CalSTRS Service Credit Purchase: Buying Back Years, Redeposits, and Sick Leave

Why Service Credit Matters So Much

Every additional year of service credit in your CalSTRS account directly increases your pension. The retirement formula multiplies service credit by your age factor and final compensation — so buying one more year of credit at a 2.0% age factor with $100,000 final compensation adds $2,000 to your annual pension permanently.

There are three ways to add service credit to your account before you retire: purchasing permissive service credit, redepositing refunded contributions, and converting unused sick leave.

Redepositing Refunded Contributions

If you left California public education at any point and withdrew your CalSTRS contributions as a lump-sum refund, you forfeited the service credit those contributions represented. You can buy that credit back by redepositing the amount you withdrew, plus compound interest from the refund date to the payment date.

The cost can be substantial. A $15,000 refund taken 20 years ago might require a redeposit of $35,000 or more once interest is calculated. CalSTRS provides an exact cost estimate through myCalSTRS — request one before committing.

The full amount due for the redeposit must be paid before your effective retirement date. CalSTRS allows installment payments over time, but the balance must be paid by then.

Purchasing Permissive Service Credit

Permissive service credit covers eligible time that didn't count toward CalSTRS — out-of-state public school teaching, federal teaching service, qualifying military service, maternity or child care leave, and certain other categories defined by statute.

The cost is calculated on an actuarial basis using your current age and highest salary, which means the older you are when you buy, the more expensive it becomes. A year of permissive service credit purchased at age 45 costs significantly less than the same year purchased at age 58.

Like redeposits, permissive purchases must be completed before your retirement effective date. Request cost estimates early — at least 12 months before your planned retirement — to decide whether the purchase makes financial sense.

Is a Service Credit Purchase Worth It?

Run the math: divide the purchase cost by the annual pension increase the additional credit produces. If buying one year costs $25,000 and adds $2,000 per year to your pension, the payback period is 12.5 years. If you expect 20+ years of retirement, the purchase generates a strong return. If you're retiring at 65 and aren't in great health, the calculus changes.

Members cannot earn more than 1.0 year of service credit for service in a single fiscal year. Certain purchase types may also have statutory limits on eligible service.

Unused Sick Leave Conversion

This is the free service credit boost. At retirement, your school district certifies your accumulated unused sick leave balance directly to CalSTRS through the Secure Employer Website. CalSTRS then converts those days into service credit using a simple formula:

Total Unused Sick Leave Days ÷ Contract Base Service Days = Additional Service Credit

If your district's contract calls for 182 work days per year and you've banked 546 unused sick days, that's 3.0 additional years of service credit at no cost. Each district defines its own base service days (typically 175 to 186), so the conversion ratio varies.

Sick leave conversion happens automatically — you don't file a separate application. But it only happens once, at retirement. You can't convert sick leave mid-career.

The converted credit counts the same as earned credit in the pension formula. It can also push you over key thresholds: from 24 to 25 years (unlocking the one-year final compensation calculation for 2% at 60 members) or from 29 to 30 years (triggering the career factor bonus).

Timing All Three

Start the process at least 12 months before your target retirement date. Request redeposit and permissive purchase cost estimates through myCalSTRS. Review your district's sick leave balance on your most recent pay stub or through your district's HR portal.

The CalSTRS Service Retirement Guide includes a service credit audit worksheet and a step-by-step timeline for completing purchases before your filing deadline.

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