Tag Archives: know your benefits

Four Facts about Divorce and Your Pension

Courts consider pensions marital property. So, if you file for divorce, a judge may award your ex-spouse part of your pension or other NYSLRS benefits. The process for dividing retirement assets after a divorce can be complex. Here are four things you need to know:

1. NYSLRS Requires a DRO

To divide your NYSLRS benefits, we need a domestic relations order (DRO). This court order, issued after a final judgment of divorce, gives us specific instructions on how your benefits should be distributed. NYSLRS provides on online fillable DRO that complies with the plan’s requirements for implementation. You are not required to use the online form; however, the System will give priority review to these DROs since the language is pre-approved.

2. A Judge has to Approve Your DRO

Before we can implement a DRO, a trial court judge must review and sign it, and you need to file it with the appropriate County Clerk’s Office. That can be a lengthy process; our Matrimonial Bureau can check 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.

Once a judge does sign off, we’ll need a certified copy of the DRO and your judgment of divorce. We start payments to your ex-spouse once we’ve calculated and finalized your retirement benefit. If we receive the DRO and judgment before we finalize your retirement benefit, we’ll make retroactive payments back to your date of retirement.

3. Some Beneficiary Designations are Revoked

Reviewing your beneficiary designations periodically is always important, but after a divorce, it’s essential to make sure your benefits will be distributed according to your wishes. As of 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.

4. Contact an Attorney with DRO Experience

This last one is not a fact, but it’s a good idea. A lawyer, who’s worked with DROs previously, can help ensure the DRO you submit to the court fairly represents the intentions of both parties.

How Can NYSLRS Help?

We developed an online template  that makes it easier to create a properly formatted DRO. Just enter your tier, plan and employment status, and answer the questions that follow.

To submit your proposed DRO for review, email it, along with scanned copies of your judgment of divorce, to our Matrimonial Bureau at dro@osc.state.ny.us. For DRO proposals prepared using our online worksheet, the review process is simplified and we can complete our review faster.

If you have any questions about divorce and your benefits, please contact our Hearing Administration and Matrimonial Bureau staff.

Email: dro@osc.state.ny.us

Address:
NYSLRS 110 State Street
Mail Drop 7-9
Albany, New York 12244

What Unused Sick Leave Might Mean For You at Retirement

If you’ve accumulated unused, unpaid sick leave, you may be able to use it toward your NYSLRS pension benefit.

New York State employees are eligible for this benefit. You also may be eligible if your employer has adopted Section 41(j) for the Employees’ Retirement System (ERS), or 341(j) for the Police and Fire Retirement System (PFRS), of Retirement and Social Security Law. Not sure? Ask your employer or check your Member Annual Statement.

Here’s How It Works

Your additional service credit is determined by dividing your unused sick leave days by the number of work days in a year, which is 260 for most members. Most ERS members can get credit for up to 165 days (7½ months) of unused sick leave. The benefit is capped at 100 days (4½ months) for most Tier 6 members. State employees in certain negotiating units may be able to use 200 days (about nine months). Those extra “months” would be used in calculating your retirement benefit.

Also, depending on your employer, your unused sick leave may be used to cover some health insurance costs during your retirement. Please check with your employer for information about health insurance.

Restrictions

Unused sick leave cannot be used to reach NYSLRS retirement milestones. Let’s say you have 19½ years of service credit. At 20 years, your pension calculation would improve substantially. You also have 130 days of unused sick leave. Can you add the six months of sick leave credit to get you to 20 years? No. Retirement law does not permit it. You’ll have to work those extra six months to get the 20-year benefit rate, though sick leave credits can still be used in your final pension calculation.

Also, credit for unused sick can’t be used to:

  • Qualify for vesting
  • Reach a minimum retirement age
  • Increase your pension beyond the maximum allowed under your retirement plan
  • Meet the service credit requirement for a special 20- or 25-year plan

Check your retirement plan booklet for more information.

