ERS Tier 6 Benefits – A Closer Look

41 Replies

Financial advisers say you will need to replace between 70 and 80 percent of your salary to maintain your lifestyle after retirement. Your NYSLRS pension could go a long way in helping you reach that goal, especially when combined with your Social Security benefit and your own retirement savings. Here’s a look at how Employees’ Retirement System (ERS) members in Tier 6 (who are vested once they’ve earned five years of credited service), can reach that goal. Members who joined NYSLRS since April 1, 2012 are in Tier 6.

formula for a financially secure retirement

Calculating an ERS Tier 6 Member’s Pension

Your NYSLRS pension will be based on your Final Average Earnings (FAE) and the number of years you work in public service. FAE is the average of the five highest-paid consecutive years. Note: The law limits the FAE of all members who joined on or after June 17, 1971. For example, for most members, if your earnings increase significantly through the years used in your FAE, some of those earnings may not be used toward your pension.  

Although ERS members can generally retire as early as age 55 with reduced benefits, the full retirement age for Tier 6 members is age 63.

For ERS Tier 6 members in regular plans (Article 15), the benefit is 1.66 percent of your FAE for each full year you work, up to 20 years. At 20 years, the benefit equals 1.75 percent per year for a total of 35 percent. After 20 years, the benefit grows to 2 percent per year for each additional year of service. (Benefit calculations for members of the Police and Fire Retirement System and ERS members in special plans vary based on plan.)

Say you begin your career at age 28 and work full-time until your full retirement age of 63. That’s 35 years of service credit. You’d get 35 percent of your FAE for the first 20 years, plus 30 percent for the last 15 years, for a total benefit that would replace 65 percent of your salary. If you didn’t start until age 38, you’d get 45 percent of your FAE at 63.

Examples of ERS Tier 6 Pension Calculation

So, that’s how your NYSLRS pension can help you get started with your post-retirement income. Now, let’s look at what the addition of Social Security and your own savings can do to help you reach your retirement goal.

Other Sources of Post-Retirement Income

Social Security: According to the Social Security Administration, Social Security currently replaces about 40 percent of the wages of a typical worker who retires at full retirement age. In the future, these percentages may change, but you should still factor it in to your post-retirement income.

Your 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. New York State employees and some municipal employees can participate in the New York State Deferred Compensation Plan. If you haven’t already looked into Deferred Compensation, you might consider doing so now.

Prepare Your Affairs and Survivors

6 Replies

After you’re gone, will your loved ones know how to handle your affairs? Will they know where to find your important documents, such as your will? Will they be able to make sense of your finances? Putting these affairs in order now can better prepare your survivors during an already difficult time.

prepare your affairs and survivors

Organize Your Documents

The first step to putting your affairs in order is collecting assorted records, certificates and other paperwork in a secure place. You’ll also want to write down names and phone numbers for any friends or business associates who could be helpful (like your attorney, accountant, insurance agent and the executor of your will).

To help your survivors find these important documents, fill out a Where My Assets Are (VO1848) form. Review this list and update it as needed.

Talk to Your Loved Ones

You may not feel comfortable discussing your death, but all your preparation won’t do any good if you keep your wishes a secret. Once you’ve collected your files and put together a list, let your potential survivors know where your documents are and provide them with copies of your asset list.

Discuss your finances with your loved ones, including your children, if any of the money matters involve them. Explain your NYSLRS benefits (such as your death benefits) and let them know how to report your death to NYSLRS. They can complete the NYSLRS Report a Death Form or call us at 866-805-0990. Death benefits cannot be paid until we have a certified death certificate.

Be sure to also discuss your funeral and burial preferences and let your family know about any arrangements you have already made.

Other Steps to Take When Organizing Your Affairs

You may have already taken care of some of these steps as part of your estate planning, but it never hurts to go back and check to make sure they still reflect your wishes.

