Tag Archives: Tier 6

NYSLRS’ Membership by Tier

NYSLRS, comprised of the Employees’ Retirement System (ERS) and Police and Fire Retirement System (PFRS), had 652,324 members as of March 31, 2017. Our members are State, local government and school district employees from across New York, including 617,143 in ERS and 35,181 in PFRS. Eighty-one percent of our members are active, which means they were on a public payroll as of March 31.

As new public employees come on board and more Tier 3 and 4 members reach retirement age, Tier 6 is expected to represent the majority of NYSLRS members in a few years.

Tier 6 includes members who joined NYSLRS since April 1, 2012. In just five years, they’ve grown to more than 174,000 members, making up 26.7 percent of total membership.

Here’s a look at our membership by Tier, as of March 31:
NYSLRS' Membership
Tier 1: NYSLRS’ oldest tier, whose members first joined the system before July 1, 1973 (July 31 for PFRS members). Tier 1 now represents only one half of 1 percent of our membership. There are only 54 Tier 1 PFRS members remaining.

Tier 2: With 29,186 members, Tier 2 represents 4.5 percent of membership. More than 87 percent of Tier 2 members are in PFRS.

Tier 3&4: Tiers 3 and 4, which have similar retirement plans, represented nearly 90 percent of membership just seven years ago. The 392,699 Tier 3 and 4 members now make up 60 percent of the total. (Note: There is no Tier 4 in PFRS.)

Tier 5: Tier 5 covers members who joined in a period of a little over two years (January 2010 through March 2012). With 53,118 members, Tier 5 now represents 8.1 percent of membership.

Tier 6: This tier covers both ERS and PFRS members who joined since April 1, 2012. Its ranks have grown by nearly 29 percent over the past year.

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.

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.

What to Know About ERS Tier 6

Employees’ Retirement System (ERS) members who join NYSLRS on or after April 1, 2012 are in Tier 6. There are currently 129,359 ERS Tier 6 members who make up 21.1 percent of ERS membership.

ERS Tier 6 Membership Milestones

ERS Tier 6 members need 10 years of service credit to be vested. That means they are eligible to receive a service retirement benefit as early as age 55. The full retirement benefit age is 63, but they can retire between 55 and 63, with a reduced benefit. Tier 6 correction officers, however, can retire with 25 years of service, regardless of age.
ERS Tier 6 benefits

The Final Average Salary (FAS) Calculation

A member’s final average salary is the average of the wages earned in the five highest consecutive years of employment. For ERS Tier 6 members, each year’s compensation used in the final average salary calculation is limited to no more than 10 percent above the average of the previous four years.

Tier 6 Service Retirement Benefit

Generally, the benefit is 1.66 percent of their final average salary for each year of service if the member retires with less than 20 years. If a member retires with 20 years of service, the benefit is 1.75 percent of their final average salary for each year of service, or 35 percent.

If a member retires with more than 20 years of service, they receive 35 percent for the first 20 years, plus 2 percent of their final average salary for each year of service over 20 years.

If you’re an ERS Tier 6 member, you can find out more about your benefits by reading one of the plan publications listed below:

Overtime and Limits for Tier 5 and 6 Members

We base your NYSLRS pension on your years of credited service and your final average salary (FAS). FAS is the average of the wages you earned during 36 consecutive months (60 consecutive months for Tier 6 members) when your earnings were highest. The calculation of your FAS can include overtime pay that you’ve earned during the FAS period.

Tier 5 and Tier 6 members have limits on how much overtime can be included in their FAS calculation. Overtime pay that exceeds these limits cannot be used in a Tier 5 or 6 member’s FAS calculation.  Therefore, members and employers are not required to make pension contributions on overtime pay that exceeds the annual limit.

Your employer should not report any overtime pay in excess of this cap to NYSLRS as it cannot be used in a member’s final average salary calculation. Each year, NYSLRS publishes the maximum overtime pay that should be reported and reminds employers not to report overtime earnings that exceed the limit.

Tier 5 Overtime Limits

The overtime limit for Tier 5 began in 2010 at $15,000 and increases each calendar year by three percent. This year, the overtime limit for ERS Tier 5 members is $17,910.78. In 2017, the overtime limit for ERS Tier 5 members will be $18,448.11. For PFRS Tier 5 members, overtime is limited to 15 percent of a member’s regular earnings.

Tier 5 & 6 overtime limits

Tier 6 Overtime Limits

For ERS Tier 6 members, the overtime limit is based on the State’s fiscal year (April 1 – March 31). From April 1, 2015 – March 31, 2016, the overtime limit for ERS Tier 6 members is $15,608. From April 1, 2016 – March 31, 2017, that limit will increase to $15,721. The fiscal year limit is adjusted for inflation based on the annual Consumer Price Index (CPI). The overtime limit for PFRS Tier 6 members is limited to 15 percent of a member’s regular earnings.

Please visit our website if you have questions about Tier 5 overtime limits or Tier 6 overtime limits.

Tier 6 Member Milestones

Understanding Your Benefits Can Help You Plan Ahead

If you’re a Tier 6 member, meaning you joined NYSLRS on or after April 1, 2012, it’s important to start learning about your benefits. Even though retirement seems far off, it’s never too early to start thinking ahead. You can start planning your path to retirement by finding out what milestones you’ll reach on the way.

Your Tier 6 member milestones are markers for when you earn a certain amount of service credit. You can reach some milestones within your first few months of membership. You reach others once you’ve earned 10 or more years of service credit.

Common Tier 6 Member Milestones

When you join NYSLRS, you reach your first milestone on the first day of your membership. This milestone covers you for certain job-related death and disability benefits. (You can learn more about them in your Tier 6 retirement plan publication.)

Once you reach 10 years of service credit, you hit another milestone: you become vested. This means that you will be eligible for a retirement benefit even if you leave public employment before age 55, although the benefit is reduced if it’s collected before age 63. Tier 6 members in the Employees’ Retirement System (ERS) are eligible to receive the full vested benefit at age 55. Tier 6 members in the Police and Fire Retirement System (PFRS) are eligible at age 63.

Later on, the other milestones you’ll reach will focus more on retirement.

ERS Membership Milestones

For Tier 6 members in regular plans, the biggest milestone will be when you reach 20 years of service credit. This is when you’ll have enough service credit to retire with a full benefit. As noted above, if you retire before age 63, the benefit is reduced (you must be at least 55 to apply for the vested benefit). For Tier 6 correction officers, you’ll reach this milestone when you reach 25 years of service credit. Check out some of the other milestones for ERS Tier 6 members using the graphic below, or visit our website for a more detailed listing of ERS member milestones.

ERS Tier 6 Member Milestones

PFRS Membership Milestones

Some of the milestones for PFRS Tier 6 members are similar to ERS milestones, but some milestones vary based on what retirement plan you have. Check out the graphic below, or visit our website for a more detailed listing of PFRS member milestones.

PFRS Tier 6 Member Milestones

If you have any questions about Tier 6 membership milestones or the milestones for other tiers, please email us.

NYSLRS – One Tier at a Time: ERS 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 Employees’ Retirement System. Anyone who joined ERS on or after April 1, 2012 is in Tier 6. There are 91,607 ERS Tier 6 members as of March 31, 2015, making them the second largest tier group in ERS.

ERS-Tier-6-BenefitsIf you’re an ERS Tier 6 member, you can find your retirement plan publication from the list below for more detailed information about your benefits:

Be on the lookout for the last NYSLRS – One Tier at a Time post next month. Want to learn more about the different NYSLRS retirement tiers? Check out some earlier posts in the series:

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:

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.

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.