Tier 6 Benefits – A Closer Look

Tier 6 members (those who joined NYSLRS since April 1, 2012) are eligible for a lifetime pension benefit with 10 years of credited service. And that pension can replace a portion of your salary throughout your retirement.

Your NYSLRS pension will be based on your Final Average Salary (FAS) and the number of years you work in public service. FAS is the average of the five highest-paid consecutive years. For most members, those higher-paid years come at the end of their careers. Since retirement is still some years in the future for most of you, we won’t focus on the dollar amount of your FAS today. But we can look at what percentage of that salary would be replaced by your pension if you continue in the system until retirement age.

For Tier 6 members of the Employees’ Retirement System (ERS), the benefit is 1.66 percent of your FAS for each year you work, up to 20 years. (Benefit calculations for members of the Police and Fire Retirement System vary based on plan.) At 20 years, the benefit equals 1.75 percent per year (for a total of 35 percent). After 20 years, the benefit grows by 2 percent per year.

Financial advisers say you will need to replace between 70 to 80 percent of your salary to maintain your lifestyle during retirement. Let’s see how we can get there.
Tier 6 Salary Replacement
NYSLRS Pension: Say you begin your career at age 30 and work until your full retirement age of 63. That’s 33 years of Service Credit. You’ll get 35 percent of your FAS for the first 20 years, plus 26 percent for the last 13 years, for a total benefit that would replace 61 percent of your salary. If you started at age 25, and continue till 63, you’d get 71 percent of your FAS. If you didn’t start till age 35, you’d still get 51 percent at 63.

Social Security: You also should factor in Social Security. We know, you may have heard that Social Security might not be there for you, but the situation isn’t that dire. According to the Social Security Administration, under current law, payroll taxes will cover about 79 percent of benefits by 2034. Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. So even if benefits take a hit – and that’s a big IF – Social Security might still replace around 25 to 30 percent of a typical worker’s pay.

Savings: Retirement savings can also replace a portion of your income. How much, of course, depends on how much you save. The key is to start saving early so your money has time to grow. If you haven’t already looked into the New York State Deferred Compensation Program, please consider doing so now.

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.

Debt and Retirement

If you’re planning to retire in the near future, it’s a good idea to take inventory of the debts you owe. Why start your next life chapter burdened with debt and interest payments?

A high priority should be any loans you have taken from NYSLRS. You cannot pay off your loan after you retire. If you have an outstanding balance when you retire, it will permanently reduce your pension. For example, if a 60-year-old Tier 3 or 4 member of the Employees’ Retirement System retires this year owing $10,000, the annual reduction would be $560.50. And that reduction would continue even if the total reduction exceeds the amount owed. What’s more, at least part of the balance would be subject to federal taxes. Learn more about paying of a NYSLRS loan.
Debt and Retirement — How a NYSLRS Loan could affect your retirement
Another priority is paying off credit cards. The average American household with credit card debt owes more than $16,000 and pays about $1,300 a year in interest, according to a recent analysis of federal data.

Fortunately, getting a handle on your credit card debt has gotten easier. A recent federal law requires credit card statements to carry a “Minimum Payment Warning.” This tells you how long it will take, and how much it will cost, to pay off your balance if you only make minimum payments. It also tells you how much you need to pay each month to pay off the balance in three years.

If you have more than one credit card balance, most financial advisers recommend you pay as much as you can on the card with the highest interest. Pay at least the minimum, preferably more, on lower-interest cards until the high-interest card is paid off. But some advisers say it might be better to pay off the card with the smallest balance first. That will give you a sense of accomplishment, which could make the process seem less daunting.

Mortgage balances make up two-thirds of the $12.6 trillion in U.S. household debt. But should you strive to pay off your mortgage before you retire? Financial advisers differ on that question, so do your research to consider all the factors.

