Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates

Recent legislation temporarily changes how Tier 6 contribution rates are calculated.

Usually, Tier 6 contribution rates are calculated using a member’s base pay, which includes regular earnings, holiday pay and longevity pay. Overtime pay (up to a certain limit) is also included in the calculation of the contribution rate.

The new law removed overtime that was earned from April 1, 2020 through March 31, 2022 from the Tier 6 contribution rate calculation. The earnings from this time period determine the contribution rates that you pay from April 1, 2022 through March 31, 2024.

Removing overtime earnings may result in lower contribution rates effective April 1, 2022 through March 31, 2024. Although Tier 6 contribution percentage rates for those years will be calculated only on annual base wages, Tier 6 members must pay the applicable contribution rate on all their pensionable earnings. This video helps explain how your contribution rate is determined.

Note: Tier 6 members are those who joined NYSLRS on or after April 1, 2012.

Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates

When Will Rates be Recalculated?

We are working with employers to review your past earnings to determine whether your rate should be lowered.

Tier 6 is now the largest tier in NYSLRS. With more than 325,000 Tier 6 members, it will take some time to collect detailed earnings information from employers and change rates.

Once information for all Tier 6 members is received and processed, if your rate is lowered, it will be retroactive to April 1, 2022. If you are entitled to a credit of overpaid contributions, you will be notified and your refund will be paid to you by your employer.

Who is Affected by the Rate Change?

Tier 6 members who make mandatory contributions toward their retirement and earned overtime from April 1, 2020 through March 31, 2022 may have their contribution rates lowered.

The rate decrease does not apply to:

  • Members who are already paying the minimum rate of 3 percent;
  • Members who did not earn overtime during the COVID pandemic; and
  • Members who joined NYSLRS on or after April 1, 2020. Your rates are based on an estimated wage provided by your employer when you were enrolled into NYSLRS rather than your actual earnings.

More About Tier 6 Contribution Rates

Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members, that percentage, or contribution rate, is based on earnings and can vary from year to year. The minimum rate is 3 percent and the maximum rate is 6 percent.

For more information about how Tier 6 contribution rates are calculated, read our blog post, How Your Tier 6 Contribution Rate Can Change.

19 thoughts on “Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates

  1. LJ

    I have been working extra service since covid started and spoke to the benefits office regarding my extra service. Now I see this email and have questions.

    I was told by the benefits office in the beginning – all of my extra service will be rolled into my final average salary. I have been working a significant amount of hours per pay period for the past 3 years to obviously increase my earnings and positively enhance my retirement. Will these be counted towards my FAS?????

    Also, these hours have been included in a single pay check and taxed at a higher rate. If this is true then I should have received separate checks and taxed at a lower rate. I did reach out to payroll in the beginning as was told – no, there would be only 1 check. I believe means there are monies that need to be refunded back to me.

    Based on these questions, now I am questioning if the past 3 years of tax returns would have been affected as well.

    ERS state employee for an explanation and answers.

    Reply
    1. NYSLRS Post author

      For account-specific information about the calculation of your final average earnings, please email our customer service representatives using our secure contact form. Filling out the secure form allows them to safely contact you about your personal account information.

      Reply
    1. NYSLRS Post author

      We are working with employers to review past earnings to determine which members should receive lower rates. If you are eligible, you will be notified and receive a credit for overpaid contributions from your employer.

      Reply
  2. Jenna Mastri

    What is the definition of ‘overtime’ pay for this purpose? For example, we have many employees that work a 35 hour work week, so anything between 35 and 40 hours is paid at straight rate. Would those hours be considered regular or overtime for this purpose?
    We also have employees that work additional hours at regular rate of pay, and a lower rate than their normal rate. Are these hours considered regular or overtime?

    Reply
    1. NYSLRS Post author

      For assistance, please call our Employer Help Desk at 866-805-0990 and press 1 to access the employer menu, then press 5 for reporting questions.

      Reply
  3. Serah Odunlade

    Why is that the state is giving money for the agencies like Assisted Living and others to pay their workers for covid pay and retention pay and refused to pay the same working directly for them. I do not understand, so confused? Can somebody explain for us please?

    Reply
    1. Fred B.

      Not only for active state employees, but for us retirees who were active when the pandemic first hit around late 2019 into 2020

      Reply
    1. NYSLRS Post author

      This legislation only affects the calculation of Tier 6 contribution rates. It does not change other Tier 6 benefit rules, such as your pension benefit calculation.

      Reply
    2. 53daveg

      Good point. As a member from a different tier, I found that my final average salary calculation was modified mid-stream, resulting in a LOWER payout when I retire. When a “Tier” is assigned to an employee, the terms should NOT be changed in a negative way for members. If someone finds a loophole and exploits it, go after them, please don’t punish everyone.

      Reply
      1. NYSLRS Post author

        If you have questions about your final average salary calculation, please email our customer service representatives using the secure contact form on our website. One of them will review your account and respond to your questions. Filling out the secure form allows them to safely contact you about your personal account information.

        Reply
        1. 53daveg

          Will do that. Will also ask again how to access my retirement account. I have reached out a few times in the past 4-5 years. Whatever I am told to do, I do. Nothing has worked yet.

          Reply
  4. BC

    Great news for the employees that started in 2012. What is our retirement system doing for those of us that have been here for more than ten years?

    Reply
    1. NYSLRS Post author

      The decision on whether to adopt benefit enhancements comes from the State Legislature and the Governor. The retirement system (NYSLRS) administers legislation and programs that are signed into law. You may want to contact your state legislative representatives.

      Reply
    1. NYSLRS

      Tier 6 is now the largest tier in NYSLRS. With more than 325,000 Tier 6 members, it will take some time to collect detailed earnings information from employers and change rates.

      Reply

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