Tag Archives: beneficiary

Choosing Your Pension Payment Option

When you retire from NYSLRS, you’ll need to decide how you want to receive your pension benefit.

You’ll have several options. All of them provide a monthly benefit for life. Some also provide a limited benefit for one or more beneficiaries after you die. Others let you pass on a monthly lifetime pension to a single beneficiary. Each option pays a different amount, depending on your age at retirement, your beneficiary’s age and other factors.

Pension Payment Option

That’s a lot to think about, so let’s make this clearer with an example. Meet Jane. Jane plans to retire at age 60, and she has a husband, a granddaughter and a grandson who are financially dependent on her. First, Jane needs to decide whether she wants to leave a benefit to someone after she dies. She does.

That eliminates the Single-Life Allowance option. While it pays the highest monthly benefit, all payments stop when you die.

Jane considers naming her grandchildren as beneficiaries to help pay for their college education.

The Five Year Certain and Ten Year Certain options don’t reduce her pension much, and they allow her to name more than one beneficiary. If Jane dies within five or ten years of retirement, her grandkids would split her normal benefit amount for the rest of that period.

However, the Five and Ten Year options wouldn’t be lifetime benefits. Since her husband doesn’t have his own pension, she’ll leave him her pension and look into a tax-deferred college savings plan for her grandkids instead.

There are a few options that leave a lifetime benefit:

The Joint Allowance — Full and Joint Allowance — Half options continue paying all or half of the retiree’s normal benefit amount to the beneficiary for life.

The Pop-Up/Joint Allowance — Full and Pop-Up/Joint Allowance — Half options also continue the retiree’s normal benefit. They reduce the pension a little more, but they have an advantage: If a retiree outlives his or her beneficiary, the retiree’s monthly payment will “pop up” to the maximum payable under the Single-Life Allowance option.

As you plan for your own retirement, you may also want to consider questions, like:

  • Do you qualify for a death benefit?
  • Do you have life insurance?
  • Do you have a mortgage or unpaid loans that will have to be paid if you die?

These and other factors can significantly impact your retirement planning.

To find out more about pension payment options, check your retirement plan booklet on our Publications page. You can also try our Benefit Calculator, which allows most members to estimate their benefits under the different payment options. For tips on developing a financial strategy that works for you, take a look through Straight Talk about Financial Planning for Your Retirement.

Power of Attorney

Power of AttorneyA Power of Attorney document (POA) lets a friend or family member you trust make decisions for you in your legal, financial and business dealings. It can be a helpful tool in case of emergency, hospitalization or unexpected admission to a nursing home.

Usually, NYSLRS can’t release benefit information to anyone without your say-so — even close family members. However, once we have a copy on record, we can discuss your pension with an agent you choose in your POA.

On the other hand, you need to understand the importance and considerable impact of a POA. Once you sign one, your agent can do more than request information; they can change your address with NYSLRS or even adjust your tax withholding — all without asking you. Some POAs include something called a statutory gift rider. If yours does, your agent will also be able to redirect your deposits to a joint bank account. (We can’t ever deposit money into an account that does not have your name on it.)

If you’re thinking about a POA, NYSLRS offers a form that combines the New York State statutory POA with a gift rider. This form meets all of New York State’s legal requirements, and it’s limited to retirement benefit transactions. For example, it won’t serve as a healthcare proxy. You can find the form at www.osc.state.ny.us/retire/forms/poa.pdf.

It’s important to consult an attorney before you execute a power of attorney document or anything similar.

NYSLRS’ Top Five Retirement Myths from 2016

Retirement Myths vs FactsWith two retirement systems, six tiers and 346 retirement plan combinations, it’s quite possible that the NYSLRS benefit information your coworker is talking about may not apply to you. That’s why, periodically, we like to clear up some common misconceptions we hear from members and retirees. Here are our top five retirement myths from 2016.


Myth #1  “NYSLRS can change the rules determining pension contributions and retirement benefits.

