Why Most Service Purchase Costs Are Recalculated Each Year
Each year on October 1, the cost to purchase most types of service with PSRS/PEERS is recalculated on any open purchase application. This annual adjustment is necessary because the cost for these purchases is based on a calculation that includes the member’s highest salary and the current contribution rate.
| Highest Annual Salary on Record | X | Combined (Employer and Employee) Contribution Rate for Your System | = | Cost to Purchase One Year of Service |
Once you apply for a purchase calculated this way, your balance due as of September 30 of each year is recalculated October 1 using your highest annual salary and the contribution rate as of the previous July 1.
You will receive an annual Service Purchase Application Recalculation Statement each year in early October as long as you have an open, unpaid purchase balance.
Early application and payoff of a purchase that is recalculated each October 1, usually means you pay less. This is because it is common that the longer you work in covered employment, the higher your salary, and therefore your purchase cost, will be.
The Purchase Cost Recovery Calculator can assist you in determining how long it will take to recover the cost of purchasing service through your monthly retirement benefits.
You can find general information on service purchases on this website or contact our Information Center for specific questions.