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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > My Fund > Public Employees > Purchasing additional service credit Purchasing additional service credit

You may purchase additional service credit that can be used toward the calculation of the Defined Benefit (pension) if you have worked in a similar position(s) in another state or have prior military service.

The purchase cost of additional service is spread, or amortized, over the period of time leading to your retirement. Therefore, the sooner you make such a purchase, the lower the purchase cost. A member can make the additional service purchase after one year of PERF-covered service but before the 10-year vesting mark. If the member separates from service before vesting, the cost of the additional service will be returned plus interest.

“Air Time” Service Credit

Members who are vested can purchase an additional one year of service credit for every five years of actual accrued service. For example, a member with 15 years of service would be allowed to purchase an additional three years of credit, and bring their total years on which a retirement calculation would be based to 18. The cost to purchase this service depends on your age, years of service, and salary. Payment for this purchase can be made in a lump sum or amortized over five years at a 7.5 percent interest rate.

Out-of-State Service Credit

State law provides for the purchase of out‑of‑state service credit with the Public Employees' Retirement Fund.

In order to qualify for the purchase of this credit, you must meet the following criteria:

  • You must have at least one year of service in a PERF-covered position.
  • Prior service in another state must be in a comparable position that would be creditable service if performed in Indiana.
  • You are no longer eligible to use those years to claim a retirement from any other retirement system.

The funds used for the purchase may come from:

  • A direct payment by the member;
  • A distribution from a retirement plan of a former employer which is qualified under Section 401(a) of the Internal Revenue Code;
  • An annuity or account under Section 403(b) of the Internal Revenue Code; or
  • An eligible deferred compensation plan maintained by a state or a political subdivision under section 457(b) of the Internal Revenue Code.

Military Service Credit

Active PERF members who served in the United States Armed Forces and were honorably discharged may purchase up to two years of military service credit at actuarial cost. This is in addition to any other military service credit that is granted by law to members.

Military service will not be used for vesting purposes. Therefore, to become eligible to retire, a member still must have 10 years of actual PERF-covered service to become vested for the Defined Benefit Pension. However, the additional military service will be included in the member’s benefits calculation.

Members may make the purchase of service after they have been in the Fund for a period of one year. To determine the cost of purchasing this military service, contact the PERF office and we will send you a Military Service Estimate form. You may also download this form from the Web site.

For more information regarding PERF's service credit purchase process, please see 35 IAC 1.2-3-13.