On May 29, 2023, SB 1444 was signed into law. This legislative achievement resulted from a collaborative effort between COAERS and the City of Austin, aimed at establishing a comprehensive framework for plan sustainability. The overarching goal was to enhance the financial health and stability of the retirement system and ensure the delivery of promised benefits to all members.
As result of the legislation, various changes will take effect in several policy areas, including benefits. It's essential to note that these changes do not alter the retirement benefits earned by members or service purchases already completed.
This page is designed to provide you with key information about the modifications to the service purchase rules. It will also help you determine your eligibility for participation in the Limited Time Supplementary Service Purchase opportunity before the rule change takes effect January 1, 2024.
What is a Service Purchase?
At the time of retirement, a member’s lifetime benefit with COAERS is determined by a formula which includes salary, years of service credit, and the membership group you belong to. While the primary way to obtain service credit is by working in a regular full-time position and making mandatory contributions to the System, eligible active members can also establish additional service credit by purchasing it. There are a number of ways in which you may be able to purchase service credit:
What are the Rule Changes Affecting Service Credit Purchases?
Beginning January 1, 2024, the following service purchases can only be made at retirement:
- Supplementary service credit
- Military service
- Non-contributory service
The following service purchases are not affected by the rule change:
- Prior service - this purchase process remains the same. Members can complete a purchase at any time.
- Sick leave - this purchase process remains the same. At retirement, employees may pay to convert their sick time to service credits. Read more about sick leave purchase.
Limited Time Supplementary Service Credit Purchase Program
Active members who were planning to make a supplementary service credit purchase before retirement now have a limited opportunity to make supplementary service credit purchases until December 31, 2028 . Established by the COAERS Board, this time-limited program allows members to fulfill their supplementary service credit purchases until December 31, 2028, once they elect to partcipate in the program by or before December 31, 2023.
What are the Limited Time Supplementary Service Credit Purchase Program Requirements?
To qualify for the limited time program, members must complete the following requirements:
- COAERS must receive the program election form (via mail or MemberDirect) no later than December 31, 2023.
- After submission of the program election form, the member must contact COAERS to receive a service purchase estimate.
- If the member wishes to pursue a supplementary service credit purchase, a Creditable Service Purchase contract must be completed. The member will pay the actuarial cost for each purchase, the cost of which is determined by the COAERS actuary based on the rules and assumptions adopted by the Board for such purpose.
- A member making an election under this section will need to complete the purchase(s) before December 31, 2028 or the member’s actual retirement date, whichever is earlier.
What is the Program Deadline?
Members must submit their election form so it is received by COAERS no later than December 31st, 2023, in order to participate in the program.
To download the program form, click the link below.2023 Limited Service Purchase Election Form.pdf
How to Submit the Program Election Form
Members can submit their form via MemberDirect, US mail, or via the secure drop box located onsite at the COAERS office. For forms submitted via US mail, we recommend you use a method in which you can track the delivery status of the form.
Here is a summary of the changes that will go into effect beginning January 1, 2024:
- Military service purchase: remove the 75% subsidy and allow purchase only at retirement
- Supplemental service purchase: allow purchase only at retirement
- Non-contributory service purchase: allow purchase only at retirement
- Prior service buyback: Change the interest rate from the current statutory rate (member interest credit rate divided by .75) to the assumed rate of return (currently 6.75%). Members can purchase this at any time.
- Sick leave purchase: This purchase remains the same. Employees pay their contributions for the hours of sick leave purchased for service credits at retirement, which is based upon the employee contribution rate in effect at the time.
The benefit policy changes will take effect starting January 1, 2024.
The changes will impact all current active members in both Group A and Group B.
Supplementary service can be expensive. The cost is calculated by determining the present value of your future retirement benefit with and without the purchase. The difference is what you pay. The range of costs for supplementary service can vary from tens of thousands of dollars in some cases or be in the hundreds of thousands of dollars for others. The cost for the purchase varies greatly depending on the member and their particular salary. Members can log into their MemberDirect account to run a supplementary service credit purchase estimate.
For the quickest way to receive an estimate, log into your MemberDirect account and select "Estimate a Purchase" to run a variety of service purchase estimates.
Submit a form
Members can also complete a "Request a Purchase Calculation Estimate" and submit the request to the COAERS Member Services at firstname.lastname@example.org. The form can be located on our website at www.coaers.org/active-member-forms
For additional assistance, contact email@example.com or (512) 458-2551.
Once you have submitted your election form, members must contact COAERS to get an estimate of your purchase. After receiving the estimate, members must decide if you want to follow through with the supplementary service credit purchase. Contact Member Services at (512) 458-2551, firstname.lastname@example.org or via MemberDirect for assistance.
If COAERS receives your election form before December 31, 2023, you have until December 28, 2028, to make a supplementary service purchase and/or purchase up to a maximum of 60 months.
You have until December 28, 2028 to complete any supplementary service credit purchases. If the full payment for the service credits outlined in the Creditable Service Purchase Agreement is not received by December 31, 2028 or by the member's actual retirement date (whichever comes first), credit will be provided to the extent of the amount already paid in monthly increments of service credit. Any excess amount that was submitted to COAERS beyond the owed sum will be returned to the member without accruing interest.
No, retirees will not see any reductions or changes to their monthly benefit as a result of the rule changes.