Monthly Archives: April 2019

Power of Attorney

Power of AttorneyThe NYSLRS Special Durable Power of Attorney form allows you to designate someone else to act on your behalf regarding retirement benefit transactions. The person you designate, referred to as an “agent,” could be your spouse, another family member or a trusted friend.

Why is this important? Under normal circumstances, NYSLRS won’t release your benefit information to anyone else without your permission — even to your spouse. With a power of attorney (POA) on file, we would be able to discuss your benefits with the agent you appointed.

The NYSLRS POA form is specific to retirement transactions and meets all New York State legal requirements. You may want to designate a power of attorney in case of emergency, hospitalization or unexpected illness, but you don’t have to wait until something happens before you file a NYSLRS POA form.

What Can Your Agent Do?

The NYSLRS form is for a “durable” POA, which means the person you designate can act for you if you become incapacitated. But the NYSLRS POA form only covers Retirement System transactions. It does not authorize your agent to make health care decisions for you or make changes to your Deferred Compensation plan.

Your agent can get account-specific information about your benefits by phone, email or mail. Your agent can request copies of documents in your retirement file or update your address or phone number. If you are still an active member, your agent can also take out a NYSLRS loan or file a retirement application for you. If you are retired, the agent can change the amount of taxes withheld from your pension.

Special Authority

If you use NYSLRS POA form, and your agent is your spouse, domestic partner, parent or child, they will have “gifting authority.” That means they can direct deposit money into a joint bank account, designate or change your death benefit beneficiaries, or choose a retirement payment option that provides for a beneficiary after your death.

If you wish to assign gifting authority to an agent who is not your spouse, domestic partner, parent or child, you must indicate that you want your agent to have the ability to designate him or herself as a beneficiary. This can be done in the “Modifications” section of the NYSLRS POA form.

Find Out More

A power of attorney is a powerful document. Once you appoint someone, that person may act on your behalf with or without your consent. We strongly urge you to consult an attorney before you execute this document.

You can also find information on the Power of Attorney page on our website.

Deferred Compensation:
Another Source of Retirement Income

deferred compensation
Many financial experts believe that you will need 70 to 80 percent of your pre-retirement income to maintain your standard of living once you retire. For NYSLRS members, a financial plan in retirement is likely to include your NYSLRS pension and Social Security benefits. To supplement your plan, it makes sense to add personal savings to the mix. Contributing to a deferred compensation plan to provide another source of retirement income is an option you should consider.

What is Deferred Compensation?

Deferred compensation plans are voluntary retirement savings plans like 401(k) or 403(b) plans, but designed and managed with public employees in mind. If you choose the traditional pre-tax option, the income you invest over the course of your career grows tax-deferred. That means you don’t pay State or federal tax on it until you begin collecting it in retirement.

The New York State Deferred Compensation Plan

The New York State Deferred Compensation Plan (NYSDCP) is the 457(b) plan created for New York State employees and employees of other participating public employers in New York.

When you participate in NYSDCP, your contributions are automatically deducted from each paycheck. NYSDCP offers both traditional pre-tax and Roth accounts, and you can create your own mix of these three investment options:

  1. Retirement-date fund. Mutual funds that automatically change investment strategies over time based on when you will turn 65.
  2. Do-it-yourself portfolio. Choose index mutual funds based on your investment strategy and tolerance for risk.
  3. Self-directed investment account. Transfer some of your plan balance to a brokerage account managed by an approved manager and pick and choose individual investments.

If you work for a local government employer, please check with your human resources office or benefit administrator to learn what plans are available.

What Does Deferred Compensation Mean For Me?

Deferring income from your take home pay may mean less money to spend in the short-term, but you’re planning ahead for your financial future.

You can enroll in a deferred compensation plan anytime — whether you’re approaching retirement or you just started working. Usually, the sooner you start saving, the better prepared you’ll be for retirement.

There are many ways to save for retirement. You may want to consult a financial planner, accountant or attorney for help developing a plan that best meets your needs.

What to Know About ERS Tier 6

Tier status is a major factor in determining your NYSLRS retirement benefits. Employees’ Retirement System (ERS) members who joined NYSLRS on or after April 1, 2012, are in Tier 6. They have plenty of company. There were 205,020 ERS Tier 6 members as of March 31, 2018, making up one-third of ERS membership.

ERS Tier 6 members contribute to the Retirement System based on their earnings, but the amount of their pensions will be determined by years of service and final average salary, not by the amount of their contributions.

ERS Tier 6 Membership Milestones

ERS Tier 6 members need ten years of service credit to become vested. Once vested, they’re eligible for a lifetime pension benefit as early as age 55, but if they retire before the full retirement age of 63, their benefit will be reduced. Tier 6 correction officers, however, can retire with 25 years of service, regardless of age, without penalty.

ERS Tier 6 Benefits

The Final Average Salary (FAS) Calculation

An ERS Tier 6 member’s final average salary is the average of their earnings in the five highest-paid consecutive years of employment. Earnings in any year included in the period cannot exceed the average earnings of the previous four years by more than 10 percent.

Tier 6 Service Retirement Benefit

Generally, if an ERS Tier 6 member retires with less than 20 years, the benefit is 1.66 percent of their final average salary for each year of service. If a member retires with exactly 20 years of service, the benefit is 1.75 percent of their final average salary for each year of service (35 percent of the member’s final average salary).

If a member retires with more than 20 years of service, they receive 35 percent for the first 20 years, plus 2 percent for each additional year. For example, a member with 35 years of service can retire at 63 with a pension worth 65 percent of their final average salary.

If you’re an ERS Tier 6 member, you can find out more about your benefits in one of these plan booklets: