The ins and outs of retirement service credits
We’re often asked to explain what service credit is and how it works. Customers want to know about topics related to service credit, such as portability (also known as reciprocity), dual membership and out-of-state credit. Here’s a rundown along with some links to helpful resources.
Retirement service credit basics
Service credits are the units used to calculate your pension benefit. The different retirement systems and plans have their own rules about how many you need to qualify for retirement; what we refer to as vesting. Most require five years, equal to 60 service credit months. Think of it like a car payment – you need to make 60 payments before you own the car. For retirement, you need to earn 60 service credit months of employment before you qualify for retirement and, you can only earn one service credit per month maximum.
For your vesting requirements, see your plan guide.
You can view your complete service credit history through your online account. It is a good practice to check your service credit every few years to be sure it matches your expectations.
Membership in multiple plans – also known as dual membership or multiple plans
Some customers have asked about dual membership and wonder if there’s reciprocity or portability (an interchange of service credit) between DRS plans and other plans from different Washington state cities and other states. At DRS, there is portability with the First Class City Retirement Systems for Seattle, Spokane and Tacoma.
You’re a dual member if you have membership in more than one Washington state retirement system, including First Class City Retirement Systems for Seattle, Spokane and Tacoma. We also refer to dual membership as multiple plans. To see if you’re eligible to retire, add up the service credit you earned in each of your member systems. If that combined service makes you eligible to retire from one of your plans, you can choose to retire from all of them. It’s important to know that retiring before full retirement age can result in a permanent reduction of your benefit. Early retirement rules still apply.
If you are in multiple plans, you will receive a separate monthly benefit from each of your systems. Each system calculates the payment amount in its own way, but they all include three factors:
- Service credit years (SCY)
- Multiplier (usually 1% or 2%)
- Highest average monthly earnings (Average Final Compensation [AFC] or Final Average Salary [FAS])
Check out these resources for more information:
- Webinar/Multiple plans
- Podcast – Dual members and reciprocity
- Plan guides
Service credit opportunities for Plan 2 and Plan 3 teachers
Teachers have portability opportunities with other states where they have earned teaching service credit. TRS Plan 2 and Plan 3 customers can use service credit earned as an out-of-state teacher to qualify for early retirement or increase their monthly benefit. Two programs are available: the Out-of-State Service Credit Program and the Public Education Experience Program. You can participate in either or both.
To be eligible, your out-of-state service must be earned from a public retirement system that covers teachers. You must also be a vested member of TRS Plan 2 or Plan 3 through DRS.
If you’re interested, we encourage you to find out if using your out-of-state service credit could benefit you. These resources can help:
- Try the out-of-state service credit calculator
- View a short video (2 mins.): Using Service Credit Earned While Teaching Outside of Washington State
- Listen to this Fund Your Future with DRS podcast — Teachers: Out-of-State Service Credit
- Review your plan guide — TRS Plan 2 or TRS Plan 3
Purchased service credit
Purchasing additional service credit increases your monthly retirement benefit for the rest of your life. You can purchase between one and 60 months of service credit in whole months. Purchasing service credit will increase your monthly benefit, but it will not increase the years of service posted on your account. The increase to your benefit is calculated using the same formula as your retirement benefit. This additional service credit is available at the time of your retirement only. Also, you cannot use the additional credit to qualify for vesting or early retirement (it won’t increase your years of service).
Log in to your account and choose “Purchasing Service.” Here you can find the estimated cost and income increase per month you purchase. Also see your plan guide for details.
Missing or withdrawn service credit
Sometimes customers notice their service credit doesn’t match their seniority date. Often, the difference is because of missing or withdrawn service credit or a break in service. You may be eligible to purchase some or all of the missing credit. Here is what you need to know about the process.
- View your complete service credit history through your online account. It is a good practice to check your service credit every few years to be sure it matches your expectations.
- Contact DRS for a cost estimate. You will need to contact DRS to request a cost for restoring your credit. We are not able to provide an estimate when you call. Similar to a retirement benefit estimate, this cost must be calculated by DRS and may require information from your employer.
- Prepare in advance. See the list of information you’ll need on hand before you call, in your Plan guide under “Missing and withdrawn service credit.”
There are lots of ways you can use your retirement service credit. Some of the rules are complex. If you have questions, please send us a secure message through your online account.