Your options for purchasing retirement credit

Sometimes our best plans are derailed by the events of our lives. In some circumstances, however, your retirement plans do not have to be derailed when life’s events cause you to have a break in PSRS/PEERS-covered employment. If you meet certain criteria, you are able to purchase PSRS/PEERS service credit, thus restoring your retirement timeline.

In order to purchase credit for time you were not in PSRS/PEERS-covered employment, you must have had at least one year of PSRS/PEERS service credit prior to leaving the system, and you must return to PSRS/PEERS-covered employment. In other words, you may purchase credit for a break in PSRS/PEERS-covered employment. You cannot purchase credit for years before you entered PSRS/PEERS-covered employment or for years after you permanently leave PSRS/PEERS-covered employment. There is an exception for this portion of the eligibility requirement for members who were engaged in active U.S. military service prior to entering PSRS or PEERS.

The circumstances under which you may purchase credit are many and varied. This article will cover only the most common.

Social Security-covered service
Purchasing Social Security-covered service can be a lengthy process, but it may be an effective way to increase your benefit amount.

Pregnancy/maternity/paternity/adoption leave
If you take unpaid pregnancy, maternity, paternity or adoption leave and return to PSRS/PEERS-covered employment after completing the leave, you may be eligible to purchase up to one year of credit for each birth, legal adoption or pregnancy. If the leave occurred during the current school year or the previous two years, you can make arrangements to pay the employee contributions through your employer, who will then be responsible for remitting both the employee and employer contributions to PSRS/PEERS. For years outside this two-year window, you may purchase credit directly from PSRS/PEERS, but you are responsible for paying both the employee and employer portions of the contribution.

Unpaid sick leave/workers’ compensation
If you are on unpaid sick leave or have had time docked due to workers’ compensation leave during the current year or in the previous two years, you may be eligible to purchase credit for the entire time of the unpaid or docked leave. Arrangements for payment of the employee portion of the contribution must be made through the employer. The employer will remit both the employee and employer portions to PSRS/PEERS. Unlike pregnancy, maternity, paternity or adoption leave, credit for time outside the two-year window is not eligible for purchase.

Leave of absence (other than sick leave)
If you are on a leave of absence other than sick leave for which you are being paid at least 50 percent of your regular salary, you may receive full credit for the time period of the leave. In order to get this credit, however, you must request it at the time of the leave. In addition, both the employee and employer contribution rates must be based on the full salary you would have received for that year, not the partial salary you actually receive.

Active U.S. military service/USERRA
If you had active U.S. military service prior to entering PSRS/PEERS, you may purchase service credit for that time period, provided you were discharged honorably. The employee must pay both the employee and employer contributions for this service credit.

For military service occurring after Dec. 11, 1994, the terms of the Uniformed Services Employment and Reemployment Rights Act apply. Service in the United States Armed Forces, the National Guard or other service categories designated by the President during war or national emergency is covered by USERRA. Among other rights provided by USERRA, when a PSRS/PEERS-covered employee returns from USERRA-qualified leave and is re-employed by the same school district, he or she may be eligible to buy credit for the time spent in USERRA-covered service. However, the employee must apply for the credit within five years of being re-employed. In this situation, the employee must pay both the employee and employer portions of the contribution.

Also under USERRA, the period of USERRA-eligible service counts toward vesting, regardless of whether you remit contributions. In this situation, the credit would not be used to calculate the amount of your retirement benefit, however.

This article contains only a brief synopsis of the situations most often encountered. There are other situations that can trigger the ability to purchase PSRS/PEERS service credit.

by Jacquie Shipma
MNEA manager of legal services and human resources

sb, summer '09