Pension Credit for Prior Police Department Service – Senate Bill No. 464
Senate Bill No. 464 was signed into law on July 8, 2024. This bill allows for a city (except first-class cities), borough, town, township or regional police department to amend its plan to allow full-time officers who have satisfied the vesting requirements the option to purchase up to five years of pension service credit for prior part-time or full-time police service provided in a police department. This bill does not impact PMRS plans with regard to service transfer.
The calculation for the cost of the service purchase is similar to that of the purchase of prior military service (plan’s normal cost percentage, capped at 10% x number of years of buyback x officer’s average annual rate of compensation over the first three years of service x interest at 4.75% compounded annually from the date of initial entry into full-time service to the date of payment). Only prior service for which the officer does not otherwise receive or is entitled to receive pension credit in another plan is eligible for buyback. When combined with credited military service, the total buyback amount may not exceed five years.
Things to remember
- Adoption is optional: The plan ordinance/document must be amended before this buyback is permitted.
- Service to buyback is combined with any military service buyback and the aggregate buyback is capped at 5 years. The calculation of the buyback cost is the same.
- Eligible service includes prior police service that does not count toward service credit from any other pension fund.
Next Steps
- Contact Conrad Siegel to prepare an actuarial study. The actuarial study will determine the estimated cost associated with the change.
- Amend your plan. If the municipality decides to implement the change, contact us for help to draft a plan amendment to adopt the change.
- Effective date is September 6, 2024, which is 60 days from the date signed into law (July 8, 2024).