How an Unpaid NYSLRS Loan Can Affect Your Pension

As a NYSLRS member, if you have contributions on file with us, you may be able to take out a loan against them. However, you need to be cautious about this decision. If you retire with an outstanding loan balance, you cannot pay off your loan after you retire. In order to recover the funds that weren’t paid back before you retired, your pension benefit will be permanently reduced.

The amount of your pension reduction is based on three things:

  • Your age at retirement
  • Your loan balance at retirement
  • The type of your retirement (regular service or disability)

Outstanding Loan Balances & Permanent Pension Reductions for 2016

The permanent reduction you receive will be based on your retirement date. So, if you had retired in 2015 with an outstanding loan balance, the permanent reduction would be different than if you retire in 2016. Here are some loan reduction examples if you retire in 2016 with an outstanding loan:
2016 Unpaid Loan Reductions

How to Avoid a Permanent Pension Benefit Reduction

To avoid a permanent reduction, you can increase the amount of your loan payments so your loan is paid in full before you retire. Though loans are repaid through regular payroll deductions, you can make additional payments or pay your loan in full at any time. There are no prepayment penalties. You can also pay off your loan in a lump sum when you retire (before your effective date of retirement). If you wish to pay off your loan, we will tell you what the payoff will be at that time.

Make your check or money order payable to NYSLRS, write “loan payment” and your retirement registration number or the last four digits of your Social Security number on your check, and include your contact information in your cover letter to us. We will apply the payment to your loan and send you an acknowledgment letter. Payments should be mailed to:

NYSLRS
Attn: Accounts Receivable Unit
110 State Street
Albany, NY 12244

If you have any questions about loans or reductions, please visit our Loans page.

5 thoughts on “How an Unpaid NYSLRS Loan Can Affect Your Pension

    1. NYSLRS Post author

      If you’re off the payroll but haven’t retired yet, you can mail payments directly to us at:

      New York State and Local Retirement System
      Attn: Accounts Receivable Unit
      110 State Street
      Albany, NY 12244

      Write “loan payment” on the check and include your registration number or the last four digits of your Social Security number for identification purposes.

      If you’ve already retired, it isn’t possible to pay off your loan. Any loan balances at retirement will permanently reduce your retirement benefit. On the infographic in the blog post above, you can see the retirement loan reduction amounts for 2016.

      Reply
    1. NYSLRS Post author

      Retirees cannot have loans, so if a member has an outstanding loan balance at retirement, the balance must be paid before we can finalize the pension benefit. If the member doesn’t send a payment to pay the loan in full, the balance is paid by a permanent reduction in the pension. The amount of the reduction is calculated to pay the outstanding balance over the member’s lifetime and is based on actuarial tables.

      Reply

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