Is it worth buying pension credits for this teacher?


Q. My son worked as a teacher in Maryland for nine years, and he’s worked as a teacher in New Jersey for the last three years. We are looking into service credits and don’t understand it and can’t find an explanation. Would he transfer his Maryland years to the New Jersey pension system? And if so, why would he have to pay service credits if he has already paid into the Maryland system.
— Figuring it out

A. Welcome back to the state for your son.

New Jersey certainly has a need for teachers.

Per the New Jersey Division of Pensions & Benefits, your allowance, or better said, your retirement benefits, depends on the amount of service credits posted to your pension account at the time of retirement along with your final average salary, said Anibal Guerrero Russo, a certified financial planner with Peapack Private Wealth Management in Bedminster.

Another way to think about your pension service credits is the years and months of service you’ve given as a worker, including purchased service credits, he said.

“An individual receives one month of service credit for each month of a full pension contribution. Furthermore, as a participant in the pension plan, you are eligible to purchase additional service credits,” he said. “To be considered an active member, one must have made contributions to the retirement system within two years of his or her purchase request and not retired or withdrawn his or her contribution.”

Whether it’s beneficial to purchase additional service credits depends on many variables, Guerrero Russo said.

These include affordability, cash flow, employer contribution, other financial assets, and more.

He said the decision to purchase should be personal to the individual and their overall financial outlook, both currently and at retirement.

Should you have further questions, we recommend booking an online counseling appointment. You can do that here.

As it relates to service completed through the Maryland State Retirement and Pension system, your son should also schedule an appointment online with a representative regarding the particular benefits accumulated over the years. You can do that here.

“If vested, you are guaranteed to receive a future benefit for the years and months of service earned before termination,” he said. “Additionally, depending on your specific situation, you may be eligible for a refund for the contributions made to the Maryland State Retirement and Pension system.”

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This story was originally published in January 2024. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.