating employer [of a member of the Teachers' Fund for Retirement] to purchase up to three years of service credit on behalf of a member. The member must not be given the option of a service purchase and an equivalent amount in cash. To be eligible the member's age plus service credit must be equal to or greater than 77; or the member must be at least age 55 with three years of service credit.
Act 77 makes numerous revisions to the current state retirement system. These revisions include, but are not limited to:
- A revision of the term "earned service" so as to include in that definition service rendered while participating in the State Optional Retirement Program (ORP); the Optional Retirement Program for Teachers and School Administrators (ORPTSA); or the Optional Retirement Program for Publicly-Supported Four-Year and Postgraduate Institutions of Higher Education (Higher Ed ORP) that has been purchased pursuant to specified procedure; or service earned as a participant in the system, the South Carolina Police Officers Retirement System (PORS), the General Assembly Retirement System (GARS), or the Judges' and Solicitors' Retirement System (JSRS) that is transferred to or purchased in the system;
- A provision that a retirement system member's highest fiscal year salary shall include the salary while participating in the ORP, the ORPTSA, or the Higher Ed ORP if the member has purchased service rendered under any of these programs pursuant to specific provisions of the bill;
- A provision that an active member on an approved leave of absence from a participating employer who returns to covered employment within four years may purchase service credit for the approved leave, under specified conditions; currently, there is no time specified for return to employment;
- Provisions regarding an active member's establishment of service credit for periods of service in the ORP, ORPTSA, or the Higher Ed ORP by making payments to the system which are determined by the State Budget and Control Board, but which must be at least sixteen percent of the member's current salary or career highest fiscal year salary, whichever is greater, for each year of credit purchased;
- A provision that earned service previously withdrawn and reestablished, purchased service credit earned as a participant in the ORP, the ORPTSA, or the Higher Ed ORP, or service earned as a participant in the system, the PORS, the GARS, or the JSRS that is transferred to or purchased in the system, is "earned service" and is eligible to be counted toward the required five or more years of service necessary for benefit eligibility;
- Elimination of current exceptions to the provision that election to participate in the State ORP is irrevocable, and addition of language providing for a State ORP participant to join the SCRS and addition of a provision that any ORP participant who was a participant in the Higher Ed ORP may irrevocably elect to participate in the SCRS during the open enrollment period from January 1, 2004, to March 1, 2004.
HB 1717 changes the requirements under which a member may receive retirement credit for service in the armed forces to conform to requirements under federal law. Under Virginia law, a member may receive retirement credit at no cost for service in the armed forces if the member (i) was on leave of absence from a covered position, (ii) was not dishonorably discharged, (iii) has not withdrawn his accumulated contributions, and (iv) has reentered service in a covered position within one year of discharge from the armed forces. Under former Virginia law, retirement credit was not granted for service in the armed forces for re-enlistments that follow the cessation of hostilities. Federal law, however, provides that any service in the armed forces, when performed on a leave of absence, is eligible for retirement credit upon a person's reemployment with his employer, regardless of whether the service is in wartime.
Chapter 157, Laws of 2003, allows substitute school employees to apply to the Washington Department of Retirement Systems for service credit at the end of a school year in which the work was performed. The substitute must pay the required contribution; upon notification of the payment, the employer will pay its required contribution.
HB 2984 allows teachers to purchase up to five years of retirement service credit for time lost due to a workers' compensation injury.
HB 3109 allows members of the teachers' defined contribution plan to receive service credit for time spent working for the state legislature.
SB 455 allows members of the Public Employee Retirement System to purchase up to five years' service credit for work performed in another state's employment, provided the purchaser is not vested or receiving an annuity from the other state's retirement plan.
Inactive members of the AZ State Retirement System (ASRS) who have not retired can transfer credited service from one state plan to the person’s current or former plan if the inactive member is not eligible for membership in ASRS and has not withdrawn contributions. Ariz. Sess. Laws, Chap. 23.
The Legislature created a military service credit program for veterans who retired before 1989, providing additional service credit in amounts depending on the length of military service. H.B. 860.
Cost of purchasing service credit was altered to 100 percent of the actuarial cost of the service, which will increase the cost of most types of purchase, as of July 1, 2001. This legislation replaces various purchase provisions with a common schedule. [The change was made to balance the cost of a change in the definition of final average compensation. Kentucky Retirement System notes that most purchases would have increased in cost in any case because of the findings of a recent actuarial study and the shift from high-5 to high calculation of FAS for benefit calculations]. HB 278.
Legislation reduces by one-half the amount that a State employee member of the TPS must pay to the SPRS when purchasing service credit for previous employment with the State. S.B. 93
Legislation expanded the Teachers Retirement Association’s out of state service credit purchase provision to include teaching service in another county or for a federally-recognized American Indian tribe. Summary Laws of 2001, 1st Special Session, Chapter 10, Article 6 § 5.
This law allows a member of the Public Employees' Retirement System (PERS) or a member of the Teachers' Pension and Annuity Fund (TPAF) to transfer all service credit between the two retirement systems even though there was a period, not to exceed two years, of dual membership.
Prior to this law, a transfer of service credit between PERS and TPAF was allowed only if there was no period of overlapping membership. If not vested in both accounts, this law allows a two year window in which to make the transfer. Chapter 6, P. L. of 2001
Contributors to the Highway Patrolmen’s retirement system to purchase additional service credit from rollovers from other qualified plans, purchase additional credit for up to four years of active employment in the armed forces of the United States, purchase credit for employer-approved leaves of absence, and purchase additional years of service credit to enable the contributor to qualify for normal retirement at actuarial cost. SB 2084.
