Service Credit

Overview

Service Credit
2nd Factor in Retirement Formula

While you work in a full-time retirement-eligible position for one of ACERA’s participating employers, you earn service credit toward retirement.  Service credit is measured in years. In general, you earn a year of service credit for each year you work full-time in an ACERA-covered job. Your service credit earnings are measured to a fraction of week, so for example, if you earned 5 years and 4 weeks of service credit, you will have earned about 5.15 years of service credit.  

Purchased service will also increase your credited service total. In general, the more retirement service credit you have, the higher your benefit.

You Earn Service Credit During Earned Leave

When you take your earned vacation and your earned sick leave, you earn service credit while out on that leave.

Times When You Don’t Earn Service Credit

Some ACERA employers will allow you to purchase additional vacation beyond your earned vacation. During the time when you’re out on this purchased vacation leave, you do not earn service credit.  And this time is not purchasable as service credit.

When you are out of the office on unpaid medical leave, you do not earn service during that time.

Unused Leave at Retirement

Unused Sick Leave at Retirement

ACERA will convert your unused sick leave into service credit, as allowed by your bargaining unit. For most members, upon retirement, 50% of any unused sick leave balance can be converted to service credit and added to total years of service. Limitations can be found in your Memorandum of Understanding (MOU) for your bargaining unit. Many MOUs limit the amount of sick leave that is convertible up to 125 days. Check with your Human Resources department for a copy of your MOU.

Converted sick leave does NOT count toward meeting retirement eligibility requirements.

To convert your unused sick leave to service credit, your retirement effective date must be the day after you terminate employment. Retirement-eligible members who terminate employment and choose not to apply for and begin retirement will not receive credit for unused sick leave. So if you spend even a single day in deferred status between active employment and retirement, ACERA will not be able to convert your sick leave to service credit.

For example: your MOU limits the amount of sick leave that is convertible to service credit up to 125 days of sick leave. You have 130 days of sick leave left on the books when you retire. If you go straight from active work into retirement, you may be eligible to receive half of 125 days as service credit, so you will receive 62.5 days of service credit. The remaining five days above 125 days that you had left on the books you do not get credit for.

Limits for Alameda Health System (AHS) members are little different: AHS members receive PTO rather than sick leave. Unused PTO does not count toward service credit (but can count toward highest average salary). AHS members also receive Extended Sick Leave and some members may still have some unused Intermittent Sick Leave (this leave was phased out in 2014). For AHS members who go straight from active work into retirement, ACERA will add together the remaining Extended Sick Leave plus remaining Intermittent Sick Leave (if any), and the member will receive half the total as service credit, limited to 62.5 days of service credit.

Unused Compensatory Time and Floating Holidays

Compensatory time and floating holidays remaining on the books at retirement do not count toward service credit. However, when taking time off and using accruals, you are credited with service. Thus, it can be to your advantage to use these time accruals prior to retirement.

Unused Vacation Leave

Unused vacation leave will not count toward service credit, but it may increase your Highest Average Monthly Salary.

Purchasing and Redepositing Service Credit

In general, the more service credit you have as an ACERA member, the higher your retirement benefit. ACERA may also use service credit to determine when you can retire and receive a benefit. Thus, by purchasing service credit, you can increase your retirement benefit and, in some cases, become eligible to retire at an earlier date.

There are specific periods of employment that may be purchased as service credit:

  • Time worked prior to your ACERA entry date. Your ACERA member entry date is the typically first day of the second pay period of employment in an ACERA-covered position. You may purchase the days worked prior to your ACERA entry date, and add these days to your service credit. However, this purchase of service does not change your entry date.
  • Part-time or other retirement-ineligible service. If you are employed in a retirement-ineligible position by a participating employer (e.g., a part-time, seasonal, intermittent, or services as needed), you may be eligible to purchase this service if you become eligible for ACERA membership at some point in the future. You may not purchase service credit for independent contractor or outside temporary working hours.
  • Medical or military leave without pay. If you are on leave without pay due to medical reasons or called to military duty, you may not receive compensation; therefore, you may not make ACERA employee contributions or earn service credit during that period. Upon return to employment, you may purchase the service lost during such leave, not to exceed one year for each leave period.
  • Redeposit of prior membership contributions (further explained in section below)
  • Other prior public service (further explained in section below

In effect, the additional service credit you purchase would increase your retirement benefit allowance when you retire. In addition, this purchased service would count toward determining your retirement eligibility date and toward becoming vested in the retirement plan. If applicable, it would also count towards 30-year membership.

To determine whether your prior participating employer service is available for purchase, you can submit your request via Web Member Services or in writing to ACERA using the ACERA Purchase/Redeposit Request Form.

In a written response to your request, ACERA will inform you if you are eligible to purchase service credit and, if so, provide the cost to purchase the service.

Redeposit of Prior Membership Contributions

If you terminate membership with ACERA, withdraw your accumulated contributions and interest, then become an ACERA member again at a later date, you may redeposit the withdrawn funds plus interest that would have accrued up to the redeposit payment date. ALL previous service credit must be purchased; partial purchases of service credit are not allowed. A decision to forego redeposit means your prior service credit does not count towards establishing your eligibility for retirement.

