To purchase service credit is when you add additional service to your PSERS account by paying contributions and interest for service rendered. You must be an active contributing member of PSERS to purchase service credit. If you are nearing retirement, you should submit your purchase of service application as soon as possible before terminating employment.
Applying to Purchase Non-Qualifying Part-Time Service
Beginning July 1, 2011, active members of PSERS have specific time frames to apply for non- qualifying part-time (NQPT) service:
- Class T-C and Class T-D members who were not active on July 1, 2011, and later return to active, contributing status, have one year from the date of notification by PSERS to file an application to purchase NQPT service.
- Class T-E, Class T-F, Class T-G, and Class T-H members have one year from the date of notification by PSERS to file an application to purchase NQPT service.
To apply for NQPT service, you and your employer(s) where the service was rendered must complete the Application to Purchase Credit for Part-Time Service (PSRS-100). The application is available on the PSERS website or by contacting PSERS. Access NQPT information.
Multiple service members who are actively contributing with the State Employees’ Retirement System (SERS) must apply to purchase prior PSERS service credit through SERS.
Methods of Payment
If your application to purchase service credit is approved, you will receive a Statement of Amount Due (PSRS-7). This statement will contain all of your payment options. With some exceptions, you have different options available to you. These options are:
- A lump-sum payment due within 90 days of the billing date.
- Payroll deductions may be available at the discretion of your employer. Contact your employer for more information. (This option does not apply to SERS members purchasing service credit with PSERS.)
- Rolling over money held in an IRA (regular/simple), 401(a), 401(k) (simple/safe harbor), SEP403(b) and governmental 457(b) plans.
- Purchase of Service (POS) Debt Plan. The POS Debt Plan, also known as an actuarial reduction, is an alternative for members who do not wish to pay the cost to purchase service in a lump sum or in monthly installment payments. This payment plan allows you to pay for your purchase at retirement by placing a debt against the equity in your DB account (your account's Present Value).
When you retire, a reduction is applied to the Present Value of your retirement account. Despite this debt, adding service credit to your account usually increases the amount of your monthly DB retirement benefit, especially if you are a Class T-C or Class T-D member.
Although it is not necessary for you to pay for your purchase of service out of pocket, you will receive a Statement of Amount Due containing payment options if your purchase of service is approved. Interest accrues at 4%, compounded annually on any unpaid balance that remains beyond 90 days beginning from the date of your statement.
Applications are available on the PSERS website or by contacting PSERS.
Benefits of Purchasing Service Credit
Will you need the additional service to reach a certain benefit milestone? Such as:
- Medical insurance premium assistance reimbursements
- A retirement window
- Protecting a larger death benefit for your beneficiary(ies)
- Superannuation (full) retirement status
- Qualify to apply for a disability retirement benefit
- Reach a vested account status (qualify to receive a retirement benefit)
The information we provided is general and may not specifically address your short-term or long-term Pennsylvania public school employment goals. Whether you are planning a short-term or long-term career in education, you may decide that purchasing service credit may or may not benefit you. In either situation, it is your decision as to whether or not you wish to apply to purchase any service credit for which you may be eligible. PSERS cannot make that decision for you.
Purchasing Service Credit for Class T-E, Class T-F, Class T-G, and Class T-H Members
The cost to purchase Non-Qualifying Part Time (NQPT) service and most types of non-school or non-state service credit is the full actuarial cost. In other words, when you purchase service credit, you are self-funding the additional benefit to your future PSERS retirement benefit from the purchase.
After your application to purchase the service credit has been submitted and approved, PSERS will calculate the cost of your purchase based on your projected total credited service, final average salary, contributions, and interest, plus the projected amount of funds needed to cover the appropriate corresponding portion of your lifetime benefit. No payment will be required at that time. At the time of your retirement, PSERS recalculates the cost to ensure only that the amount you were previously billed is not more than the actual cost of the purchase at retirement.
Contact a PSERS retirement representative if you need more information on the various payment options.
The only exception to funding the full cost of the purchase is when you purchase military service, as the calculation remains the same as it is for a Class T-C or Class T-D member.
Those who qualify may purchase the following types of service credit:
If you were once a member of PSERS, terminated employment and chose to withdraw your contributions and interest, you may restore your former withdrawn service. This is done by repaying the withdrawn contributions plus interest.
To do so, you must complete the Application to Return Withdrawn Contributions (PSRS-696). The more information you supply, the easier it will be for PSERS to locate a record of the refunded service.
This is full-time service rendered in a Pennsylvania public school where your employer did not report contributions to PSERS. Full-time service is 5 or more hours a day, 5 days a week, or its equivalent of 25 or more hours a week.
You and your employer where the service was rendered must complete the Application to Purchase Credit for Full-Time Service (PSRS-27).
