With the passage of pension legislation last year, the cost of purchasing some types of service credit soon will increase to reflect their true cost to the Ohio Public Employees Retirement System. But our members can take advantage of a short window of opportunity to purchase these credits under the current pricing system.
Beginning back in 2006, OPERS asked the Ohio legislature to increase the price of some service credit purchases so that they more fairly represent the actuarial cost of the benefit. Before the pension legislation passed last year, the entire OPERS membership was subsidizing the cost of some of these service credit purchases, which are available to only some of our members.
That will no longer be the case going forward. However, members will be permitted to make service purchases at the current rates if they initiate the transaction by July 7. They will have until July 7, 2018, to complete the purchase before the cost will be recalculated.
OPERS offers 15 types of service purchases—some of which are already at full actuarial cost. Members may be eligible to buy service credit if they served in the military, on a school board, as a full-time elected official, or in other certain circumstances. After July 7, members will be required to pay the full actuarial cost for the following types of service purchases:
- Additional service credit: Elected and certain appointed officials are permitted to purchase an additional 35 percent service credit for every full-time year they serve. For instance, if they serve two 4-year terms, they may choose to purchase an additional 2.8 years (0.35 x 8). The pension bill allows the OPERS Board of Trustees to define “full time” for the purposes of eligibility to purchase the additional 35 percent credit.
- Exempted service: This is service for a period of time in which the member was exempted from paying into OPERS while working in a position in which OPERS coverage was offered. For example, a student employed by a university may choose to be exempted from membership.
- Out-of-state, federal or municipal service credit: This service credit is for public employment while working outside of Ohio or for the federal government or a municipal retirement system.
- Leave of absence I: Up to one year of credit may be purchased at any time for authorized leaves of absence or resignation due to pregnancy or adoption of a child. Interest is included in the cost of the purchase.
- Leave of absence II: This covers employer-approved leaves of absence. Members may buy service credit or contributing months and pay no interest if the purchase is completed within one year of the beginning of the leave.
- Prior elected service: This type applies to Ohio elected officials, who are not required to become OPERS members immediately after their election to public service. Rather, at a future date after membership is established, they can purchase credit for service they completed as an elected official that predates their membership in OPERS, provided they did not pay into Social Security.
To find out more about this service purchase window, members can refer to the Special Coverage section of the OPERS website, where we have published a service purchase notice. There also is additional information about service purchases for Bureau of Workers’ Compensation time and military time, and for elected officials denied salary increases. Please note that not all types of service purchases will count toward health care eligibility for members.
For the types of service credit purchases that do count toward health care eligibility, refer to the chart on page 15 of our Comprehensive Guide for Pension and Health Care Changes.