Read more about debt and retirement in our publication Straight Talk About Financial Planning For Your Retirement.

Filing Your Application for Retirement

You’ve carefully planned your retirement, received your benefits estimate and are ready to take the big step. But before you can start receiving a pension, you’ll need to complete and submit your Application for Service Retirement (RS6037). You can also get a copy of the form from your employer or by contacting our Call Center.

Timing is important. We must have your application on file at least 15 days, but not more than 90 days, before your retirement date. (The 15-day rule does not apply if you are over 70 or left the public payroll before age 55.)

Be sure to list all of you public employment on the form. If you’ve ever been a member of another public retirement system in New York State, you’ll need to note that as well. Because your application is a legal document, you must sign it in the presence of a notary public. Many members make an appointment at a Consultation Site to file their applications. Our information representatives can notarize your application, help you with your paperwork and answer any questions.

Filing for Retirement

If you don’t wish to file in person, you can send your application by mail. Mailing the application “Certified Mail — Return Receipt Requested” will help you track this important document. Certified mail is also a good idea if you are close to a filing deadline because we consider the day it was mailed as the filing date. The mailing address is:

NYSLRS
110 State Street
Albany, NY 12244-0001

At the same time you submit your application you can also file a W-4P, so federal taxes can be withheld from your payments, and a Direct Deposit Enrollment Application, so your pension can be deposited directly into your bank account. If you’ve had a recent pension estimate, you can submit a payment option election form along with your retirement application. You should also submit a photocopy of proof of your date of birth

For more information, read our booklet “Life Changes: How to Prepare to Retire” or contact us.

How Much Will My Pension Be?

Estimate Your Pension

For anyone thinking about retirement, one big question looms: How much money will I have to live on after I stop working? Your NYSLRS pension is a lifetime benefit. Having a good idea of what that monthly amount will be is essential to effective retirement planning. Fortunately, we offer tools to help you estimate your future pension.

Most members* can use our Benefit Projection Calculator to estimate their pension. You can use this calculator even if your planned retirement date is a long way off. The calculator provides estimates based on information you enter. By changing each variable (date of retirement, average salary, beneficiary information), you can see the impact it would have on your pension benefit.
how to estimate pension infographic
If you are a vested member who has enough NYSLRS service to be eligible for a pension, you can request a benefit projection by calling our automated information line at 1-866-805-0990 (518-474-7736 in the Albany, New York area). This service is available 24 hours a day, seven days a week.

If you are nearing retirement eligibility and you aren’t certain that you have credit for all of your NYSLRS-eligible employment, complete and submit a Request for Estimate (RS6030) form. If you are a member of the Employees’ Retirement System (ERS), you may use this form if you will be eligible to retire within five years. Members of the Police and Fire Retirement System (PFRS) can submit this form within 18 months of their retirement eligibility date.

As part of your retirement planning process, you may also want to check on your Social Security benefits.

*At this time, you cannot use this calculator if you are in ERS Tier 5 or 6; PFRS Tier 3, 5 or 6; or certain special plans.

Welcome New Members

Welcome to new members of the New York State and Local Retirement System (NYSLRS).

NYSLRS is here to help you plan for a financially secure retirement. Your retirement may be far in the future, but decisions you make now will have a big impact on your later years. Here are a few things you should know:

How Pensions Work

A NYSLRS pension is a defined benefit plan. Under this type of plan, once you are eligible for a pension and apply for retirement, you will receive a monthly payment for your lifetime. Your pension benefits are determined by a preset formula set by law. However, many employees in the United States, particularly in the private sector, are enrolled in 401(k)-style plans. The ultimate value of a 401(k) plan is based on the contributions made and investment returns. While 401(k) plans and other individual retirement accounts are a way to supplement your pension and Social Security payments, they do not provide the same level of security as defined benefit plans. Unlike your pension, these plans do not guarantee a lifetime benefit. Learn more about how pensions work.