You may purchase credit for former uncredited part-time service unless you previously waived your membership rights. This is part-time service rendered in a Pennsylvania public school that met one or more of these conditions:
- Your employer did not report contributions to PSERS, even though you worked at least 80 days or 500 hours during the school year.
- You were part-time salaried.
- You worked for multiple employers within a single school year and the combined service between the multiple employers qualified you for membership.
You must first meet membership eligibility requirements in the school year in which you submit the application before you can apply to purchase this service. You and your employer(s) where the service was rendered must complete the Application to Purchase Credit for Part-Time Service (PSRS-100).
This is non-salaried part-time service in a Pennsylvania public school during a single school year that totaled less than 80 days or 500 hours. Beginning on July1, 2011, those who were active contributing members prior to July 1, 2011, will have until July 1, 2014 to apply to purchase Non-Qualifying Part-Time service (NQPT), or termination of public school employment, whichever is earlier. Inactive or new members of PSERS who begin employment on or after July 1, 2011, have either a one year window or prior to their date of termination, whichever is earlier, to apply to purchase NQPT service.
To apply, you and your employer(s) where the service was rendered must complete the Application to Purchase Credit for Part-Time Service (PSRS-100).
To purchase this type of leave, your school board must have approved the sick leave. The leave may not exceed one year and you must have received at least half-salary through Worker’s Compensation or a school-sponsored insurance program.
You and your employer where the leave was rendered must complete the Application to Purchase Credit for an Approved Leave of Absence (PSRS-112). Note on the application that it is for a special sick leave.
If you are a full-time employee, you may apply to purchase service credit for a leave of absence for professional study as an exchange teacher, or for service with a collective bargaining organization, which was approved by your employer’s board.
Approval for the leave of absence must appear in the employer’s board minutes. A copy of these minutes must accompany the application. A copy of transcripts covering the period or any other proof that the leave was for professional study should be attached to the application if no board minutes are available.
You and your employer where the leave occurred must complete the Application to Purchase Credit for an Approved Leave of Absence (PSRS-112). Be sure to attach the school board minutes or other appropriate proof of the leave.
Purchasing out-of-state service depends on the following conditions:
- You must close the other state’s retirement system account by withdrawing any contributions and interest and you must forfeit any retirement benefit. If you withdrew your former employer’s contributions, you are not eligible to purchase out of state school service because receiving employer contributions is considered a retirement benefit.
- The service you are purchasing must be for at least one year but cannot exceed a maximum of 12 years. The maximum of 12 years rule also applies if purchasing U.S. Government in combination with out-of-state service.
- You must first have one full year of service with PSERS before you can apply for out-of-state service. You may only purchase as much out-of-state service as you have PSERS and/or state service. Therefore, credit may be purchased on a year-by-year basis.
- You may only purchase non-qualifying part-time (NQPT) service credit if it is followed by qualifying service rendered in the same state. NQPT is part-time hourly or per diem school employment in which the service was less than 80 days or 500 hours in a given school year.
You, your former out-of-state employer(s), and your former retirement system must complete the Application for Credit of Out-of-State Service (PSRS-278).
To apply for U.S. Government service rendered outside of Pennsylvania you must meet certain conditions:
The service for the government agency must be in the field of education as an administrator, teacher, or instructor teaching school-age children. These usually include:
- You must forfeit any monthly retirement benefit in the U.S. Government’s retirement system.
- The service you are purchasing must be for at least one year but cannot exceed a maximum of 12 years. The maximum of 12 years rule also applies if purchasing out-of-state service in combination with U.S. Government.
- You must first have one full year of service with PSERS before you can apply for out-of-state service. You may only purchase as much out-of-state service as you have PSERS and/or state service. Therefore, credit may be purchased on a year-by-year basis. You and the personnel office of the U.S. Government agency with whom the service was rendered must complete the Application for Credit for United States Government Service (PSRS-600). The personnel officer must also attach a copy of the job description.
- Peace Corp (teaching)
- Department of the Interior Native American (Reservation) Schools.
You may purchase service rendered in the United States Armed Forces (Army, Marine Corps, Navy, Air Force, and Coast Guard). There are three types of United States Armed Forces military service which you may purchase:
Intervening –Intervening military service is also known as Selective Service or “The Draft”. To qualify for this purchase you must meet the following conditions:
- You must have been a Pennsylvania public school employee immediately preceding an induction into the United States Armed Forces.
- You must have been on a military leave of absence to meet a draft obligation, excluding any period of voluntary extension of such service.
- You had to return to regular full-time Pennsylvania school service within 90 days of your release from active military service.
- You cannot be receiving, or be eligible to receive, any other pension using this service credit.
