Purchasing Additional Service Credit

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You may be eligible to purchase service credit in CalSTRS or CalPERS that can increase the amount of your monthly retirement benefit. Service credit is one of the factors in the formula used by both systems to determine your eligibility for retirement benefits. Service Credit is defined as the accumulated years for which you have earned creditable compensation and made contributions under the Defined Benefit Program for both systems.

The most common way to purchase additional service credit is by redepositing withdrawn funds. For example, if you previously left your job and withdrew your contributions and interest, you may be able to redeposit the money when you return to membership in either system. Keep in mind that when you repurchase service credit, you will pay the interest that would have accumulated had you not withdrawn the funds. The longer you wait, the more costly your purchase will be.

You may also be able to purchase additional service credit under certain conditions, such as service you performed for which you did not receive service credit. These conditions vary. You can view a list of types of service credit you can purchase under both systems on page 6 of the booklet "Join CalSTRS? Join CalPERS?" (PDF).

Each system has specific conditions and requirements you must meet to be eligible to purchase service credit. It may be to your benefit in the long run to purchase additional service credit; however, it can be expensive to purchase what you need. Start thinking now about what you will need in retirement and developing a plan to purchase what you need.

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