  • Work with an attorney to prepare a will or trust.
  • Review your beneficiary information in Retirement Online and make sure we have the correct contact information for your beneficiaries.
  • Consider advance directives, such as a durable power of attorney, living will, health care proxy or do-not-resuscitate order. If you have minor children, you may wish to name a guardian for them. If you have a child with a disability, consult a professional who can help you navigate Medicaid and Medicare.
  • Keep your loved ones apprised of any changes to your situation that may affect them.

Read Getting Your Affairs in Order and A Guide for Survivors and share this publication with your potential survivors. The second half provides information for your survivors and explains what to do and who to contact if a loved one dies.

NYSLRS – One Tier at a Time: PFRS Tier 5

6 Replies

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 PFRS Tier 5. Anyone who joined PFRS from January 9, 2010 through March 31, 2012 is in Tier 5. There were 1,967 PFRS Tier 5 members as of March 31, 2021, making up 5.6 percent of PFRS membership.

About Special Plans

Under a regular plan, you need to reach certain age and service requirements to receive your NYSLRS pension. If you’re covered by a special plan, there is no age requirement, and you can receive your pension after completing 20 or 25 years of service.

Nearly 80 percent of PFRS members are in plans covered under Sections 384, 384-d, 384-e or 384-f of the Retirement and Social Security Law. Read our Police and Fire Retirement System blog post for information about different PFRS plans.

Check out the graphic below for the basic retirement information for PFRS Tier 5.

PFRS Tier 5

If you’re a PFRS Tier 5 member, you can find detailed information about your benefits in the retirement plan booklets listed below:

For special plans under miscellaneous titles, please visit our Publications page.

Check out other posts in the PFRS series:

A Short To-Do List for After You Retire

28 Replies

There are a few things you should do regarding your NYSLRS benefits after you retire. This way, wherever your retirement takes you, we can continue to provide you with the benefits and services available to our retirees.

A Short To-Do List for After You Retire

Sign Up for Retirement Online

If you don’t already have a Retirement Online account, this is a great time to sign up. Retirement Online provides a secure and convenient way to check important NYSLRS information, like the deductions from your latest payment and a summary of your benefits. You can also view or update beneficiary information and generate pension income verification letters right from your computer. We’ll be adding additional online features for retirees in the near future, so stay tuned.

Have New Contact Information? Let Us Know

If you move after you retire, let NYSLRS know your new address so you can be sure to get important communications about your benefits.

The Post Office usually won’t forward pension checks to another address. If you haven’t already, you can sign up for our direct deposit program. It’s the safe, hassle-free way to receive your monthly benefit. But there are other things you’ll want to receive from us after you retire, such as:

  • Your 1099-R form. Your pension isn’t taxed by New York State, but it is subject to federal income tax.
  • Your Retiree Annual Statement. It’s a helpful reference that spells out the benefits, credits and deductions you receive each year.
  • Any official notifications such as a net change in your benefits.
  • Your Retiree Notes newsletter.

There are several ways to update your address. The fastest way is through Retirement Online. Or, you can complete our secure contact form for street addresses within the United States. Be sure to fill out the entire contact form and provide both your old and new addresses.

You can also complete a Change of Address Form (RS5512) and mail it to:

NYSLRS
110 State Street
Albany, NY 12244-0001

You should also make sure we have your current email address. Having an email address on file means we can contact you quickly if we need to notify you about an update to your NYSLRS benefits. If you haven’t updated your email address with NYSLRS, update it in Retirement Online, send it to us using the secure email form or send it to us with your Change of Address Form (RS5512).

Keep Your Beneficiary Information Current

Reviewing your beneficiary designations periodically is important. By keeping them up to date, you ensure that any post-retirement death benefit will be distributed to your loved ones according to your wishes. You can use Retirement Online to change your death benefit beneficiaries at any time, or contact our Call Center and we will send you the necessary form.

Read Our Guide for Retirees

Check out our publication, Life Changes: A Guide for Retirees (VO1705), for information about other benefits you may be entitled to and the services we offer after you retire.

