145-1-35 Service purchase.

(A) For purposes of Chapter 145. of the Revised Code and PERS rules:

(1) “Service purchase” means both of the following:

(a) For members participating in the traditional pension plan, payment for the purchase of service credit pursuant to division (Y) of section 145.01, section 145.20, 145.201, 145.28, 145.29, 145.291, 145.293, 145.295, 145.299, 145.2911, 145.2913, 145.301, 145.302, 145.31, 145.42, 145.44, or 145.47 of the Revised Code or rule 145-2-18 of the Administrative Code.

(b) For members participating in the combined plan, payment for the purchase of service credit pursuant to rule 145-3-21 of the Administrative Code, division (Y) of 145.01 and section 145.20, 145.201, 145.28, 145.29, 145.291, 145.293, 145.295, 145.299, 145.2911, 145.2913, 145.301, 145.302, 145.44, or 145.47 of the Revised Code, or rule 145-3-40 of the Administrative Code.

(2) “One-time or lump-sum payment” means a service purchase that is the full cost of the entire service credit to which a member is entitled and is paid directly to the retirement system.

(3) “Partial payment” means a service purchase that is less than the full cost of the entire service credit to which a member is entitled and is paid directly to the public employees retirement system.

(4) “Payroll deduction” means a service purchase made pursuant to section 145.294 of the Revised Code and rule 145-1-38 of the Administrative Code.

(5) A “statement of cost” means a bill prepared by the retirement system stating the cost of the service credit to be purchased.

(B)

(1) A member participating in the traditional pension plan or combined plan may make a service purchase, pursuant to Chapter 145. of the Revised Code, PERS rules, and federal Internal Revenue Code section 415, either directly to the retirement system or by payroll deduction.

(2) Except as otherwise provided in rule 145-1-38 of the Administrative Code, a member is not eligible to purchase concurrently by direct payment and payroll deduction the same period of service purchase.

(C)

(1) Except as otherwise provided in Chapter 145. of the Revised Code, the interest rate to be used in calculating the cost of a service purchase by a one-time or lump sum payment, partial payment, or payroll deduction shall be six per cent compounded annually. Interest shall be calculated under the applicable Revised Code section from the first date through the end of the month of payment;

(2) Interest shall be applied to unpaid balances of service purchases by partial payment or payroll deduction at a rate of six per cent compounded annually after the first payment.

(3) The public employees retirement board may adjust the interest rates in paragraphs (C)(1) and (C)(2) of this rule. If adjusted, the new interest rate shall apply to any statement of cost issued or initial payroll deduction begun after the adjustment.

(D) If the retirement system is required to apply the member’s contribution rate at the time the service occurred against the member’s earnable salary in calculating the cost of a service purchase, such rate shall not exceed the maximum employee contribution limits that were applicable at the time the service occurred.

(E)

(1) Service credit shall be granted following receipt of all lump-sum payments, partial payments, or payroll deductions received in a month.

(2) Except as otherwise provided in Chapter 145. of the Revised Code, when a member makes a service purchase by partial payment or by payroll deduction, interest at six per cent compounded annually shall be applied to the unpaid balance. The member’s payment shall first be applied to the amount of current interest on the unpaid balance and the remainder of the member’s payment shall be used to reduce the unpaid balance. Service credit shall be granted by multiplying the service credit not yet purchased by a fraction having as the numerator the payment amount less current interest paid and as the denominator the unpaid balance on which the current interest was calculated.

(F)

Except as provided in this paragraph, all service purchases shall be completed prior to issuance of the initial benefit payment. A disability benefit recipient may purchase service credit while on a leave of absence described in section 145.362 of the Revised Code. Any service purchased by a disability benefit recipient during the leave of absence described in this paragraph shall take effect on the first day of the month following the date of purchase.

Effective: 06/23/2008

R.C. 119.032 review dates: 09/29/2010

Promulgated Under: 111.15

Statutory Authority: 145.09, 145.80, 145.82.

Rule Amplifies: 145.01, 145.02, 145.20, 145.201, 145.28, 145.29, 145.291, 145.293, 145.294, 145.295, 145.299, 145.2913, 145.301, 145.302, 145.31, 145.42, 145.44, 145.47, 145.81.

Prior Effective Dates: 4/1/08 (Emer.); 1/12/08; 8/9/07; 7/1/07 (Emer.); 1/1/06; 12/24/04; 1/1/03; 3/22/02; 2/3/00; 3/27/99; 9/27/98; 9/27/97; 11/2/96; 5/29/95; 12/14/89; 1/1/78; 8/20/76