Fact  We can’t. The contributions you make and the benefits you enjoy are dictated by law — as passed by the Legislature and signed by the Governor. NYSLRS administers these programs.

This is also true for retirement incentives; the decision to offer an incentive comes from the Legislature and the Governor. Individual employers, like your town or police department, may decide to offer their own incentives to employees, but these do not affect a member’s NYSLRS pension benefits.


Myth #2  “Your final average salary (FAS) is based on the years immediately preceding your retirement

Fact  While the number of years used to calculate your FAS varies by tier and plan, they aren’t limited to your final years of employment. We look at your entire employment history while you were a member of NYSLRS to find the consecutive years when you earned the most, and those years are used in the calculation for your FAS. For more information, visit our website.


Myth #3  “NYSLRS membership ends when you stop working for a NYSLRS participating employer.

Fact  Even when you leave public employment before you’re eligible to retire, you’re still a NYSLRS member. If you’re vested, you will be eligible for a pension benefit once you reach the retirement age specified by your plan. If you’re not vested, your contributions stay with NYSLRS and continue to earn 5 percent interest for seven years. If you leave public employment with less than 10 years of service, you can end your NYSLRS membership and request a refund of your retirement contributions.

What else happens when you leave public employment? Check out your plan publication to learn more about your benefits. You can also visit our website for more information.


Myth #4  “You can’t make extra payments to pay off a NYSLRS loan faster.

Fact  You can make additional payments or pay your loan in full at any time, with no prepayment penalties. For the payoff balance on your loan, call our automated phone service (1-866-805-0990 or 518-474-7736 in the Albany, New York area and press 3 for members; then 1 or 2 for the Employees’ Retirement System or the Police and Fire Retirement System; and then 1 for loan services). For more information, visit Loans: Getting One and Paying it Back.


Myth #5  “If Call Center lines are busy, there’s no way to get benefit information.

Fact  Even when the Call Center phone lines are busy, our automated phone system can help members and retirees with a number of tasks 24 hours a day, seven days a week.

Press 3 for Member Services, which includes current loan balance and application status information.

Press 4 for Retiree/Beneficiary Services, which includes COLA eligibility and federal tax withholding information.

Press 6 for Other Services, which includes requesting forms by fax.

Another way to get benefit information is to visit the Contact Us page on our website, which has answers to many commonly asked questions. You can also email us using our secure email form.


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NYSLRS Basics: Special Beneficiary Designations

As a NYSLRS member, it’s important for you to name a beneficiary. Upon your death, your beneficiaries may be eligible to receive a death benefit. You may designate any person, a trust or organization to receive your ordinary death benefit – it does not have to be a family member.

The two main types of beneficiaries are primary (an individual or individuals who receive your benefit if you pass) and contingent (an individual or individuals who receive your benefit if your primary beneficiaries predecease you.)

Primary and Contingent Beneficiaries

A primary beneficiary is the person who receives your death benefit. If you name more than one primary beneficiary, each will share the benefit equally, unless you indicate specific percentages totaling 100 percent are to be paid (e.g., John Doe, 50 percent, Jane Doe, 25 percent, and Mary Doe, 25 percent).

A contingent beneficiary will receive your death benefit only if all the primary beneficiaries die before you. Multiple contingent beneficiaries will share the benefit equally, unless you indicate specific percentages are to be paid.

Special Beneficiary Designations

Special Beneficiary Designations

There are special rules for certain beneficiary designations:

Minor Children

If your beneficiary is under age 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may also choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Before making this type of designation, please contact us for more information.

Trust

If you have executed a trust agreement or provided for a trust in your will, your trust can be your primary or contingent beneficiary. Use our Trust with Contingent Beneficiaries form (RS5127-T) and be sure to include the trustee’s address.

With this type of designation, the trust is the beneficiary, not the individuals who will receive the trust. If you revoke the trust or it expires, its designation as beneficiary is no longer valid. You would then need to complete a new Designation of Beneficiary form (RS5127) to keep your beneficiary designation current.