How Full-Time and Part-Time Service Credit Works

103 Replies

Service credit plays a vital part in your pension calculation and your eligibility for other NYSLRS benefits. As a NYSLRS member, you earn service credit by working for an employer who participates in the Retirement System. Your paid public employment is creditable. You would not, however, earn credit for any period when you are not receiving a salary, such as an unpaid leave of absence. You would earn credit for both full-time and part-time employment, but if you work part-time, the service you earn is pro-rated.

Earning Service Credit When You Work Full Time

When you work on a full-time, continuous basis throughout your career, we’ll calculate your total service credit from your date of employment up until the date you leave paid employment. Most full-time workers earn a year of service credit for working 260 workdays a year. For a full-time, 12-month employee, 260 workdays equal a full year. (If you work in an educational setting, you can read about earning service credit in our blog post, How School Employees Earn NYSLRS Service Credit.)

Earning Service Credit When You Work Part Time

Your service credit is prorated if you work part time. Part-time employment is credited as the lesser of:

the number of days worked ÷ 260 days

or

your reported annual salary ÷ (the State’s hourly minimum wage × 2,000)

You can think of it like this: let’s say you work 130 days in a year. If a year’s worth of service credit is earned for working 260 days full time, you’d earn half a year (0.5) of service credit for your part-time work.

How Part-Time Service Credit Works

Check Your Service Credit in Retirement Online

Retirement Online is the fastest way to check your current total estimated service credit. Once you sign in, go to the ‘My Account Summary’ section of your Account Homepage and look under “Account Information.”

You can also use Retirement Online to request credit for public employment from before you joined NYSLRS. If you’re eligible to purchase previous service credit, it’s a good idea to file your request as early in your career as possible because:

  • Records we need to verify your service will be more readily available.
  • If there is a cost, it will be less expensive than if you wait to purchase credit before retirement.
  • Your retirement benefit will be processed more quickly if your service credit request has been reviewed or processed prior to retirement.

For more information, please read our publication Service Credit for Tiers 2 through 6. You may also wish to refer to your specific retirement plan booklet, available on our Publications page.

Taxes After Retirement

53 Replies

Estimating your post-retirement expenses is crucial to effective retirement planning, and it’s important to remember that taxes are also part of that equation. Most retirees pay less in taxes than when they were working, partly because their incomes are lower. But there are other reasons why your tax burden may be lighter after you stop working.

taxes after retirement

New York State Taxes

As a NYSLRS retiree, your pension will not be subject to New York State or local income tax. New York doesn’t tax Social Security benefits, either.

You may also get a tax break on any distributions from retirement savings, such as deferred compensation, and benefits from a private-sector pension. Find out more on the Department of Taxation and Finance website.

Be aware that you could lose these tax breaks if you move out of New York. Many states tax pensions, and some tax Social Security. For information on tax laws in other states, visit the website of the Retired Public Employees Association.

Federal Taxes

Unfortunately, most of your retirement income will be subject to federal taxes, but there are some bright spots here.

Your Social Security benefits are likely to be taxed, but at most, you’ll only pay taxes on a portion of your benefits. You can find information about it on the Social Security Administration website. (If you’re already retired, use the Social Security Benefits Worksheet in the Form 1040 instructions to see if any of your benefits are taxable.)

Throughout your working years, you’ve paid payroll taxes for Social Security and Medicare. For most workers, that’s 6.2 percent (Social Security) and 1.45 percent (Medicare) of your gross earnings out of every paycheck. But Social Security and Medicare taxes are only withheld from earned income, such as wages. Pensions, Social Security benefits and retirement savings distributions are exempt from Social Security taxes. Of course, if you get a paying job after retirement, Social Security and Medicare taxes will be deducted from your paycheck.

Once you turn 65, you may be able to claim a larger standard deduction on your federal tax return.

To better understand how your retirement income will be taxed, it may be helpful to speak with a tax adviser.

