The ASRS Service Purchase Program is a benefit that allows active members with previous qualifying service to purchase past service time. There are 5 types of qualifying service, with the most common being the purchase of Forfeited Service or the purchase of Other Public Service. While it can be costly, it can also be beneficial - potentially increasing your lifetime benefit and/or allowing you to retire earlier than planned.
Forfeited Service
Members who are eligible to purchase forfeited service are those who have previously terminated employment with an ASRS employer, took a refund of their contributions, are now working directly for an ASRS employer, and making contributions again. A common misconception is that purchasing this type of service just means paying back the amount initially refunded. In reality, buying previously forfeited service costs more than the original refunded amount, as you’ll need to pay back the original refunded amount plus interest that would have accrued, had the funds remained in the ASRS.
If you do find yourself in the position of leaving your ASRS employer and are thinking about refunding your account, we encourage you to visit the Refunding page of AzASRS.gov to get more information and weigh the pros and cons. (Or read our article, “Should I Refund My ASRS Account?”)
Other Public Service
There are two types of employment that can be purchased under this category. If you were previously employed by a public, non-ASRS employer, such as a federal, city, county, state, political subdivision, school or university employer, you may be eligible to purchase some of that time so it applies towards your ASRS retirement. There are some stipulations. For instance, if you participated in that previous employer's retirement system, you would be required to relinquish your rights to any benefits from the previous employer’s retirement system prior to purchasing that service with the ASRS.
This is also the category that covers people who may have worked for an ASRS employer but were not contributing members for a period of time. Most state agencies, for example, have a 6-month waiting period from when an employee is first hired to when they start contributing and become members of the ASRS. Once they’ve been contributing members for 5 years, those employees can purchase those 6 months of service. Additionally, if you worked for an ASRS employer but didn’t meet ASRS membership criteria by working at least 20 hours per week for 20 or more weeks in the fiscal year, you would also be able to purchase any time in which you were working for the ASRS employer but not contributing. (Note: Members cannot purchase service for any months in which they have already received service credit with the ASRS.)
Other Types Of Service Available for Purchase
Military Service, Leave of Absence, and Contributions Not Withheld are all additional categories of service purchase. To read more about each type, visit our Service Purchase page. There you’ll also find a helpful Frequently Asked Questions section that covers a variety of helpful topics.
Cost
How much does purchasing service cost? That depends. For starters, there are different methods of calculating cost depending upon the type of service purchase you qualify for. Additionally, your age, current salary, years of service, and the amount of time you’re looking to purchase can all affect cost. For Other Public Service, Military Service, and Leave of Absence, how early or late into your career you purchase time will also affect the price. For these particular service types, cost is determined by calculating how much money we need now in order to pay out the benefit increase that your purchased time will provide when you retire. The earlier you purchase your time, the longer the ASRS has to invest and grow the money you’ve paid before you retire, and the less it’ll cost.
The best way to receive an estimate of how much it will cost is to log into your secure myASRS account and start the service purchase application process, during which you’ll be provided with pricing and payment options. Don’t worry about submitting a request in error because there is no obligation to purchase any request that you submit online, should you decide it is not the right price or circumstance for you. Going through the service purchase application just to see how much it might cost is completely okay – even encouraged!
For additional information on service purchase, payment options, and frequently asked questions, make sure to visit our service purchase page at AzASRS.gov.
