Retirement Savings and Confidence Continue to Decline

A new National Institute on Retirement Security (NIRS) report reveals that the median retirement account balance has dipped to $2,500 for working age American households, down from $3,000.

NIRS researchers discovered that some 62 percent of working households age 55–64 have retirement savings less than one times their annual income, which is far below what Americans need to be self-sufficient in retirement. NIRS reported that the typical near-retirement working household only has about $14,500 in retirement savings.

Retirement-CrisisEven after counting households’ entire net worth, the report revealed that two-thirds (66 percent) of working families still fell short of conservative retirement savings targets for their age and income, based on working until age 67.

Retirement Crisis Feared By Many

Another NIRS report found that an overwhelming majority of Americans – 86 percent – believe that the nation faces a retirement crisis. Nearly 75 percent of Americans are concerned about their ability to achieve a secure retirement. Some 82 percent say a pension is worth having because it provides steady income that won’t run out, while 67 percent indicate that they would be willing to take less in salary increases in exchange for guaranteed income in retirement.

Comptroller DiNapoli’s Position On Retirement Security

New York State Comptroller Thomas P. DiNapoli, the administrator of NYSLRS and trustee of the Common Retirement Fund, has long addressed the topic of retirement security and called it “an issue that we have to confront.” In remarks he delivered last June during a Retirement Summit at The New School’s Schwartz Center for Economic Policy, the Comptroller called attention to the “staggering” national retirement savings shortfall that’s between $7 trillion and $14 trillion.

Comptroller DiNapoli is encouraging “not just a discussion of the race to the bottom, but a broader discussion about retirement security.”

The NYSLRS Member Annual Statement

We started mailing our 2015 Member Annual Statements last week. The mailing takes approximately six to eight weeks to complete. Most members typically receive their statement by mid-July.

Your Statement contains important information about your NYSLRS membership, including your reported salary, service credit and beneficiaries. Depending upon your own circumstances, your Statement may also contain information about projected annual benefits, loan balances and past service account balances.

When You Receive Your Statement

Your Statement is automatically mailed to your employer, who is responsible for distributing it to you. (If you’ve left public employment, we mail your Statement to the home address we have on file for you.) When you receive your Statement, be sure to review it carefully. Your Statement is a valuable tool that can help you plan for retirement, so you should verify that the information in it is accurate. You can contact us to correct most errors, but if you have a question about your reported salary, you should contact your employer.

Member ID Cards

Your Statement also includes a Member Identification Card. Your Member ID Card contains the registration number you have been assigned within NYSLRS. Please use this number, rather than your Social Security number, whenever you contact us.

By limiting the use of your Social Security number, you’re helping us protect you and your personal information. And with incidences of identity theft so prevalent in society, we’re committed to ensuring the safety of that information.

When you receive your Statement, be sure to clip out your Member ID card and save it in a secure and easily accessible place so your registration number will always be handy.

What If You Have Questions About Your Statement?

 The Member Annual Statement Overview and Tutorial requires Adobe Flash Player version 11.4 or later. You must have at least this version installed on your computer to view this presentation.Our website features a special interactive, online presentation about the Member Annual Statement. It offers a page-by-page explanation of your Statement, and also contains answers to additional Frequently Asked Questions. You can view the entire presentation, or go directly to the information you need.

For more information about your Statement, you can contact us via this email form. One of our representatives will respond back to you within 3 to 5 business days.

This is Public Service Recognition Week

This week we proudly celebrate the more than 600,000 members and 400,000 retirees of The New York State and Local Retirement System (NYSLRS) for their service to the people of New York State.

A Brief History of Public Service Recognition Week

Public Service Recognition Week (PSRW) was created in 1985 to honor the men and women who serve our nation as federal, state, county and local government employees. Congress officially designated the first week of May as PSRW. This year, it is being celebrated May 3 through May 9.

PSRW publicly honors all the men and women who dedicate their careers – and sometimes their lives – to keep others safe and provide for the common needs of our society. These individuals strive to help make life better in our communities.

The Public Servants of NYSLRS

NYSLRS is a public retirement system full of stories about State workers and municipal employees finding value and meaning in the work they do, especially when they help another New Yorker. These are stories you may not read or hear about, because to some public employees, they’re just doing their job.

Whether they are picking up our garbage, educating our children, or cleaning our roads during snowstorms, NYSLRS members deliver the critical resources and services many New Yorkers depend on. Likewise, many NYSLRS members and retirees also give back to our state by serving their communities as volunteers and supporters of charitable causes.