Give Your Retirement Savings a Boost

10 Replies

If you’re already building your retirement savings, you already understand how those savings, along with Social Security, work together with your pension to help provide financial stability in retirement. Financial advisors call this the “three-legged stool.”

But why not take it a step further and give your retirement savings a boost? Even a small increase could make a big difference over time, while having minimal impact on your take-home pay.

How much of a difference would it make? You can check it out yourself using this online calculator and your own salary and savings information. Calculate the impact of your current savings, then try the same calculation with an additional 1 percent of your earnings. For example, if you’re saving 5 percent of your pay, see what saving 6 percent would do by the time you expect to retire.

retirement savings

Impact on Your Paycheck

Fortunately, adding a small amount to your retirement savings won’t have a substantial impact on your paycheck. For example, if you’re making $60,000 a year, 1 percent is only $600. That’s just $50 a month or, if you are paid every other week, about $23 per payday.

The impact on your take-home pay would be even less if you save in a tax-deferred plan because you won’t have to pay income tax on those earnings until after you retire. The New York State Deferred Compensation Plan’s paycheck impact calculator can help you estimate how increased savings would affect your paycheck. (You don’t have to have a Deferred Compensation account to use their calculator. The New York State Deferred Compensation Plan is not affiliated with NYSLRS.)

When to Increase Retirement Savings?

The sooner you boost your savings, the better off you’ll be. But if you’re not ready to increase your savings right now, then try this: Schedule your increase to coincide with your next raise. That way, you may not even miss the money.

The Police and Fire Retirement System

26 Replies

NYSLRS is actually two retirement systems: the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS).

PFRS, which provides retirement benefits for police officers and paid firefighters, is the smaller of the two systems, with about 32,000 active members. A third of PFRS members work for cities, while almost 19 percent work for New York State. The remainder work for towns, counties and villages.

There are five tiers in PFRS, reflecting when the members joined the system: Tiers 1, 2, 3, 5 and 6 (there is no Tier 4 in PFRS). Tier 2, which includes PFRS members who joined the Retirement System from July 31, 1973 through June 30, 2009, is the largest tier, accounting for almost 55 percent of PFRS membership.

If you joined PFRS on or after April 1, 2012, you are in Tier 6.

Ninety-eight percent of PFRS members are in special retirement plans that allow for retirement after 20 or 25 years of creditable service. If you are in one of these plans, once you have the full amount of required service, you can retire at any age.

Some PFRS members are in regular retirement plans, which require a member to reach a certain age before they are eligible for a pension.

police and fire infographic

As a PFRS member, you’ll pass a series of important milestones throughout your career. Knowing and understanding these milestones will help you better plan for your financial future.

Service Credit

Service credit is a key in determining your eligibility for a pension and other benefits, including the amount of those benefits.

Under most 20- and 25-year plans, not all public employment is creditable. Usually, police and firefighting service can be counted as special-plan service. You may also be able to use military service to help you reach 20 or 25 years. If you have questions about the service that can be used to calculate your pension, please check your retirement plan booklet or contact us.

PFRS Plan Booklets

You can find details about your NYSLRS benefits in your retirement plan booklet.

For the majority of PFRS members, that’s the Special 20- and 25-Year Plans booklet. This booklet is for PFRS Tier 2, 3, 5 and 6 members covered by Sections 384, 384-d and 384-e of the State Retirement and Social Security Law.

If you are a PFRS member who works for New York State, your booklet is based on your specific job. There are separate booklets for State Police, Forest Rangers, Regional State Park Police, State University Police and EnCon Police.

If you are not covered by one of the plan booklets listed above, you can find your booklet on our Publications page. If you’re not sure what retirement plan you’re in, you can find that information in the My Account Summary section of your Retirement Online account. You can also check your Member Annual Statement, ask your employer or email us using our secure contact form.

From Ledgers to Databases: A Look at NYSLRS’ Technology

Leave a reply

The years since 1921 have witnessed unprecedented advances in technology. Not surprisingly, NYSLRS has taken advantage of many of these innovations to manage a complex and growing retirement system.

