Purchasing Service Credit

Service credit is earned based on the hours worked for a participating SBCERA employer, which are then converted to years. It is one of the factors used to determine the amount of your monthly lifetime retirement benefit. It is also used to determine when you become vested, eligible to retire, and stop paying contributions to SBCERA (30 years, Tier 1 only). Typically, the more service credit you have, the higher your monthly lifetime benefit will be.

Active and deferred members may be eligible to purchase additional service credit for previous employment with SBCERA or another public employer. Service credit purchases must be made prior to retirement, and all balances must be paid off within 120 days after your effective retirement date.

Types of Service Credit Purchases:

  • Redeposit of Withdrawn SBCERA Contributions: If you previously worked for a participating SBCERA employer and withdrew your contributions upon termination of employment, you may restore these years of service credit by redepositing your contributions plus interest.
  • Past Ineligible Service: You can purchase all or part of the time you worked with a participating SBCERA employer that was considered ineligible for SBCERA membership. This typically includes part-time, CETA, seasonal, per diem, student worker or temporary service.
  • Authorized Leave: If you go on an authorized medical leave, you may be eligible to purchase up to 12 consecutive months of service credit for the time you did not earn while on medical leave. You may also purchase military leave taken while you were an active member of SBCERA.
  • Prior Public Agency Service (PPAS): You may purchase all or part of your prior service with another public agency as long as you will not receive a pension or retirement benefit from that agency for the time. This includes service with the State of California, Federal government, the military and some other public agencies in California. Please note, PPAS time does not count toward vesting and retirement eligibility requirements.

The Cost

The cost and payment options vary on an individual basis. All purchases include applicable contributions plus interest. Since they include interest, the sooner you complete the purchase the less the purchase may cost you. The money you spend on service credit purchases is credited to your SBCERA retirement account as refundable contributions and will be reflected in your total account balance.

Payment Options

  • Direct Transfer from Qualifying Deferred Compensation Plan: You may be eligible to rollover funds from an employer-sponsored defined contribution retirement savings account, such as a 457(b), 401(a) or 401(k) plan, to pay for all or a portion of your purchase.
  • Payment Plan (Payroll Deductions): Payments through payroll deductions. The number of payroll deductions is dependent on the type of service credit purchase.
  • After-Tax Lump Sum Payment: You may pay all or a portion of your service credit purchase using after-tax dollars, such as a check or money order. This option is not available for Authorized Leave service credit purchases.
  • Partial Lump Sum and Payment Plan: A combination of the payment options listed above. For example, you may choose to do a direct transfer from your 457(b) account to cover a portion of the cost and make payments using payroll deductions for the remaining balance.

Steps to Purchase Service Credit

  • To begin, log into your SBCERA account online and submit a Service Purchase Request. All requests are handled on a first-come, first-served basis. Please allow up to 90 days to complete the entire purchase process.
  • SBCERA will send you additional information including the next steps. For most purchases, you need to initiate this process to purchase the service credit in order to receive a cost estimate. However, you are not obligated to purchase the service credit unless you sign and return an official service credit purchase contract.
  • Once you receive a contract and/or cost estimate from SBCERA, create your own benefit estimates online to see what, if any, impact it may have on your benefit. When doing so, be sure to override your years of service credit to include the service credit you are considering purchasing.
  • Decide if you want to purchase the service credit. If you wish to proceed with the purchase, sign and return the contract to SBCERA. By signing the contract, you are agreeing to the terms set forth in it. If you decide not to complete the purchase, no additional steps are required and you may keep the contract for your records.
  • If at any time during this process you have questions, please contact SBCERA or email us at ServiceCredit@SBCERA.org.