Buying service credit trades money today for a permanently larger monthly benefit for life. Whether that trade is good turns on three numbers: your system's quoted cost, the exact benefit increase it buys under your formula, and how long you will collect it. Get the official cost quote first — it is specific to you — then do payback-period arithmetic before you sign, because most purchases cannot be refunded.
How to read this page. This is a framework, not a recommendation. There is no answer here that fits everyone — only the inputs that drive your answer. Run the numbers with us, or run them on your own; either way, run them before you file.
What can actually be purchased
The menu varies by system, and it shrank sharply in 2013. The California pension reform law (PEPRA) ended the purchase of "airtime" — nonqualified service credit not tied to any actual work — across California public systems as of 1 January 2013. What generally remains:
- Redeposit. You left public employment, withdrew your contributions, and later returned. Redepositing the withdrawn amount plus interest restores the service credit. Tier restoration depends on the system; LACERA, for example, explains that a member who withdrew before 2013, returned and redeposits may keep pre-PEPRA status. Confirm before paying.
- Military service. Most systems allow purchase of credit for qualifying active duty, subject to caps and conditions set by each system.
- Approved leaves and prior service. What you can buy differs by system; read yours: CalPERS, CalSTRS, OCERS, or LACERA.
Two things to confirm before anything else: whether your window to purchase has a deadline (some purchase types get more expensive, or close entirely, the longer you wait), and how your system prices the purchase — actuarial present value, contributions-plus-interest, or another basis. The price is set by the system, quoted in writing, and is not negotiable.
The arithmetic, in plain shape
Every service credit decision reduces to the same three-line calculation. No percentages here — yours come from your system's quote and your own formula:
Line 1 — the cost
The system's official quote for your purchase, plus the return you give up by not investing that money elsewhere. Many systems accept rollovers or trustee-to-trustee transfers from eligible plans; LACERA, for example, accepts 401(k), 401(a), Keogh and 457 funds. Confirm with your system.
Line 2 — the benefit increase
Extra years of credit multiplied through your formula equals a specific, permanent increase in your monthly benefit — and in some systems it can also change your eligibility date or vesting. Your system's estimator will state the increase exactly.
Line 3 — the payback period
Cost divided by the annual benefit increase (after tax) gives the years of collecting it takes to break even. Then the honest questions: how does that compare with your life expectancy, does your survivor election carry the increase to your beneficiary, and are increases cost-of-living adjusted in your system?
Done properly, the comparison also asks what else the money could do. The alternative to buying credit is not "nothing" — it is investing the same dollars, paying down a mortgage, or keeping them liquid. A purchase that beats a savings account may still lose to your 457(b). We model the purchase against your actual alternatives, not against zero.
When it tends to be clearly good, and when it is marginal
- Often compelling: redeposits that restore a more favorable formula or an earlier retirement date; purchases quoted at a price set years ago that has not caught up with the benefit it buys; credit that pushes you over an eligibility threshold you would otherwise miss.
- Often marginal: purchases late in a shortened life expectancy; purchases funded by high-interest borrowing; purchases whose payback period exceeds any horizon you would honestly plan around; buying credit when the same dollars are needed for nearer-term obligations.
- Never assumable: that the purchase is priced "fairly" for you specifically. Actuarial pricing is fair on average across all members. Your health, your retirement date and your survivor election make it better or worse than average for you — which is exactly why the arithmetic is worth an hour.
What we do and do not do. We do not administer purchases, quote costs, or process paperwork — only your system does that. What we do is arithmetic: your official quote, your formula, your alternatives and your tax situation on one page, so you can sign (or decline) with the full picture. Our fee is disclosed and does not depend on your answer.
Before you call your system, gather
- Your latest annual member statement showing current service credit and formula.
- Records of the service you want to purchase — dates, employer, and for redeposits the amount withdrawn.
- Your system's purchase publication and cost estimator output: CalPERS, CalSTRS, OCERS, or LACERA.
- Balances of the accounts you might fund the purchase from.
Common questions
Common questions
Can I still buy 'airtime'?
No. PEPRA ended nonqualified service credit purchases in California public systems as of 1 January 2013. Offers or guides describing airtime purchases are outdated. What remains are purchases tied to actual service — redeposits, military time and qualifying leaves — on each system's terms.
Is a purchase refundable if I change my mind?
Generally no once completed, which is why this page keeps saying 'before you sign.' Payment plans and installment rules vary by system; confirm what happens to an in-progress purchase if you separate, retire, or die before it is complete.
Is buying credit better than putting the money in my 457(b)?
Sometimes yes, sometimes no — the purchase buys a guaranteed lifetime increase, the 457(b) buys a flexible balance with market risk and market upside. Neither dominates in general. It is a comparison we can run in a single sitting with your actual quote.
Model it before you file
These elections are permanent. We will run the arithmetic with you — your numbers, every scenario on one page — while they are still choices. Fee-only, fully disclosed, no products to sell you.