You’ve probably heard the term “service credit” when discussing your CalPERS benefits. But what exactly does it mean—and why is it essential to understand the details yourself, rather than relying on secondhand information when making decisions for your future?
Simply put, service credit is the number of years you’ve worked for a CalPERS employer. It’s one of three factors — along with your final pay and benefit formula — that determine the size of your monthly pension check.
Sometimes, your service credit may not include all the years that you were potentially eligible. Maybe you went out on maternity leave. Maybe you worked for a CalPERS employer for a short time and cashed out your CalPERS contributions. Or maybe you served in the military before joining a CalPERS employer, and are thus eligible to receive credit for that time.
Did you know you can buy that service credit time and raise your pension? Here’s how:
How is service credit calculated?
You earn service credit for each year or partial year worked for a CalPERS-covered employer. Credit accumulates on a fiscal year basis (July 1 through June 30). 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)
How can I find how much service credit I have?
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 assist you.
How do I know if purchasing service credit is right for me?
The more service credit you have when ready to retire, the higher your benefit may be. The table below shows how buying service credit can raise your pension.
Is it better to purchase service credit early in my career?
It’s less expensive. As you advance in your career, your salary typically increases—and so does the cost to purchase service credit. Additionally, interest may accrue from the dates being requested until the date of purchase. This means that the longer you wait to request cost information, the more expensive purchasing service credit could become.
How much does it cost to purchase service credit?
It depends on your personal situation. To find out which purchase types you qualify for and estimate the potential cost, log in to your myCalPERS account, go to Retirement, and submit a cost request under the Service Credit Purchase section.
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.
What are the payment options to purchase service credit?
If you’re eligible to purchase service credit, the cost and election information will be available in the Service Credit Purchase section of your myCalPERS account. You can pay it off at once (lump sum), have installment payments automatically deducted from your monthly paycheck, or even roll over funds from a qualified retirement account such as a 401(k) or 457(b).
Can vacation or leave credits be converted to CalPERS service credits?
Vacation leave cannot be 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).
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.
Where can I learn more?
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. You can also watch our Retirement Tip video for more basic information.