From the CalPERS website:

Press Release
September 15, 2010


External Affairs Branch
(916) 795-3991
Patricia K. Macht, Director
Brad Pacheco, Chief, Office of Public Affairs
Contact: Edward Fong, Information Officer
pressroom@calpers.ca.gov


New CalPERS Actuarial Assumptions Increase Cost of Service Credit Purchases
Slight Benefit Increase for Optional Benefit Payment Choices

SACRAMENTO, CA – The California Public Employees' Retirement System (CalPERS) today announced that newly adopted actuarial assumptions will increase the cost of service credit purchases effective immediately.

The new assumptions will also result in slightly higher benefit amounts for members who choose an alternative payment option at retirement that reduces their unmodified benefit amount in order to provide a benefit for a spouse or beneficiary upon the retiree's death.

"Under state law, we are required to charge the member the full cost of the additional liability due to the purchase of additional service credit," said CalPERS Vice President George Diehr. "The new assumptions will increase the member's liability to the employer so the cost of service credit purchases will have to go up."

In April of this year, the CalPERS Board adopted a new "experience" study that updated various actuarial assumptions based on the actual experience of CalPERS members from 1997 to 2007. The study found that CalPERS members were living longer than previously assumed, members were retiring slightly earlier, and members with higher years of service were receiving bigger salary increases than previously assumed. The new actuarial assumptions will result in an increase in the average cost of service credit purchases under the "present value" costing method, ranging from 12 percent to 38 percent, depending on the member's retirement plan classification.


Plan Average Increase
Public Agency Miscellaneous 17%
Public Agency Safety 24%
State Miscellaneous 18%
State Industrial 12%
State Safety 23%
Police Officers, Firefighters 23%
California Highway Patrol 16%
Schools 38%


The most common types of service credit purchases that use the present value costing method include Additional Retirement Service Credit (ARSC); military service; and leave of absences for maternity or paternity, educational purposes, sabbatical, serious illness, and service leave.

"We regret the fact that the new assumptions will result in higher costs for service credit purchases," said CalPERS Chief Actuary Alan Milligan. "Our fiduciary responsibility requires us to make sure that benefits are fully paid for."

While the new actuarial assumptions will increase the cost of purchasing service credit, CalPERS members who select an optional benefit payment method at retirement instead of the unmodified allowance in order to provide a benefit to a spouse or beneficiary upon the member's death will benefit from a smaller reduction in the benefit amount, about $5 to $10 for every thousand dollars of benefit, resulting in a slightly higher benefit amount. More information about how the new actuarial assumptions will affect the cost of purchasing service credit and optional benefit payment methods are available on the CalPERS website at www.calpers.ca.gov.

The new assumptions go into effect on September 16, 2010. They will be used for service credit purchase cost requests postmarked or received by CalPERS September 16, 2010, or later, and for calculations of optional benefit payments for members who chose a retirement date of September 16, 2010, or later. Any service credit cost requests postmarked or received by CalPERS September 15, 2010, or earlier will be calculated with the old assumptions. Likewise, benefit calculations for retirement dates of September 15, 2010, or earlier will use the old assumptions.

CalPERS is the largest public pension fund in the U.S. with assets of approximately $210 billion. The retirement system administers retirement benefits for more than 1.6 million active and retired California public employees and their families on behalf of 3,000 public employers, and health benefits for more than 1.3 million enrollees.

I'm glad I elected to buy my back time when I did. Too bad for future buying. If its too expensive, I can just work 1 year, 2 months longer and get the same benefits without paying another dime.