Comptroller DiNapoli’s Faith in Public Service

New York State Comptroller Thomas P. DiNapoli is the administrator of NYSLRS and trustee of the Common Retirement Fund. His public service career began when he was elected as a trustee to the Mineola Board of Education at the age of 18, making him the first 18-year-old in New York State to hold public office. Comptroller DiNapoli is understandably proud about the career path he has chosen and he often speaks about the contributions that New York’s public employees make; not just as engaged citizens, but as individuals who bring value to the communities where they live:

NYSLRS – One Tier at a Time: PFRS Tier 6

When you join the New York State and Local Retirement System (NYSLRS), you’re assigned a tier based on the date of your membership. There are six tiers in the Employees’ Retirement System (ERS) and five in the Police and Fire Retirement System (PFRS). Each tier has a different benefit structure established by New York State legislation. Our series, NYSLRS – One Tier at a Time, walks through each tier to give you a quick look at the benefits in both ERS and PFRS.

Today’s post looks at Tier 6 in the Police and Fire Retirement System. Anyone who joined PFRS on or after April 1, 2012 is in Tier 6. PFRS Tier 6 members currently make up 8.4 percent of NYSLRS’ total membership, totaling 2,861 members, making it the second largest tier in PFRS.

Check out the graphic below for the basic retirement information for PFRS Tier 6 members.

PFRS-Tier-6-Benefits

Where to Find PFRS Tier 6 Information

If you’re a PFRS Tier 6 member, please find your retirement plan publication from the list below for more details about your benefits:

Please visit our Publications page for special plans under miscellaneous titles.

Stay tuned for more NYSLRS – One Tier at a Time posts. Next time, we’ll take a look at another ERS tier. Want to learn more about the different NYSLRS retirement tiers? Check out some earlier posts in the series:

Earth Day, Energy Saving and Retirement

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Image Credit: NASA’s Earth Observatory

As Earth Day marks its 45th year in support of environmental protection, it’s a good time for members and retirees to think about their energy usage, and its possible added cost during retirement.

When you’re working, you may be more likely to turn off certain appliances or set your thermostat to a lower temperature while you’re out of the house. You do this to save energy and keep your utility costs low.

But, once you’ve retired, the time once spent at the office may now be spent primarily at home, resulting in an additional 40 hours of energy use a week as you use appliances, heating/cooling systems, and more. With some careful planning and changes in behavior, you can make sure your utility costs are manageable and fit your post-retirement budget.

Helpful Tips for Energy Saving

To help reduce energy consumption during retirement, we’d like to share some tips courtesy of the New York State Department of Environmental Conservation. Here are some things you can do in your home right now:

In Your Kitchen

  • Set the refrigerator temperature between 38 Farenheit (F) and 42 F
  • Set the freezer temperature between 0 F and 5 F
  • Microwave whenever you can

Washing Laundry

  • Wash and dry only full loads
  • Wash with warm water instead of hot
  • Rinse with cold water instead of warm

In Your Bathroom

  • Install a low-flow shower head
  • Reduce the volume of water in your toilet tank
  • Shut off the sink while brushing your teeth

The DEC has more tips you can use to make environmentally-responsible choices in your daily life. You can also visit the New York State Energy Research and Development Authority (NYSERDA) for information on making your home energy efficient.

NYSLRS Is Doing Its Part

Here at NYSLRS, we’re actively seeking opportunities to reduce our energy footprint and utilize renewable resources. Some of what we’ve accomplished includes:

  • Purchasing 25 percent of the energy we use from renewable sources.
  • Printing publications on paper that is at least 30 percent post-consumer waste (PCW).
  • Publishing newsletters that are now 100 percent PCW, and moving towards 100 percent PCW on all of our printed publications.
  • Moving toward using soy-based inks, rather than petroleum-based.
  • Transitioning to two-sided printing and expanding the use of environmentally friendly printers, and
  • Implementing a scanning system that has markedly reduced our paper files.

Overtime Limits and Tier 5 & 6 Members

In the New York State and Local Retirement System (NYSLRS), Tier 5 and 6 members have limits on the amount of overtime (OT) we can use in the calculation of their pension. Any OT amount in excess of these limits will get excluded from the member’s final average salary.

For Employees’ Retirement System (ERS) and Police and Fire Retirement System (PFRS) Tier 5 members and PFRS Tier 6 members, the OT limit is based on the calendar year; for ERS Tier 6 members, the limit is based on the State’s fiscal year (April 1 – March 31).

