What are tiered rates?
Tiered rates is the new system approved by the Teachers’ Retirement Board making the cost to purchase additional service credit more equitable in relation to the benefit members receive. This system is based upon a member’s age at the time of purchase, which more closely represents the actuarial cost of the permissive service credit.

Who is affected?
Tiered rates will affect those members who wish to purchase permissive service credit. The chart below depicts the types of service credit purchasable and whether they are impacted by the July 1, 2004 changes:

Service Credit Type	Impacted by Tiered Rates
California State College or University of California	Yes
Cash Balance consolidation of benefits	Yes
Cash Balance Program Equivalent Service Credit	Yes
Child Care Center Service Credit	Yes
Deaf and Blind School Service Credit	Yes
Family Care or Medical Leave Service Credit	Yes
Job Corps Center Service Credit	Yes
Maternity/Paternity Service Credit	Yes
Military Service Credit	Yes
Native American School Service Credit	Yes
Non Member Service Credit	Yes
Out-of-State Service Credit	Yes
Red Cross Service Credit	Yes
Sabbatical Service Credit	Yes
Service Under Fulbright Act	Yes
Workman's Comp Service Credit	Yes
Local Service Credit	No
Non Member Spouse or registered domestic partner Refund Redeposit	No
Nonqualified Service Credit (Air Time)	No
Redeposit of previously withdrawn contributions	No
Redeposit with Local Service Credit-Converted	No
Uniform Service Credit under USERRA	No

Why was the calculation for permissive service credit purchases changed?
The Teachers’ Retirement Board adopted a resolution that provided a more equitable way to calculate permissive service credit purchases for members. It was determined the current methodology for calculating the cost to purchase permissive service credit was inequitable.
By allowing all members to pay the same rate for permissive service credit, regardless of when in their career they purchased the credit, those who paid at the end received more benefit from the funds than those who purchased earlier in their career. New rates will be determined annually and approved by the Teachers’ Retirement Board to be effective each July 1.

What are the new rates?
The changes to the costs will be very significant for those requests received after July 1, 2004.
For the 2004/2005 fiscal year, the rates are as follows:

What happens if necessary documentation needed by CalSTRS is held up by my former employer (i.e. Out-of-State service credit certifications, university certifications, maternity leave verifications, etc)?
Certain required documentation is needed by CalSTRS to correctly approve and calculate the cost of some permissive service. Click here for more information: It is the member’s responsibility to provide this documentation. If there is a reasonable cause for delay in obtaining this documentation at the time you request a purchase of permissive service credit, we may honor the date of the request as long as you can show proof that you submitted the information to your former employer and they are unable to respond in a timely manner. For example, proof may consist of a letter from the other retirement system indicating receipt of your request/certification or copies of all information forwarded to your former employer requesting certain documentation. The sooner you provide this type of information to CalSTRS, the better we can service your request.

How can I see what the new costs will be?
The Permissive Service Credit Purchase calculator on the CalSTRS Website Click here can assist you with determining approximately how much it will cost you to purchase service credit. Please keep in mind that the calculator is an estimate only. In order to obtain the actual amount, please submit to CalSTRS a Redeposit or Purchase of Permissive or Nonqualified Service Credit, a Request to Consolidate Benefits form or an Out-of-State Service Credit Certification. Click here to down load the forms.

Do these rates affect the Consolidation of Benefit for Cash Balance?
Yes. Click here for more information and/or to download the Consolidation of Benefit forms.

What do I need to do to purchase service credit?
Submitting the request as soon as possible will usually provide the lowest cost as the factor is based on your age. Click here to order the request forms. Once your request is processed, a statement is generated and mailed to you. To purchase your permissive service credit select one of the payment options listed on the statement and promptly return the information to CalSTRS or your employer as instructed. You must submit your election within 35 days from the date of the statement or you will need to submit a new request, which may increase the cost of the permissive service credit purchase.

Recalculations Treated as New Requests
When CalSTRS receives your request and processes a statement for service credit, and you then decide to buy a different amount of service, return the original statement within 35 days of the date on the statement to receive a new calculation. CalSTRS will count this as a new request and add it to the processing queue, which may result in backlog related delays in returning a revised statement to you. However, we will honor the rates in effect at the time of the original request. Requests received after the 35 days will be subject to rates in effect as of the new receipt date.

What if I am retiring this year and don’t receive my statement?
If you wish to purchase additional service credit you must have your request to CalSTRS before your retirement date. Requests received after your retirement date cannot be accepted. Once you receive your statement, you will have 35 days to initiate payment via personal check or rollover. Once full payment is received, the service credit will be added to your retirement calculation and you will receive a retroactive adjustment back to your retirement date. We are prioritizing requests from those members who are retiring. However due to the enormous volume of requests coming in currently, you can expect to receive your statement within four to six months.

If I am currently paying for permissive service credit, will my balance be adjusted with the new rate?
No. If you are currently paying for permissive service credit, you are locked into the rate factor in effect when you began payments. The new rates only apply to those requests received after July 1.

Effective July 1, 2004, a member can purchase out-of-state service credit in excess of 10 years. If I am buying 10 years but was certified for more, what do I need to do to purchase my additional out-of-state service credit?
If you would like to purchase more of your out-of-state service credit and the certification is already on file, please send in section one of the Out-of-State Certification form informing us that the completed certification is already on file. We will calculate the amount of service requested; however, note that because the ability to purchase more than 10 years was not effective until July 1, 2004, the purchase will be calculated using tiered rates.

Please contact CalSTRS for more information at 916.229.3870 or 800.228.5453