San Jose Municipal Code Part 18 Purchase of Eligible Prior Military Service

A. Subject to the conditions, limitations and requirements of this Part 18, a member of this plan may purchase service credit in this plan for eligible prior military service.

B. For the purpose of this part, "eligible prior military service" means active service with the Armed Forces or the Merchant Marines of the United States, including time during any period of rehabilitation afforded by the United States government other than a period of rehabilitation purely for educational purposes, where all of the following conditions are satisfied:

1. The military service was performed prior to the member's first employment by the City of San José.

2. The military service is not eligible for service credit in this plan under any provisions other than this Part 18.

3. The member does not receive any service credit toward a military pension for the same period of time.

4. The member does not receive any service credit in a reciprocal system (as described in Part 16 of this chapter) for the same period of time.

5. The military service is continuous; provided, however, that a member may select which of two or more periods of continuous military service for which the member elects to purchase service credit in this plan.

6. The military service for which the member elects to purchase service credit does not exceed four years.

C. In the event there is any dispute regarding a member's eligibility to purchase prior military service, the amount of eligible prior military service, the contributions required or the actuarial reduction in the monthly retirement benefit required for the purchase, or the amount of service to be credited to a member, the board shall determine the issue based on the relevant information presented to the board.

(Ords. 26464, 29266, 29879.)

In order to purchase service credit for eligible prior military service, the member must satisfy all of the following conditions:

A. The member must separate from city service by reason of retirement on or after August 21, 2001. A person who separates from city service for any reason other than retirement shall not be eligible to purchase service credit for eligible prior military service, regardless of whether the person elects to leave his or her contributions on deposit with the retirement fund.

B. The member must file with the secretary to the retirement board a written notice of election to purchase service credit for eligible prior military service.

C. Within thirty days after filing the notice of election, the member must retire for service or disability under the provisions of this chapter.

D. The member must make an irrevocable election to pay the full cost of the additional benefit to the member as determined pursuant to Section 3.36.3720.

(Ord. 26464.)

A. The member shall pay the full cost of any and all additional benefits that accrue to the member or the member's survivors as a result of the purchase of service credit for eligible prior military service.

B. The cost of the additional benefits shall be actuarially determined as the difference between (a) the value of the benefits calculated including service credit for the eligible prior military service and (b) the value of the benefits calculated without service credit for the eligible prior military service.

C. The cost of the additional benefits shall be determined using the interest rate and life expectancy tables used in determining the actuarial equivalents of the optional settlements provided under Part 9.5 of this chapter.

D. The cost of the additional benefits shall include cost-of-living-adjustments provided under Chapter 3.44.

E. For any member who, at the time the notice of election is filed, would not be eligible for a service retirement pursuant to this chapter unless the member received service credit for the eligible prior military service, the cost of the additional benefits shall be determined assuming that the member's final compensation would remain unchanged from the date of the member's retirement to the date the member would have first been eligible for a service retirement had the member not elected to purchase service credit for eligible prior military service.

F. If the member elects the installment payment option under Section 3.36.3730.A.2, the calculation of the cost of the additional benefits shall include an interest factor on the outstanding balance. The interest factor shall be at the interest rate used in determining the actuarial equivalents of the optional settlements provided under Part 9.5 of this chapter.

(Ord. 26464.)

A. The member must pay the full cost of the additional benefit:

1. By making a lump sum payment to the retirement fund prior to the member's retirement; provided, however, that this option shall not be permitted if such payment would exceed the limitations of Section 415 of the Internal Revenue Code; or

2. By making installment payments by executing an irrevocable written election to have the member's monthly retirement benefit actuarially reduced for a period of time selected by the member; provided that such period shall not exceed eight years from the effective date of the member's retirement, and provided that the payments do not exceed the limitations of Section 415 of the Internal Revenue Code; or

3. By making a combination of a lump sum payment and installment payments as described in paragraphs 1. and 2. above.

B. No person shall be permitted to purchase service credit for eligible prior military service by making installment payments if:

1. The required actuarial reduction would exceed the monthly retirement benefit otherwise payable to the member; or

2. The required deduction from a surviving spouse's benefit under Section 3.36.3740.B. would exceed the monthly benefit otherwise payable to the surviving spouse.

(Ord. 26464.)

A. Upon the member's retirement, the member shall be given service credit for the eligible prior military service the member has elected to purchase.

B. If a member elects to purchase service credit for eligible prior military service and pay the contributions and interest specified in this part by making installment payments but fails to complete the required payments because of death before the end of the installment payment period, the unpaid contributions and interest shall be deducted from any benefits paid to an eligible surviving spouse. Such deductions shall be in the same dollar amount as the amount of the actuarial reduction in the member's benefit and shall be made for the time remaining in the installment payment period elected by the member.

(Ord. 26464.)

Under no circumstances shall the service credit for eligible prior military service be included in the determination of service credit for qualification for medical benefits provided under Part 14 of this chapter or for the qualification for dental benefits provided under Part 15 of this chapter.

(Ord. 26464.)

The retirement plan shall bear the cost of one calculation of the full cost of the additional benefits. In the event the member fails to retire within thirty days of filing the notice of election described in Section 3.36.3710, cost of the additional benefits shall be recalculated so that it is determined within not more than thirty days prior to the effective date of the member's retirement and the member shall bear the cost of such calculation.

(Ord. 26464.)