Service credit is one factor we use to determine the amount of your retirement benefit. For the most part, the more service credit you have at retirement, the greater your benefit. As a member of the New York State and Local Employees Retirement System, you earn service credit while being paid by a participating employer.

You can also receive service credit for periods you received salary from a participating public employer before you joined the Retirement System (non-member service) and for employment with a public employer before that employer participated in the Retirement System (prior service). You can also receive credit for service from a previously withdrawn membership and for certain periods of military service.

In most cases, there is a cost for service credit. Payments are either mandatory or optional.

Q: What payments are mandatory?

A: Mandatory payments are those you are required to make for service after your membership date (mandatory arrears). For example, if you are a Tier 3 or 4 member whose employer did not deduct contributions from your pay as soon as you joined the Retirement System, or took insufficient contributions, you would be required to pay the contributions not withheld, plus interest.

Q: What payments are optional?

A: Payments you choose to make to receive credit for periods of previous public employment or military service. The purchase of optional service may increase your retirement benefit but will not change your date of membership or tier status.

Q: How do I pay for service credit?

A: For either mandatory or optional service, you can make payment with a single lump sum to cover the entire cost, or pay in installments through payroll deductions. For optional service, you can also choose to pay by a trustee-to-trustee transfer.

Q: What is a trustee-to-trustee transfer?

A: If you participate in either a deferred compensation (457) or tax-sheltered annuity 403(b) plan, you can authorize your plan administrator to forward funds directly to the Retirement System. The advantage is that you are using pre-tax dollars to purchase your optional service credit.

Q: Are there disadvantages to a trustee-to-trustee transfer?

A: Carefully consider the advantages of a trustee-to-trustee transfer compared to the possibly higher rate of return the funds might earn if they were to remain in your 457 or 403(b) plan. Also note that installment payments from 457 or 403(b) plans are not accepted, and that only one transfer per year from your deferred compensation or tax-sheltered annuity for the purchase of optional service credit is permitted. You may want to consult with your financial adviser before making a decision.

Q: How can I get more information?

A: Refer to our booklet, Service Credit for Tier 2, 3, & 4 Members, available on our Web site at www.osc.state.ny.us/retire/publications/vo1854.htm, or contact our Call Center toll-free at (866) 805-0990, or (518) 474-7736 in the Albany/Capital District area.