You and the school employer you worked for immediately preceding your induction must complete an application to purchase this service. Please contact PSERS for this form, as it is not available online. A copy of the school board minutes granting the military leave must accompany the application. A copy of the DD-214 papers indicating that your discharge was other than undesirable, bad conduct, or dishonorable
Non-intervening - To apply for this service credit, you must have at least 3 years of credited service with PSERS following the military service.
If you receive or will be eligible to receive a military pension from the United States Government or any other private or public pension fund based solely on your active military service, you may not purchase retirement credit for non-intervening military service with PSERS.
You may purchase credit for up to five years of non-intervening military service after you have at least three years of credited school service following your non-intervening military service. Credit may be purchased on a year-by-year basis as you accumulate Pennsylvania school/state service. You may not purchase more military service credit than you have credited school/state service. If you are a multiple service member and have service credit with both PSERS and the State Employees’ Retirement System (SERS), you may use your service credit in both retirement systems to match the years of military service credit you are attempting to purchase. You, however, are still limited to the 5-year maximum.
You must complete the Purchase of Non-intervening Miltary Service (PSRS-28). A copy of your enlistment and discharge papers (DD-214) must be attached. The DD-214 paper must show both the date of entry into active service and the date of discharge from active service, and your discharge was other than undesirable, bad conduct, or dishonorable.
Activated – This military service is when you are called to active military duty on or after July 1, 1990 and before June 30, 2013. It does not apply to a draft.
To qualify to purchase activated military service, you must:
- Continue contributing to PSERS and gain immediate service credit.
- Discontinue contributing to PSERS during the leave. If you stop contributing, you will not receive service credit unless you elect to purchase the service credit.
If you discontinue contributing to PSERS, you have 90 days after your return to Pennsylvania public school service from the military leave to apply to PSERS to purchase the service credit.
To purchase activated military service that commenced on or before June 30, 2013, please contact PSERS. The proper forms will be provided to you at that time.
Activated Military leave on or after July 1, 2013 (USERRA) - The law prohibits you from making contributions to your PSERS retirement account while you are on your military leave. When you return to work, the time you spent on military leave counts toward the time you need to vest in PSERS or attain premium assistance eligibility. If you also want the time to be used to calculate your retirement benefit, the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) allows you to purchase this military service credit upon reemployment with your PSERS participating employer. USERRA requires that you pay for this service within three times the length of your deployment or five years, whichever is less. If you do not request and pay for this service in accordance with USERRA, you forfeit all rights to ever purchase activated military service for your PSERS account.
PSERS will contact you when your employer informs us that you have begun military leave. PSERS will also contact you when you return to service from your military leave; this second communication will explain your options and offer you the opportunity to purchase service credit for the period of time when you were on military leave.
To purchase maternity leave, the leave must have occurred before November 1, 1978 during school employment with a Pennsylvania public school. You also must have resigned or taken a leave of absence.
To apply, you must complete the Application to Purchase Maternity Leave of Absence (PSRS-1127).
You may be able to purchase County Board Service if you were hired and paid by the County Board of School Directors or by County Commissioners. You must not be eligible now, nor will be in the future for an annuity for county employment with a county board of school directors.
You and the intermediate unit that absorbed the County Board where the service was rendered must complete the Application to Purchase Credit for Full-Time Service (PSRS-27) for full-time service or the Application to Purchase Credit for Part-Time Service (PSRS-100) for part-time service. The intermediate unit should note on the application if you were paid by the County Board of School Directors or the County Commissioners.
You may be able to purchase service credit for full-time service as a nurse employed by a county in Pennsylvania. For every three years of county nurse employment, you can purchase one year of service not to exceed five years of service. You and the personnel officer of the county where the service was rendered must complete the Application for Service as a County Nurse Employee in Pennsylvania (PSRS-708).
You may purchase up to 3 years of service credit in the Cadet Nurse Corps, provided the service was as a student or graduate nurse and the training lasted at least 2 years.
The student or graduate nurse plan had to be approved under Section 2 of the Act of June 15, 1943 (Public Law 78-73, 57 State. 153). Retirees of PSERS or SERS retirees with multiple service coverage may purchase this service credit if they were an active contributing member on or after January 1, 1989.
You must complete the Application to Purchase Credit for Cadet Nurse Service (PSRS-1128). A copy of Form-300A indicating the admission and termination dates must accompany the application.
Service credit eligibility is fact specific. This is especially true when it involves employment rendered while a student. You may not purchase service credit if you worked as a graduate assistant, resident assistant, the position was part of a financial aid package (work study or tuition waiver), the position was part of the student’s curriculum (received academic credit), and/or the employment was available only to students.
This list is not exhaustive. There may be other positions that come into question.
