Retirement Benefits

New Law Affects Service Credit Payment Options

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It’s never too early to purchase service credit.

Be Retirement Ready

Purchasing service credit may help secure your financial future. The more service credit you have at retirement, the higher your monthly retirement allowance might be, and you may be able to retire sooner.

It may also cost less if you purchase service credit early in your career, and you will have a more accurate retirement estimate for planning your future.

New Payment Options at Retirement

A new law affects CalPERS members who elect to purchase or convert service credit on or after January 1, 2020. You will be required to pay any remaining balance by your retirement date or elect to have your monthly benefit reduced by the actuarial equivalent (AER) of the unpaid balance, in lieu of making installment payments into retirement. The same payment choices will also apply to your survivor or beneficiary if you make a future service credit purchase or conversion and pass away before retirement.

If you purchase service credit prior to January 1, 2020, you may pay the balance at retirement through a lump sum, convert to an AER, or continue installment payments into retirement.

By planning ahead and purchasing service credit early in your career, you will have more opportunities to pay your balance in full before retirement and will ensure that you have maximized your retirement benefit.

Want to learn more about how service credit can affect your final retirement allowance? Read our post, “Be Retirement Ready: Have More Money in Your Nest Egg.” You can also visit the CalPERS website to learn more about the various service credit options available.