There are several ways to add to, and build, your CalSTRS/CalPERS retirement plan. One of these ways is through what’s called service credit.

You’ll want to understand service credits and how they can benefit you in your retirement.

What is service credit?

Essentially, service credit is retirement credit for time worked. It uses the number of years you’ve worked to count toward the benefits you’ll receive when you retire, as long as you’ve made contributions under the Defined Benefit Program. It’s also one of the factors in the formula used by both CalPERS and CalSTRS systems to determine your eligibility for retirement benefits.

How can I accumulate service credit?

CalSTRS

In addition to credit for actual service, you may receive service credit for creditable compensation for certain employer-approved leaves of absence. Service credit may also be purchased under certain circumstances. At service retirement, CalSTRS will convert your unused sick leave to additional service credit using the information your employer provided on the Express Benefit Report form.

CalPERS

You earn service credit for each year or partial year you work for a CalPERS- covered employer. It accumulates on a fiscal year basis (July 1 through June 30) and is one of the factors used to calculate your future retirement benefits. Alternate Retirement Program (ARP) [i] members begin earning CalPERS service credit after the first 24 months of state employment.

How can I purchase additional service credit?

The most common way to purchase additional service credit is by redepositing withdrawn funds. For example, if you previously left your job and withdrew your contributions and interest, you may be able to redeposit the money when you return to membership in either system. Keep in mind that when you repurchase service credit, you will pay the interest that would have accumulated had you not withdrawn the funds. The longer you wait, the more costly your purchase will be. You can view a list of types of service credit you can purchase under both systems on page 6 of the booklet "Join CalSTRS? Join CalPERS?" (PDF).

Additional resources

CalPERS: https://www.calpers.ca.gov/page/active-members/retirement-benefits/service-credit

CalPERS Estimate My Service Credit (requires login): https://www.calstrs.com/calculators

[i] https://www.calpers.ca.gov/page/active-members/retirement-benefits/service-credit