You should contact your attorney for more information on trust agreements.

Estate

You may name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as your primary beneficiary, you cannot name a contingent. If a benefit is payable, it will be given to the executor of your estate to be distributed according to the terms of your will.

Entities

You may name any charitable, civic, religious, educational or health-related organization as your beneficiary. An entity can be a primary or contingent beneficiary.

You can find your NYSLRS beneficiaries listed in your Member Annual Statement, which is sent out every summer. Starting in January, you’ll be able to view and update your beneficiaries using our secure self-service portal, Retirement Online. Watch for more information about opening your new online account in upcoming blog topics and in other NYSLRS communications.

More Than One Million Strong: The Growth of NYSLRS

When NYSLRS formed in 1921, it started with a total of 4,721 participants (4,672 members and 43 retirees). Today, NYSLRS provides retirement security to 643,178 members and 430,308 retirees and beneficiaries (the most recent data available).

To say we’ve grown would be an understatement. But no matter how large we get, NYSLRS will continue to provide its members and retirees with lifetime retirement benefits and help them to plan for a financially secure future.

A look back at membership growth through the years.

NYSLRS Membership growth through the years

NYSLRS: Retirement Security Before Social Security

Before NYSLRS began in 1921, many New York public employees who were no longer able to work would fall into poverty. At the time, Social Security didn’t exist to help supplement post-retirement income. While Social Security was created in 1935, it wasn’t made available to public employees until 1950 and didn’t start in New York until 1953.

NYSLRS in 1950

Under State Comptroller Frank C. Moore, NYSLRS was comprised of 161,686 participants in 1950. Of those, 151,326 were Employees’ Retirement System (ERS) members and 10,360 were retirees and beneficiaries.

You may have noticed that there were no Police and Fire Retirement System (PFRS) members in 1950. We had police and fire members – a little more than 12,000, in fact – but they were considered ERS members until 1967. On April 1, 1967, ERS split into the two systems you know today: ERS and PFRS.

NYSLRS in 1970

Participation in NYSLRS grew to 525,763 in 1970. Of these, 463,939 were members and 51,824 were retirees and beneficiaries. The State Comptroller at the time was Arthur Levitt Sr. Comptroller Levitt is known for having the longest tenure as State Comptroller, serving a total of 24 years from 1955 to 1978.

The 1970s also saw the creation of a new member group. Tier 2 began on July 1, 1973. The creation of Tier 2, and the other tiers that followed, were designed to provide members equitable benefits at a reasonable cost.

NYSLRS in 1990

From 1979 to 1993, Edward V. “Ned” Regan served as State Comptroller. During his time in office, participation in NYSLRS continued to climb, growing to 882,410 in 1990. Of these, 649,847 were members and 232,563 were retirees and beneficiaries.

NYSLRS in 2010

Between 2006 and 2007, participation in NYSLRS broke the one-million-participant mark. In 2010, during current Comptroller Thomas P. DiNapoli’s administration, participation rose to 1,055,020. Of these, 679,217 were members and 375,803 were retirees and beneficiaries.

NYSLRS in 2015

In 2015, overall membership in the System reached 1,073,486. This includes 643,178 members and 430,308 retirees and beneficiaries (the most recent data available). The number of retirees is increasing more quickly than members. For example, in 1995, retirees represented 30 percent of the System’s members. By 2015, that number had increased to approximately 40 percent.

What does 2016 hold for NYSLRS? Keep an eye out in future blog posts for the latest NYSLRS demographics.

What to Know When Leaving Public Employment

There may come a time when you leave public employment. Even though you’d no longer work for a New York public employer, you’d still be a NYSLRS member. If you ever leave public employment, you should be aware of the effect it could have on your membership and benefits.

What Happens to My Contributions If I Leave Public Employment?

If you have less than ten years of service credit, you may end your membership and request a refund of your contributions by filing a Withdrawal Application (RS5014) pdf-icon.

