South Carolina Retirement Credit for Military Service

Section 9-1-1140(C) lets an active member of the South Carolina Retirement System establish up to six years of service credit for any period of military service, if the member "was discharged or separated from military service under conditions other than dishonorable", by making a payment to the system. The discharge test is the loosest in this file: other than dishonorable. A general discharge under honorable conditions qualifies. An other than honorable discharge qualifies on the words, since only a dishonorable discharge is named as disqualifying. That is broader than the veteran designation on a driver's licence, broader than the state cemetery, and broader than the apprenticeship credit. The price is the part to model carefully. The payment is "actuarially neutral", determined by the actuary for the board based on the member's current age and service credit, "but not less than sixteen percent of the member's current salary or career highest fiscal year salary, whichever is greater, for each year of credit purchased." Two things follow. Sixteen percent is a floor, not the price. The actuarially neutral figure for an older member close to retirement will exceed it, sometimes by a lot, because the credit converts immediately into a larger annuity. And the floor is measured against the greater of current salary and career highest fiscal year salary, so a member who has stepped down to a lower-paid position does not get a cheaper purchase. The career highest fiscal year salary includes salary earned while participating in the State Optional Retirement Program, the Optional Retirement Program for Teachers and School Administrators, or the Optional Retirement Program for Publicly Supported Four-Year and Postgraduate Institutions of Higher Education, but only if the member has purchased that service under subsection (F). Periods of less than a year are prorated, so a member with three years and four months of service does not have to round. "Military service" is defined for the chapter in Section 9-1-10(19) and it is broad: service in the Army, Navy, Marine Corps, Air Force or Coast Guard; service in the select reserve of any of those components' reserves; and service as a member of the Army National Guard or Air National Guard "of this or any other state". Guard service in another state counts. The list has not been updated for the Space Force. Section 9-1-10(23) defines "public service" to exclude military service expressly, so the six-year military allowance is separate from any public service purchase and does not compete with it. Two limits from elsewhere in the chapter. Section 9-1-1140 is a purchase provision for an active member, so a member who has already separated cannot use it. And there is a general bar on double counting: a member may not purchase credit for a period already credited in the South Carolina Retirement System, the Police Officers Retirement System or the General Assembly Retirement System. Qualified military service during covered employment is a different matter entirely and is not a purchase. Section 9-1-1975, headed "Compliance with USERRA", provides that effective December 12, 1994 and notwithstanding any provision in the chapter to the contrary, contributions, benefits and service credit with respect to qualified military service are provided in accordance with Section 414(u) of the Internal Revenue Code. That is the USERRA pension restoration mechanism: an employee who leaves covered employment for military service and returns is treated as not having had a break in service and may make up employee contributions. That costs the employee only the employee contributions, not sixteen percent, and should always be checked before buying credit under subsection (C).