New Members Checklist

Service Credit

Your NYSLRS pension will be based on factors such as your tier, retirement plan, age at retirement, final average salary, and service credit. One year of full-time employment with a participating employer is equal to a one year of service credit. Part-time employment is prorated. You may also be able to buy service credit for previous public employment or military service, which in most cases would increase your pension.

Start Saving Now

Because having a defined benefit pension plan is only one part of building a financially secure future, it’s essential that you save additional money for retirement. State workers and employees of participating local governments can take advantage of the New York State Deferred Compensation Plan. You can start by having as little as $10 deducted from each paycheck. You may choose how your money will be invested from a variety of options. Because of how compound interest works, the earlier you start saving, the better off you’ll be.

More Information

You’ll find more information in our booklet Membership in a Nutshell. We also publish booklets about specific retirement plans. If you know which system you’re in (Employees’ Retirement System or Police and Fire Retirement System) and your tier, you should be able to find your plan. If you are not sure what plan you’re in, ask your employer.

Overtime Limits for Tier 5 and 6 Members

The exact formula used in calculating your NYSLRS pension varies by tier and plan, but your credited service and final average salary (FAS) are the core variables. You earn service credit for paid service with participating employers and you also may claim it for some previous public service. FAS is the average wage you earned during the time period when your earnings were highest (36 consecutive months for Tier 5 and 60 consecutive months for Tier 6).

Your FAS can include overtime pay that you earned during the FAS period. However, for Tier 5 and 6 members, there are limits to how much overtime can be used to calculate your pension.

Members and employers aren’t required to make contributions on overtime pay above the limit, and your employer shouldn’t report overtime above the ceiling to us. While you can earn overtime beyond the limit, anything over will not count toward your FAS or your retirement benefit.

Tier 5 Overtime Limits

For Tier 5 Employees’ Retirement System (ERS) members, the limit changes each calendar year. The overtime ceiling for Tier 5 increases each calendar year by 3 percent. This year, the overtime ceiling for Tier 5 ERS members is $18,448.11. In 2018, it will be $19,001.55. For Police and Fire Retirement System (PFRS) members, the overtime limit is 15 percent of your regular earnings each calendar year.

Tier 5 & 6 Overtime Limits

Tier 6 Overtime Limits

For Tier 6 ERS members, the cap follows the fiscal year (April 1 through March 31), not the calendar year. For 2016-2017, the limit is $15,721. Come April that will increase to $16,048. The limit is adjusted for inflation based on the annual Consumer Price Index (CPI). The overtime ceiling for Tier 6 PFRS members is 15 percent of your regular earnings each calendar year.

Find more information about the overtime limit, FAS and retirement calculations in your plan booklet, available on our Publications page.

Are You Prepared for a Long Retirement?

Are you planning for a long retirement?We all look forward to a long, happy and financially secure retirement. But as you plan for retirement, “how long?” is an important question.

People are living longer. A 55-year-old man can expect to live another 25 years, to about 80. Women tend to live three or four years longer. But these are only averages. More than 36,000 current NYSLRS retirees are over 85, and more than 3,000 have passed the 95 mark. In fact, in the state fiscal year that ended in March 2016, 336 NYSLRS’ retirees were 101 or older. Considering that many public employees retire at 55, retirement could last 45 years or more.

As you plan for retirement, you need to ask yourself, will I have enough money to maintain a comfortable life for decades to come? Members of the Employees’ Retirement System (ERS) who retired in 2016 are receiving an average monthly pension of $2,364. The average Social Security benefit for a retired worker was $1,355, as of November 2016.

Retirement savings are also a crucial asset, but half of U.S. households with members aged 55 or older have no retirement savings, according to a recent report by the U.S. Government Accountability Office. If you have no retirement savings, it is never too late to start. An easy way to get started is through the New York State Deferred Compensation Plan, a retirement savings program created for New York State employees and employees of participating public agencies.