Purchase of Service Time
I read an interesting article called: “ Purchase Of ‘Air Time’ Not Frequent But Some Nevada Lawmakers Want To Review” by Sean Whaley, Nevada News Bureau, April 16, 2012.
Some conclusions were that some Republican assembly legislators want to review PERS’ purchase of service program though few public employees purchase service credit because of the cost. PERS reports that for FY 2011, $17.2 million was spent to purchase service credit. Counties often buy service credit for employees to reduce future costs.
The reason state employees cannot buy time, is because they have no collective-bargaining rights, and they must take whatever the Legislature gives them. Right now, that is about a 10 annual percent pay cut, no merit increases, no cost of living adjustments for the past few years, an increase in retirement contributions to just over 12 percent and a health insurance plan that costs more but has fewer benefits.
Counties can later replace bought-out employees with new ones costing less. This principle was one of the late Governor Guinn’s suggestions during his first term, and he wasn’t only talking about buying out state employees nearing retirement. He wanted to reclassify all state employees as un-classified, so he and his department heads could fire at will without regard to any work performance standard or regulation. He wanted to replace as many experienced employees with new ones to save money.
Because state employees have no collective-bargaining rights, his proposal would have been devastating especially for employees with 25 years or more of service. Luckily, the state personnel system statutes and regulations provide certain protections and an orderly process to discipline and fire rank and file state employees without political influence.
Right now, an employee can buy up to 5 years of service credit and the amount is based on your age and salary. ( monthly salary times the actuarial percentage times the number of months purchased based on age.) Try it yourself at PERS’ Service Credit Purchase Estimator.
Example: Age 55 (regular member) , making $50,000: one year will cost $20,150 and five years is $100,750.
If you decide to purchase, you must first contact PERS to request a “purchase of service agreement”.
You can use the funds in your deferred compensation account to purchase time and do it without penalty. This is from the Nevada Deferred Compensation website:
PERS Service Credit Purchase You may request a transfer from your NDC account to Nevada PERS for service repurchase or payment while you are still working. This is a non-taxable transfer. To determine eligibility and cost, please contact Nevada PERS at 1 (866) 473-7768.
Contact PERS by calling them at (775) 687-4200 or toll-free at 1-866-473-7768. Their Las Vegas number is: (702) 486-3900.
The specific statute chapter regarding PERS is NRS 286.
Purchase of service credit: http://leg.state.nv.us/NRS/NRS-286.html#NRS286Sec300
Purchase of service credit by public employers: http://leg.state.nv.us/NRS/NRS-286.html#NRS286Sec3005
My advice has been consistent for years and years, “Get out as soon as you can.”