Any member of the Teachers’ Retirement System with seven years of actual service may purchase up to three years of additional service credit by paying the actuarial cost. The cap on purchase of out-of-state credit was increased from 10 years to 15 years, subject to any IRS regulations. SB 477.
Members or former members of the Texas Teachers’ Retirement System, the Employee Retirement System, Judicial Retirement Systems, and certain other state and local retirement systems are allowed to reestablish credit for service the employee earned in another of the specified retirement systems that the employee had previously cancelled, even though the employee is not presently a member of the system credit for service in which the member wishes to reestablish. HB 1428, SB 372.
Legislation reduced the cost of purchasing certain types of prior service credit and eliminated the five-year vesting requirement and the 25-year service requirement to purchase certain types of service. These bills reduce the cost to purchase certain types of service from 15 percent to 5 percent of current salary (or average final compensation, if higher), including military service and creditable service of another state, service of a political subdivision or public school system, and civilian service of the United States. This legislation also permits the purchase of service for periods of time when a member was employed in a part-time or wage position with a VRS employer.
These bills cap the amount of part-time or wage service that can be purchased at four years. The types of service specified in this legislation must be purchased or a purchase contract be entered into within three years from the date of hire for new members hired after July 1, 2001. For current eligible employees, the purchase must be completed or a purchase contract be entered into within three years after becoming eligible for the purchase, or by July 1, 2004, whichever is later. If the purchase is not made within these time limits, the cost to purchase the service will be at the actuarial equivalent cost. HB 2293 (SB1077).
S.B. 267 gave firefighters and law enforcement officers (mostly local employees in both cases) one additional year of service credit for each five years of active service as "stress time" on a continuing basis. In return, the employee contribution rate was increased by 1% of salary. Those provisions are mandatory; the law provides for optional purchase of comparable stress time for previous years of service.
S.B. 45 (Act 892 of the 2000 General Assembly) provided for purchase of military service credit for active duty whenever the draft was in effect, with a limit of two years' purchase. The purchaser will pay 5% of last compensation before duty or first compensation after duty plus interest at 4%. The legislation allows Viet Nam veterans to purchase such military service credit.
H.B. 717 allowed active, vested Public Employment Retirement System of Idaho members to purchase up to 48 months of service in the PERSI plan. The full cost must be paid before retirement to be counted toward retirement.
S.F. 2411 allowed members with five or more calendar years of covered wages to purchase time as a Canadian public school teacher. Minnesota. 2000 Minnesota Laws, Chapter 461, Article 4, §§1,4, allow vested members of the Minnesota State Retirement System who failed to acquire service credit while on a military leave of absence or who performed service before becoming an MSRS member to purchase service credit for the full actuarial value, for specified service, if the member is not eligible for a military pension and has no service credit for the same service in another plan.
S.B. 2738 allowed up to four years of service credit for active military service to members of the Highway Safety Patrol Retirement System but explicitly not to members of other retirement systems.
Assembly Bill 11418/Senate Bill 8142 provides one month of additional service credit for each year of credited service up to a total of two years of additional service credit for Tier 1 and Tier 2 members of the Teachers' Retirement System as of June 1, 2000; allows benefits to exceed the maximum of 75% of final salary now in law; eligibility includes active service from April 1 2000 through the end of the 1999-2000 school year.
S.B. 144 permits members of the School Employees Retirement System who resigned from covered employment due to pregnancy or the adoption of a child and later returned to covered employment to purchase up to two years service credit for the period of the resignation; allows members of the State Teachers Retirement System who resigned from covered employment due to the adoption of a child and later returned to covered employment to purchase up to two years service credit for the period of the resignation.
S.B. 1002 replaced the current grant of military service credits for members of the public employee, judicial and law enforcement systems with an option to purchase the same service. The bill also provided that both active and retired members of the system may receive up to five years' free service credit for military service irrespective of receipt of a federal military pension for that service.
S. 1204 repealed all existing provisions for purchase of service credit for the South Carolina Retirement Systems (SCRS, covering general state and local employees, education employees and educators) and replaced them with general provisions that make purchase of service available to almost all active members of the system. The new rules provide for purchase of qualified service at 16% of salary and nonqualified service for 35% of salary. Qualified service includes public employment, military service including the National Guard, approved leaves of absence, primary or secondary private school teaching (including teaching in sectarian schools) and withdrawn service. Non-qualified service includes any employment but is limited to purchase of five years service credit. The legislation allows several methods of payment: 401(k) deferral, installment loan and lump sum. The purchaser must be an active contributing member of the SCRS and must have five years of earned retirement credit to purchase non-qualified service. The service purchase rates will be in effect only for requests received by December 31, 2000.
The legislation also provided for the category of Special Monthly Contributor, which allows 25-year members of the system to purchase up to three additional years of service credit by paying the employee and employer contributions due on salary, with contributions to begin at the time of termination from covered employment.
H. 688 allowed state employees and teachers who have 25 years of service credit in their Vermont retirement system to purchase up to five years additional service credit basically at its cost to the retirement system. The act increases the amount of purchasable credit for military service and certain other federal service from three to five years. It allows credit for leave for professional study for state employees, a provision already available to teachers.