In effect, a redeposit of your contributions restores your past service credit earned. This will increase your retirement benefit allowance when you retire. In addition, this purchased service will count toward determining your retirement eligibility date and toward becoming vested in the retirement plan and 30-year membership, if applicable.

Initiating a redeposit is the same process as purchasing service described as above.

In a written response to your request, ACERA will inform you if you are eligible to redeposit withdrawn contributions and, if so, provide the cost for doing so.

Other Prior Public Service

If you worked for another public agency prior to becoming an ACERA member, you may be eligible to purchase that service. Some of the types of other agency or public service you may be eligible to purchase are listed below:

  • County employment within the State of California
  • Any public employer covered by a retirement plan under Public Employees’ Retirement System (PERS) (State of California) or reciprocal with PERS
  • East Bay Municipal Utility District (EBMUD)
  • Port of Oakland
  • State of California
  • Any public school district in Alameda County
  • Federal government service or military service for employees hired on or before August 9, 1972

Purchasing previous public employer service credit would increase your retirement benefit allowance but would NOT count toward determining your retirement eligibility date or becoming vested in the retirement plan. However, it would count towards 30-year membership eligibility.

For purchase of prior public service, verification of the dates worked is required. In addition, you cannot be eligible for a pension from the other agency and the service must have been earned before your ACERA entry date.

The cost of purchasing prior public service includes employee and employer contributions based on the contribution rates and salary at your ACERA entry date. Interest is also charged from your ACERA entry date to the date of purchase.

You can obtain a retirement estimate, account balance, or current service credit total from Web Member Services.

Service Purchase and Redeposit Payment Methods

Members may purchase service credit or redeposit prior membership by using one or more of the following payment methods:

  • Lump sum payment. You may make payment in full by paying with cash, a personal check, or a cashier’s check made payable to ACERA.
  • Direct rollover or trustee-to-trustee transfer.
    • Direct rollover. This is a transfer of pre-tax funds from a qualified retirement account, usually earned from your former employment. ACERA will accept a direct rollover of pre-tax funds from these types of plans: 401(k) tax qualified plan; 457 deferred compensation plan maintained by a California public agency; 403(b) tax-sheltered annuity plan; pre-tax IRA.  If you are eligible to purchase service through ACERA, you can ask your former employer’s plan administrator to disburse the funds directly to ACERA for service purchase. The plan administrator will determine and must certify that the distribution qualifies for a direct rollover. The check should be made payable to “ACERA For the Benefit Of [your name]”.
    • Trustee-to-Trustee Transfer. This is a transfer of funds from a qualified retirement account, such as a 457 plan (deferred compensation plan), from your current employer to ACERA. When ready to purchase service, the funds may be disbursed from the plan administrator directly to ACERA for redeposit or service purchase. Any check from the plan administrator must be made payable to “ACERA For the Benefit Of [your name]”.
  • Payroll deduction payments. You may purchase service credit using payroll deductions. The payments are divided equally over the term of the contract. The specific contract term may vary depending on the type of service purchased. The amount is in addition to your normal employee retirement plan contributions. All purchases must be completed before retirement. To set up a payment plan for a service purchase, you must sign a contract and submit it to ACERA.

To initiate a service purchase or redeposit request, visit Web Member Services and click on the Web Forms link or submit a Purchase Request Form or Redeposit Request Form to ACERA. Upon receipt and completion of your request, ACERA will calculate the required payment and provide information regarding payment options. Once you inform ACERA that you are interested in making this purchase and your choice of payment type (lump sum or payment plan), ACERA will issue a payment contract. Your service purchase or redeposit request itself is not an authorization to begin a redeposit or service credit purchase; you must return the signed contract in order for your redeposit/purchase payments to begin. For help with purchasing service credit or redeposits, we encourage you to meet with an ACERA Retirement Specialist. Contact us to schedule an appointment.

Former Tier 1 Members Can Buy Back Into Tier 1 — Aquilino Conversion

If you are a tier 2 member who previously withdrew tier 1 contributions, you have the opportunity to redeposit and restore your tier 1 benefits under a Marin County lawsuit known as the Aquilino decision. This decision only affects ACERA tier 2 members who were in tier 1, terminated their membership, withdrew all tier 1 contributions, and later re-entered ACERA on or after July 1, 1983, as tier 2 members.

To have tier 1 benefits reinstated, eligible members must:

  • Complete a redeposit of the withdrawn tier 1 funds;
  • Apply for tier 1 restoration with ACERA; and
  • Pay the cost to convert all tier 2 contributions to tier 1.

On application for tier 1 restoration, ACERA will compute a conversion adjustment based on the difference between the contributions the member would have paid under tier 1 and those paid under tier 2. The additional interest that would have been earned under tier 1 will also be included in the calculation. This will be the cost to convert the contributions. If you do not choose to convert your current membership, your retirement allowance will be based on tier 1 for redeposited membership, and tier 2 for current membership.

For more information on the Aquilino tier 1 restoration process and an application form, contact us.

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