Buying extra service credit: PERF and TRF members

As a member of the Public Employees’ Retirement Fund (PERF) or the Teachers’ Retirement Fund (TRF), you have the option to buy extra service credit. Buying extra service credit gives you a higher monthly pension benefit. It also may let you retire earlier. However, you cannot buy extra service credit in order to vest with PERF or TRF.

Qualifications

Active members of PERF and TRF can purchase one year of additional service credit for each five years of PERF- or TRF-covered employment. To buy this credit, you must:

  1. Be currently employed in a PERF- or TRF-covered position
  2. Have at least 10 years of PERF- or TRF-covered employment

What does service credit have to do with my monthly pension benefit?

We use three pieces of information to get your PERF or TRF monthly pension benefit amount:

  • your highest five years' salary
  • years you worked in your PERF or TRF-covered job, known as creditable service, and
  • age at the time monthly pension benefits begin.

You also have the option to buy more service credit to give you a higher benefit amount. There are several things that factor into the final cost of extra service. The two most important factors are the date you stop working and the date you start getting your retirement benefits. The text below explains in more detail how we calculate the final cost for you to buy more service credit as a member of PERF or TRF. If you're a member of one of our other funds click here. If you have questions after reading this information, please call our customer service center at (844) GO-INPRS.

How can buying extra service credit give me a higher monthly pension benefit?

If you buy service credit, that added service will increase your monthly pension benefit amount.

Example 1:

Linda has 20 years of service and an average salary of $30,000 per year. Here’s how we would figure out her monthly pension benefit:

.011 x $30,000 x 20 = $6,600, or $550 per month

If Linda purchases two years of service, for a total of 22 years of service, her monthly benefit would increase. 

.011 x $30,000 x 22 = $7,260, or $605 per month

Having extra service credit may allow members to retire earlier than they could without it. For instance, if you have 10 years of service, you can start receiving a full monthly pension benefit at age 65. But if you have 15 years of service, you can start getting a full benefit as early as age 60.

With 30 or more years of service credit, you can start receiving your full pension benefit payments as early as age 55 if your age and service are equal to or more than 85. This is known as the “Rule of 85.”

Example 2:

John is 57 years old with 12 years of service. He could buy two more years of service at a fairly low cost since his service would be brought up to 14 years.

With 14 years of service, John still won’t have enough to retire at 60 with a full monthly pension. But, if he buys two more years and then works another year, he could quit his job at 58 and start his benefits at age 60. In this scenario, John would have 15 years (13 worked, plus the two he bought). If he doesn't work the additional year, he could still quit at 58 without the two years of purchased service, but wouldn’t be able to start his benefits until age 65.

If John instead buys two years at age 57, quits at 58, and then starts his benefits at 60, his two years of purchased credit will allow him to start receiving benefits five years earlier.

How do I decide if I want to buy extra service credit?

When we estimate your cost to buy service credit, we assume two things to make sure the value of the extra service won’t be more than the amount we estimate your future pension benefit to be:

  • After you buy service, you’ll choose to stop working. [1]
  • Once you stop working, you’ll start your monthly benefit at an age that gives you the best value for the service you bought. [2]

We'll provide you with an estimate that allows you to see examples of how buying different amounts of service credit at different ages changes the cost of the service credit. Remember that, in general, the closer you are to retirement age the more you're likely to pay for the extra years of service credit you wish to buy. [3]

Examples of cost to buy extra service credit

Bobby is a 28-year old janitor. He has been a member of the Public Employees’ Retirement Fund (PERF) for 10 years and is vested. Bobby’s current salary is $21,000. If he wanted to buy two years of service credit for PERF, he would pay $6,803. 

Jane is a 45-year-old teacher. She has been a member of the Teachers’ Retirement Fund (TRF) for 23 years and is vested. Jane’s current salary is $40,000. If she wanted to buy one more year of service credit, she would pay $12,207.

So you’ll get the best value for service you may want to buy, we’ll provide you with:

  1. The cost to buy the service
  2. The amount that your benefit will be increased with the extra service
  3. The age you would stop working, and
  4. The age you would start your retirement benefit

However, if you're interested in getting a personalized estimate of how much it could cost you to buy extra service credit after reviewing this info, please contact our Customer Service Center at (844) GO-INPRS, M-F, EST. You can also reach us by email at questions@inprs.in.gov

What PERF and TRF forms are available?

PERF

TRF

What if I'm a member of a fund other than PERF or TRF?

Below you’ll find links to forms to buy service credit for our other funds. Please check your member handbook for more details. Or, you can contact us at (844) GO-INPRS.

1977 Police Officers’ and Firefighters’ Pension and Disability Fund (1977 Fund)

Judges' Retirement System (JRS)

State Excise Police, Gaming Agent, Gaming Control Officer and Conservation Enforcement Officers' Retirement Plan (Excise Plan)

Members of the Legislators’ Retirement System and the Prosecuting Attorneys' Retirement Fund are not eligible to buy service credit.


[1] Known as your Termination Age.
[2] Known as your Commencement Age.
[3] NOTE: if purchasing service will make you eligible for a retirement benefit, please contact our Customer Service Center for your estimate. In this situation the calculator may not provide an accurate cost, which may be more expensive.