Service purchases
The new law adds ways for members to buy service credits. Service is important because it helps determine your benefit amount at retirement. Retirees may also buy service credit, which will increase their benefits. Service credits also affect disability and death benefits.
New ways to purchase service
- Members who have earned at least five years of IPERS service may buy up to five years of service credit that is not tied to specific employment (also called buy-in of air time) at the actuarial cost.
- Vested members who have a mixture of regular service and Special Service may convert regular service credits to Special Service credits by paying the added actuarial cost (also called a buy-up) of the higher Special Service benefits.
Effective July 1, 2008
Iowa Code Section Amended: 97B.80C(1) and (2)
Credit applied when buying back past service
When members quit working for an IPERS-covered employer and withdraw their contributions, they give up IPERS membership rights for that period of employment, including all service credits earned. If they later return to a job covered by IPERS, they can buy back that service at the actuarial cost.
The new law grants a credit that will reduce the buy-back cost to members who:
- Received a refund from IPERS before July 1, 1998,
- Were vested in IPERS when they received the refund, and
- Returned to work before July 1, 1998, and worked:
- Full-time, and
- In a job with mandatory IPERS coverage.
If you are interested in buying back service and think you may be eligible for the cost-reduction credit, please call. The credit will be based on your membership class, the number of years covered by your refund, and how much your employer contributed to IPERS during the time you worked.
Effective January 1, 2009
Iowa Code Section Amended: 97B.80C(3)
About purchasing service
When you purchase service, you pay money into the IPERS Trust Fund to buy additional service credits that IPERS will use to calculate your retirement benefits. The added service credits can increase the amount of your benefits or allow you to retire earlier. IPERS does not profit from a service purchase.
Actuarial cost
IPERS’ actuary determines the cost of your service purchase by calculating the value of the extra benefits over your lifetime (the actuarial cost). The calculation reflects projections of future mortality rates, salary increases, and employment patterns. While the actuary uses the same set of assumptions for all service purchase calculations, the impact of each factor varies by individual.
Generally, the sooner benefits begin, the more valuable they are. If the service purchase moves up your projected normal retirement date, the service purchase cost reflects the fact that you will begin drawing benefits earlier.
Applying
You must complete an Application for Service Purchase so the actuary can develop a cost quote. Filing an application does not obligate you to purchase.
Only you can decide if the added benefits you will receive from a service purchase outweigh the cost of purchasing the service.
Your IPERS benefit equals: |
Multiplier
(Based on Years of Service) |
X |
Salary
(Average of Highest 3 Years) |
For regular IPERS members, the multiplier increases 2 percent each year you work in a job covered by IPERS, up to 30 years, and one percent for years 31–35. The maximum multiplier for regular members is 65 percent.
The multiplier for Special Service members (sheriffs, deputies, correctional officers, police, firefighters, and other public safety personnel) increases about 2.7272 percent each year, up to 22 years, and 1.5 percent each year for years 23–30. The maximum multiplier is 72 percent.
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