If you are not vested (eligible for a retirement benefit) and do not withdraw your contributions, they will continue to earn 5 percent interest for seven years. After seven years, if you are still off the public payroll, your membership will automatically end and your contributions will be deposited into a non-interest-bearing account. Your contributions will not be automatically refunded.
Leave Public Employment

How Will Leaving Public Employment Affect My Death Benefits?

If you have at least ten years of service credit, 50 percent of your death benefit may still be payable if you die after leaving public employment. If you have less than ten years of service credit, the 50% death benefit is only available to you if you die within one year of leaving public service.

How Can I Pay Back My Outstanding Loans?

If you have any outstanding NYSLRS loans when you leave the public payroll, you must make payments directly to NYSLRS at least once every three months. You must repay your loan within five years of the date it was issued or you will default on the loan. Please note: since you will be required to pay ordinary income tax and possibly an additional 10 percent penalty on the taxable portion of the loan, defaulting on a loan carries considerable tax consequences.You also won’t be eligible to take a NYSLRS loan once you are off the public payroll.

How Can I Stay Informed About My Membership If I Leave Public Employment?

If you leave public employment, but haven’t ended your NYSLRS membership, you’ll still:

You’ll also need to keep your membership information updated. This includes information like:

Read our publication Life Changes: What if I Leave Public Employment? (VO1800) for more information.

Your Checklist to Apply for Retirement

After months of planning and preparation, you’re ready to apply for retirement. To get your pension benefit, you need to send in a NYSLRS retirement application. Let’s look at what you should include with the form to help make the retirement process go more smoothly.

Filling Out the Retirement Application

Unless you’re filing for a disability retirement, you’ll need to fill out the Application for Service Retirement (RS6037). Some items to keep in mind when you fill out the form:

  • Know your registration number. You can find this number on your most recent Member Annual Statement or retirement estimate.
  • Know your past employment. Please list your public employment history, including military service and any memberships in other New York public retirement systems. This helps ensure you receive the proper credit for your public service.
  • Include your beneficiary’s information. This isn’t an official designation, but will help us provide you with the pension payment options available to you.
  • See a notary. The form must be filled out completely and signed by a notary public.

Applying for Retirement

Proof of Birth

Make sure we also have proof of your birth date. You can send it with your retirement application or before or after, but pension benefits cannot be paid without it. We’ll accept photocopies of the following as proof:

Other Forms to Consider

You’ll need to choose your payment option before your pension is payable. Option election forms are available on our website, but we will also send you a form after we process your retirement application. If you choose an option that would provide a pension benefit to a beneficiary upon your death, you must provide us with proof of your beneficiary’s birth date.

Your NYSLRS pension isn’t subject to New York State income tax, but it is subject to federal tax. You can fill out a W-4P form to tell us what amount you want withheld from your monthly benefit. You can change your federal withholding status at any time. We don’t withhold other states’ income taxes. Visit the Retired Public Employees Association’s website to see if your benefit will be taxed in another state.

You can enroll in our direct deposit program at the same time you file for retirement. Just fill out a Direct Deposit Enrollment Application (RS6370) and return it to us. Once your final retirement benefit amount is determined, your payments will be directly deposited into the account you specified on your enrollment application. Direct deposit is the fastest and most secure way for you to receive your pension benefits. We will send you information on your direct deposit payment amount including deductions, and will inform you when the amount changes.

If you’re divorced and your ex-spouse is entitled to part of your pension, you should send us a copy of your Domestic Relations Order (DRO) as soon as possible. We cannot finalize your pension until we have reviewed your DRO and calculated the required distribution of your benefit. The DRO gives us specific instructions on how your benefits should be divided. For more detailed information, please read our Guide to Domestic Relations Orders.

If you have other questions about applying for retirement, read our publication, Life Changes: How Do I Prepare to Retire?

