Retirees in Action: Understanding service credit

January 10, 2024 — Prior state service (service credit) is very important to understand before an active PEF member retires. I’ve compiled information below that will explain the service credit process and I hope you will find it helpful. 

What is service credit?

Service credit is a core component of your New York State and Local Retirement System (NYSLRS) membership. It determines when you are entitled to a pension even if you leave public service before you are eligible to retire (vested). It is one of the eligibility requirements for retirement benefits, death benefits and loans. For most members, the total service credit they have at retirement will directly affect the amount of their pension.

Once you become a NYSLRS member, you receive service credit for all your paid public employment beginning with your date of membership. The amount of credit you receive is based on your earnings and service information your employer reports to the New York State Comptroller’s Office.

Earning service as a member

Once you become a NYSLRS member, you receive service credit for all your public employment beginning with your date of membership. NYSLRS refers to this as mandatory service. If you are required to contribute a percentage of your earnings toward your retirement benefits (Tiers 3, 4, 5 and 6 members, and Tier 2 members in a contributory plan), you must pay the contributions that are associated with your mandatory service. Generally, these mandatory contributions are deducted from your pay and sent to the NYSLRS by your employer.

If there is a period after your date of membership when your employer did not deduct contributions (or deducted insufficient contributions), you will still receive credit for your employment, but you must pay these mandatory contributions plus interest. The NYSLRS will automatically notify your employer to take payroll deductions until the amount is paid. If you have outstanding mandatory contributions when you retire, your pension will be permanently reduced to cover the cost.

Additional service credit

You may be able to receive additional service credit for public employment before your date of membership or for military service. There is usually a cost for additional service. Purchasing additional service credit is optional, but because service credit is a factor in calculating a NYSLRS pension benefit, purchasing service credit will generally increase your pension benefit.

There are several types of additional service:

• Previous Service— Service with a participating employer before you joined NYSLRS.
• Prior— Service with a participating employer before the employer elected to participate in NYSLRS.
• Military— Service in the United States Armed Forces; the amount of credit available and the cost vary depending upon which section of the law applies.
• Transferred— Service from an active membership credited in another New York public retirement system.
• Withdrawn— Service from a previously withdrawn membership in NYSLRS or another New York public retirement system.

(See the Previous Service, Prior Service, Military Service sections, as well as Transferring Service and Withdrawn Service sections of the NYSLRS website for more details about additional service.)

If you wish to receive credit for additional service, you must request it. See the How to Request Credit section for details.

Your request will be reviewed to determine and verify your eligibility. If you are eligible, the NYSLRS will notify you of the cost (if any). While you are not required to pay for additional service, you will only receive credit if you purchase it.

For previous and prior service, in addition to paying the associated costs (if any), you must earn two years of service credit as a member before your service can be credited. For certain military service, you must have five years of member service credit. You cannot purchase additional service after your retirement date.

There are certain situations where purchasing additional service credit will not increase your pension. See Should You Purchase Additional Service Credit for more information.

Previous Service

Previous service is time you worked for a participating employer before you joined NYSLRS. Receiving additional service credit for previous service is optional. You can choose to receive credit, but there is usually a cost.

Example: You worked at the town library while going to school and, as a part-time employee, you chose not to join NYSLRS. When you graduated and took a full-time job at the Town Supervisor’s office, you were required to join. You can request credit for the part-time service at the library.

There may be a cost to obtain credit for your previous service (see chart below). You can request and pay the cost for previous service any time, however, you must earn two years of service credit as a NYSLRS member before your purchased service can be credited.

Cost to Purchase Previous Service Credit:

Prior service

Prior service refers to any period of time during which you received salary from an employer before the employer elected to participate in NYSLRS. Receiving additional service credit for prior service is optional. You can choose to receive credit, but there may be a cost.

• For Tier 2 and 3 members, there is no cost to obtain credit for this service.
• For Tier 4 and 5 members, the cost is 3% of gross earnings plus interest to the date of payment.
• For Tier 6 members, the cost is 6% of gross earnings plus interest to the date of payment.

Tiers 4, 5 and 6 members can pay for prior service any time, however, you must have earned two years of service credit as a NYSLRS member before your prior service can be credited.

Military service

If you served in the U.S. Armed Forces, you may be eligible to purchase credit for your military service, regardless of whether your military service was before or after you joined NYSLRS.

There are different sections of the law that allow credit for military service. The amount of military service credit you can receive, and the cost (if any) will vary depending on which section of the law allows the credit.

Additional information about military service credit, including eligibility and application requirements under the different statutes of law, is available on the NYSLRS Military Service Credit page.

How to request credit for previous, prior or military service

To request additional service credit for previous, prior or military service, sign in to your Retirement Online account, scroll down to the ‘My Account Summary’ area of your Account Homepage and click the “Manage my Service Credit Purchases” button. The Service Credit Purchase Accounts page will appear. Click “Request Additional Service Credit.”

You can also apply by mail by submitting a Request to Purchase Service Credit (Including any Military Service) (RS5042), available on the Forms page.

Include as much information as you can about the period of employment for which you are seeking credit. If you are applying for military service credit, upload your Certificate of Release or Discharge from Active Duty (DD-214) in Retirement Online, or enclose a copy with your paper application. The NYSLRS will determine your eligibility and provide a statement of any cost involved.

The NYSLRS must receive your service credit request before your date of retirement.

Requesting credit for your previous, prior or military service as early in your career as possible can be advantageous:

• Records we need to verify your service will be more readily available.
• If there is a cost, it will be less expensive than if you wait to purchase credit at a later date.
• If your tier allows you to discontinue contributions after a defined period of time, you will stop paying contributions sooner.
• Your retirement benefit will be processed more quickly if your service credit request has been reviewed or processed prior to retirement.

If you are requesting previous, prior or military service credit to establish eligibility for a vested retirement benefit, you must request this credit while you are on the payroll of a participating employer. If you receive a statement of the cost after you leave the payroll, you must make payment within 30 days of notification.

Note: If your purchased service brings your total credited service to ten or more years, you will no longer be eligible to withdraw your contributions and end your membership.

Verifying your service

When the NYSLRS receives your request for additional service credit, they must first verify your earnings and service dates. They will ask your employer for your monthly earnings and hourly rates of pay. They need this information to determine the amount of credit you are eligible to receive and the cost (if any) to purchase it.

In most instances, your employer will be able to supply this information. However, if records are unavailable, the NYSLRS will accept documents such as W-2 forms from your tax returns or Social Security earnings records.

They may ask you to request a “non-certified detailed (itemized) earnings statement” directly from the Social Security Administration (SSA) by completing form SSA-7050-F4. This form is available from your local SSA office, on the SSA website or by calling 1-800-772-1213. (NYSLRS cannot request the information for you.) There is a service charge to obtain this information from the SSA.

Your detailed (itemized) earnings statement includes the names of your employers and your quarterly earnings for each year requested. The NYSLRS can usually get your pay rates from the state or the appropriate local civil service commission.

You can be credited only for employment with an employer that participates in one of the retirement systems listed in the Withdrawn Service section, or from military service. You cannot receive credit for service with a nonparticipating employer or service performed while not on the payroll, such as independent contractor service.

Contact us

There are several ways to get more information or assistance:

• Email form: secure contact form;
• Call: 866-805-0990, or 518-474-7736 in the Albany, New York area;
• Fax:518-402-7799; or
• Write:
  NYSLRS
  110 State Street
  Albany, NY 12244-0001