ERS Tier 5 OT Limit

The OT limit for ERS Tier 5 began in 2010 at $15,000 and increases by 3 percent each year. This year (calendar year 2015), the OT limit is $17,389.11.

PFRS Tier 5 OT Limit

In PFRS Tier 5, any overtime paid to a member in excess of 15 percent of their regular annual wages can’t be included in their final average salary calculation. This percentage doesn’t vary.

ERS Tier 6 OT Limit

The OT limit for ERS Tier 6 began in State fiscal year 2012-13 at $15,000. The limit increases each fiscal year, and is based on the Consumer Price Index on December 31 of the previous year. This fiscal year (2015-16), the OT limit is $15,608.

PFRS Tier 6 OT Limit

In PFRS Tier 6, any overtime paid to a member in excess of 15 percent of their regular annual wages can’t be included in their final average salary calculation. This percentage doesn’t vary.

Overtime-Limit

If you’d like to know more about what can or can’t be included in your retirement calculation, find your retirement plan publication on our Publications Page. If you have questions about overtime and the overtime limit, please contact us.

The Top 5 Things NYSLRS Members Need to Know About Retirement and Divorce

The most important thing you need to know is that if you divorce, your ex-spouse may be entitled to a portion of your pension or other New York State & Local Retirement System (NYSLRS) benefits. But determining how to divide retirement assets in your NYSLRS plan as a result of a divorce can be complex. Knowing these five key points can provide some clarity:

NYSLRS Requires a Domestic Relations Order (DRO)

For divorcing NYSLRS members, any division of your retirement benefits must be stated in the form of a domestic relations order (DRO) – a court order issued after a final judgment of divorce that gives us specific instructions on how your benefits should be distributed to your former spouse.

Without A DRO, NYSLRS Will Not Provide Your Ex-Spouse Any Portion of Your Pension.

The pension that you receive is a benefit held in trust by NYSLRS and you are considered the beneficiary of that trust. You cannot assign retirement benefits to another person and, because NYSLRS has no legal relationship with an ex-spouse, no payments will be made to an ex-spouse based on a separation agreement or judgment of divorce alone.

Prepare the DRO before you finish the divorce

The DRO must be signed by a trial court judge and entered with the appropriate County Clerk’s Office before it can be implemented. Our Matrimonial Bureau may review your DRO for compliance with the law before you submit the draft order to the court. This way, if the DRO does not meet the requirements, you will have a chance to make revisions.

We require a certified copy of the signed DRO and a copy of your judgment of divorce prior to implementing the terms of the DRO. Payments to your ex-spouse will start when your retirement benefit is calculated and finalized, and will be retroactive to your date of retirement if we receive the DRO and judgment of divorce before your retirement benefit is finalized.

Change your beneficiary designations on your retirement benefits after your divorce.

It is especially important to review your beneficiary designations to ensure your benefits will be distributed according to your wishes. Effective July 7, 2008, beneficiary designations for certain benefits are revoked when a divorce, annulment or judicial separation becomes final. Please read our Guide to Domestic Relations Orders and review our DRO FAQs before you finalize your divorce.

Contact an attorney with DRO experience

He or she can help you ensure the DRO you submit to the court fairly represents the intentions of the parties.

How Can NYSLRS Help?

We recently developed an online worksheet, which helps you create your own DRO easily in the proper format. Just enter your tier, plan, employment status and answer the questions that follow. Then, submit a copy of your proposed DRO to us for review before you submit it to the court. You can email it, along with scanned copies of your judgment of divorce, to our Matrimonial Bureau at dro@osc.state.ny.us. DRO proposals that are prepared using this form will be given priority review.

If you have any questions about divorce and your benefits, please contact our Hearing Administration & Matrimonial Bureau staff by email at dro@osc.state.ny.us, by writing to 110 State Street – Mail Drop 7-9, Albany, New York 12244, or by fax at 518-474-7794.

Understanding Your Tier 6 Contributions

In the New York State and Local Retirement System (NYSLRS), Tier 6 members make contributions based on their earnings. This means your contribution rate could change from year to year depending on how much you earned in previous years. As of April 1, 2015, there are two ways we determine the contribution rates of Tier 6 members.

For your first three years of membership, we base your contribution rate on an estimated annual wage we receive from your employer. After three years, we start using the record of your past earnings to determine your contribution rate. We call this the two-year look back.