NYSLRS’ Top Five Retirement Myths from 2015

Retirement Myths vs FactsFrom the day you become a NYSLRS member to the day you retire, you’re exposed to all sorts of retirement information. Unfortunately, sometimes what you learn can get jumbled along the way. We want to help clear up some common misconceptions we’ve heard from members and retirees over the past year. Here are the top five retirement myths from 2015:


Myth #1 “I’ll receive the full amount of my monthly retirement benefit when my payments start.”

Fact For the first few months of retirement, most NYSLRS retirees will receive partial payments while we finish calculating their final benefit. (We need to collect information on final payments and pensionable leave credits from their employers, a process that can take some time.) The partial payments are based on their most recent NYSLRS retirement estimate and usually make up 90 – 95 percent of their final benefit. Partial payments are paid by check and mailed to the address we have on file for the retiree.


Myth #2 “Family members always receive death benefits.”

Fact With the exception of accidental death benefits, NYSLRS members may name any person, trust, or organization as their beneficiary to receive death benefits. It doesn’t have to be a family member. Accidental death benefit recipients are outlined in the law.


Myth #3 “I can’t collect my pension until I start receiving Social Security.”

Fact Members can apply for retirement as soon as they meet the eligibility requirements of their retirement plan.


Myth #4 “NYSLRS manages my retiree health insurance.”

Fact NYSLRS does not administer health insurance programs for its retirees. We deduct premiums from a retiree’s monthly retirement benefit to pay for their health insurance if we’re told to do so by their former employer.

(If you have questions about your health insurance coverage or premium deductions, please contact your former employer. If you retired from a New York State agency, you can contact the New York State Department of Civil Service.)


Myth #5 “NYSLRS decides when there’s a retirement incentive.”

Fact This isn’t the case. The New York State Legislature (not NYSLRS) enacts retirement incentive programs. Incentives are approved by both houses and signed into law by the Governor. NYSLRS administers programs that are signed into law.


Check out your plan publication to learn more about your benefits. You can also visit our website for more information.

Planning Around Your Retirement Date

Retirement is a big decision, and one important factor to plan for is the day you choose to retire. When you’re eligible and ready to retire, you can select any day as your retirement date. You can even choose a weekend or a holiday. Generally, your retirement date is the first day you don’t work. It could also be the first day you don’t get paid by your employer (for example, if you use accruals before your retirement date).

Another thing to keep in mind when choosing your retirement date is when you’ll receive your first benefit payment. Once we receive your retirement application, we begin the process of gathering service and salary information from your employer to come up with your final benefit amount. Most retirees are eligible to receive partial monthly pension payments while we work on calculating their final benefits.

Planning for your Retirement Date

Partial Payments

We base your partial payments on your most recent NYSLRS retirement estimate. These monthly payments provide 90 to 95 percent of what your final pension benefit amount is estimated to be. You’ll continue to receive partial payments until we finalize your benefit. Partial payments are mailed to the address we have on file for you.

This is where your retirement date comes in. The month you retire determines when partial payments will start, not the day. If you retire in March and are eligible to receive partial payments, your first partial payment would be mailed on the first business day of May. It doesn’t matter if your retirement date is March 1 or March 31: your payment will go out on the first business day of May. You can enroll in our Direct Deposit Program at the same time you file for retirement. As soon as we are able to, your payments will be directly deposited into your account.

Keep this in mind before you settle on a date. You may need to set some money aside, as it could be five to eight weeks before your first partial payment arrives. Many retirees retire on the last day of a pay period (so final payment information is available from their employer sooner) toward the end of the month to minimize the number of weeks before they receive their first partial payment.

Filing for Retirement

Once you have a day in mind, when should you apply for retirement? You must file your retirement application with us 15 to 90 days before your retirement date. If you’re over age 70 at retirement, or if you are no longer actively employed by a public employer, you don’t have to wait the 15 days. The application is also available from your employer or can be found on our website by clicking the link above.

Would you like to read more about applying for retirement and what comes after? Read the Applying for Your Service Retirement Benefit and After You Retire sections in these publications:

You may also want to visit one of our consultation sites.