You Asked, We Answered: Your Top Questions About Service Credit
Service credit is an important component in determining your future CalPERS retirement benefit. We answer your most-asked questions about this popular topic.
I want to buy service credit. How much does it cost and how do I learn more?
We offer a variety of service credit purchase options to eligible members. Each member has a unique service credit history. To get a better idea of what purchase type you’re eligible for, estimate the potential cost and submit a cost request, log in to your myCalPERS account and request to purchase service credit.
Our Guide to Your CalPERS Service Credit Purchase Options (PUB 12) (PDF) helps break down the different types for state, school, and public agency members. Read our guide to better understand the different types. You can also watch our Quick Tip YouTube video for more basic information.
When you’re ready to purchase service credit, log in to myCalPERS, go to Retirement and select Service Credit Purchase, then select Search for Purchase Options. Once you submit your service credit purchase request, you can view the status through your myCalPERS account. Go to Retirement, select Service Credit Purchase, then view Your Requests, where you can see your status and request date.
I’ve worked for my employer for 5 years; why do I have only 4 years of service credit?
To earn a full year of service credit during a fiscal year, you must work at least:
- 1,720 hours (hourly pay employees)
- 215 days (daily pay employees)
- 10 months full time (monthly pay employees)
You may not have met the criteria for part of your employment to earn a full year of service credit. You can view your Service Credit Breakdown by logging in to your myCalPERS account and selecting View Service Credit by Fiscal Year under the Service Credit panel. Speak to your employer or call us at 888 CalPERS (or 888-225-7377) so we can better assist you. You may also visit our regional offices for in-person assistance.
When will my installment payment deductions for service credit end?
If you elect installment payments (or paycheck deductions), your payments will continue until the amount owed is paid in full.
When you purchased your service credit, you elected to make installment payments through your employer. Your employer will continue to deduct the payments from your paycheck and report them to CalPERS through payroll reporting. Keep in mind, interest will continue to accrue on the balance. If you leave CalPERS-covered employment, you must pay the remaining balance in full at that time.
While installments are one payment option available, members who elected payments on an after-tax basis may pay off their balance early with a lump-sum payment, either by check or rollover.
How do I decide if purchasing service credit is a good investment and is right for me?
The more service credit you have at retirement, the better your retirement benefit may be. The example below provides a comparison of a retirement allowance with and without the purchase of service credit.
What’s the difference between earned service credit and purchased service credit?
Earned service credit is based on the time you accrue by working for your CalPERS-covered employer. Purchased service credit comes at a cost and is only for members who are eligible. Our Guide to Your CalPERS Service Credit Purchase Options (PUB 12) (PDF) helps break down the different types of service credit for state, school, and public agency members and the eligibility criteria.
I want to pay off my service credit purchase balance; will I be saving both interest and principal if I do this?
To be eligible to make a lump-sum payment, it would depend on if you elected to purchase service credit through an after-tax or pre-tax installment payment. If you elected after-tax installment payments, then you can pay the total amount due early and save both interest and the principal. However, pre-tax installment payments can’t be altered or paid off early for active members but is an option at the time of retirement, per Federal Internal Revenue Code Title 26, subsection 414(h)(2)d.
To submit a payment or payoff your service credit, log in to your myCalPERS account and select Request Payoff on the Service Credit page.
I have a financial hardship and need to stop my deductions for a service credit purchase; what do I do?
If you’re an active or inactive member, you may be eligible for a temporary suspension if you selected after-tax installment payments for your service credit purchases and have not suspended your payments within the last three years. Suspensions can last up to 12 months.
However, you should note if you’re granted a temporary suspension:
- Interest will continue to accrue on your unpaid balance during the suspension period.
- Your account balance will recalculate to include the interest at the end of your suspension period.
- Your payments will automatically continue at the end of the suspension period.
Contact us by submitting a secure message through your myCalPERS account, call us at 888 CalPERS (or 888-225-7377), or visit our regional offices for in-person assistance.
Can vacation or leave credits be converted to CalPERS service credits?
No, vacation leave is never converted into service credit. However, your employer’s contract may allow you to convert any unused sick leave hours to service credit when you retire. You must retire within 120 days from your last day of employment for this to apply. See an example in Planning Your Service Retirement (PUB 1) (PDF).
I submitted my service credit purchase, but I’m not sure what type I bought? How can I check and learn if I can buy more?
Once you submit your service credit purchase request, you can view the status through your myCalPERS account. Go to Retirement, select Service Credit Purchase, then view Your Requests, where you can see your status and request date.