During the two-year look back, we look back at your earnings from two years before and use that amount to determine your contribution rate for the current year. Watch the video below for more information. If you have questions about Tier 6 contributions, please contact us.


Video Transcript:

As a Tier 6 member, the contributions you make toward retirement are based on your earnings. This means your contribution rate could change from year to year depending on how much you earned in previous years.

If you’re a Tier 6 member with three or more years of membership in NYSLRS, we determine your contribution rate using a method called the two-year look back.

This means we look back at your earnings from two years before. We use those earnings to determine your contribution rate for the current year starting April first.

So, we look back to what you earned from April first to March thirty-first two years ago, and use those earnings to determine your contribution rate. This will be your contribution rate for the entire year until next April first, when we’ll do the look-back again to determine your new rate.

Remember, as a Tier 6 member, your contribution rate could change each year depending on your earnings. You may not see a change right away, but over time, you could wind up contributing more or less than you did before.

If you have any questions about Tier 6 contribution rates or your benefits, visit our website or contact us. Thanks for watching.

What Happens if You Have a NYSLRS Loan and Go Off Payroll?

Borrowing against your contributions is just one of the services available to eligible members of The New York State & Local Retirement System (NYSLRS). But what happens if you have an outstanding loan, go off the payroll and your automatic loan payments are discontinued before the loan is paid off?

The answer is….it depends. If you leave your job because you’re retiring, then your benefit will be permanently reduced – you can’t pay off your loan once you’re retired. However, if you leave work for any other reason, you are required to make direct payment at least quarterly and complete repayment within five years from the date the loan was issued. If you fail to meet either of these conditions, your loan will default.

What Happens If My Loan Defaults?

If your loan defaults:

  • We must report your outstanding balance, minus any previously taxed amount, to the IRS as a distribution to you.
  • You must include the loan on your federal income tax return for the year it defaults. (If it was taxable prior to default, you will not be re-taxed on that portion of the loan.)
  • If you’re under age 59½, you will be subject to an additional 10 percent penalty on the taxable portion of the loan. (There are no New York State or local taxes due on the distribution.)
  • You still owe the balance to the Retirement System and the loan continues to accrue interest and insurance charges until it’s paid in full.
  • We cannot issue a new loan until the defaulted loan has been repaid.

Take the Proper Precautions

If you leave public employment, contact us as soon as possible. We’ll tell you the exact amount you need to repay to avoid defaulting. When making a payment, be sure to write “loan payment” on your check and include your member registration number so we can apply it to the correct account. Mail payments to us at the following address:

New York State and Local Retirement System
Attention: Loan Unit
110 State Street
Albany, NY 12244

For more information about loans, you can contact us via this email form: https://nysosc9.osc.state.ny.us/product/ccsub.nsf/fsWeb?OpenFrameset. One of our representatives will respond back to you within 3 to 5 business days.

Need to Know Tax Information for NYSLRS Retirees

If you haven’t filed your tax returns, you still have 28 days until April 15 to do so. In the interim, here’s some useful information that may help you:

The W-4P Form

Your retirement benefit from the New York State & Local Retirement System (NYSLRS) isn’t subject to New York State income tax, but it is subject to federal income tax. The W-4P form determines withholdings from your pension payments.

NYSLRS takes care of your estimated tax payment requirement by withholding money from your pension based on your W-4P. If you’re receiving a NYSLRS pension, you need to file a W-4P to determine how much to withhold.

Significance of the W-4P

If you don’t have enough withheld from your retirement income during the year, you could find yourself owing the Internal Revenue Service (IRS) extra in interest and penalties when you file your tax return.

Changing Your W-4P

You can submit a new W-4P form whenever you want as your life circumstances change. Don’t know how much you want withheld from your pension? Our Withholding Tax Calculator can help you figure out the amount. If you need to update your withholding status, you can send us an updated W-4P form. Make sure you check out our W-4P tutorial if you have questions about filling out the form.

Other Tax Information Resources

If you have questions about your 1099-R tax form – the form that reports your pension distributions from us – our 1099-R tutorial can help.

If you are a retiree receiving regular monthly pension checks from NYSLRS, you may also want to read our Frequently Asked Questions dealing with taxes and your retirement benefit.

And if you ever have any other retirement-related questions that we can assist you with, please don’t hesitate to contact us via this email form: https://nysosc9.osc.state.ny.us/product/ccsub.nsf/fsWeb?OpenFrameset. One of our representatives will respond back to you within 3 to 5 business days.