NYSLRS technology through the years

The Early Years

The IBM 407 Accounting Machine, mid-1950s
Typewriters and comptometers (adding machines), mid-1950s

When NYSLRS was established a century ago, the business world was still in the age of paper, as it had been for centuries. Individual member information was logged in paper ledger books. A punch card was prepared for each member and retiree, and this data was mechanically tabulated to record statistical information (date of birth, gender, years of service, etc.) about them.

An employee’s desk also looked radically different. Instead of laptops and computer monitors, office technology was limited to adding machines and typewriters, and the use of carbon paper for making copies of documents. Large accounting machines, like the IBM 407, read member punch cards and could print out results.

The Computer Era

In 1963, NYSLRS entered the computer age with its first computer, an IBM 1401. The 1401 was considered revolutionary in its day, offering businesses an affordable general-purpose computer. At the time, it also had 16KB of memory – about as much as a pocket calculator today – and was the length of a minivan. NYSLRS’ early computers were programmed and coded through the use of punch cards, until the late 1970s, when they could be coded through terminals. The first personal computers wouldn’t appear on staff desks until 1984.

NYSLRS accounting machine.
The IBM 407 Accounting Machine, mid-1950s

In the mid-1980s, NYSLRS launched a major database conversion project, which would result in a computer system that would serve NYSLRS for decades. But that system eventually became outdated. Recently, after years of meticulous research, NYSLRS launched a multi-year project to replace its information technology systems and streamline core services.

Retirement Online is the public face of that project. Launched in 2017, Retirement Online provides members and retirees with convenient, secure access to their account information. Members can update contact and beneficiary information, apply for a loan, generate a pension estimate, apply for a service retirement benefit and more. Retirees can view pension payment and tax withholding information, and additional features will be added in the near future.

The Future

Technology has served NYSLRS well over the years. Certainly, technology will continue to evolve, and NYSLRS will continue to adopt innovations that help us better serve our members, retirees, beneficiaries, and employers.

Power of Attorney

17 Replies

Under normal circumstances, NYSLRS won’t release your benefit information – even to close family members­ – without your permission. However, if we have an approved copy of your power of attorney (POA) form on record, we can discuss your information with the person you named as your agent in your POA.

For example, your agent could ask for details about your pension payments, get help completing a loan application or call us for clarification if you don’t understand a letter you received.

father and son discuss power of attorney

Your agent could be your spouse, another family member or a trusted friend. You may designate more than one person as your agent, and you may authorize those agents to act together or separately. You may also designate “successor agents” to act on your behalf if the primary agent is unable or unwilling to serve.

A POA form may be filed with NYSLRS at any time, so there’s no need to wait until a “life event” happens to file. With a POA already on record, the designated agent can act immediately in case of emergency, hospitalization or unexpected illness.

What Can Agents Do?

The agent named in your POA is authorized to act on your behalf and conduct business with NYSLRS for you.

Agents can file applications and forms, such as service or disability retirement applications. They can get account-specific benefit information, request copies of retirement documents, update addresses and phone numbers, and take out loans. For retirees, agents can change the amount withheld from your pension for taxes.

The NYSLRS POA Form

NYSLRS provides a Special Durable Power of Attorney form that is specific to retirement transactions and meets all New York State legal requirements.

If you use the NYSLRS POA form, and your agent or successor agent is your spouse, domestic partner, parent or child, they have “self-gifting authority.” That means they can designate themselves as a beneficiary of your pension benefits or, if you are not yet retired, choose a retirement payment option that provides for a beneficiary after your death and designate themselves as a beneficiary for that benefit.

If your agent or successor agent is not your spouse, domestic partner, parent or child, they do not automatically have self-gifting authority. If you want them to be able to designate themselves as beneficiaries, you should indicate that in the Modifications section of the POA. You should identify your agent by name and specify the authority you want granted to them.

It’s important to note that the NYSLRS POA form only covers Retirement System transactions. It does not authorize an agent to make health care decisions or changes to a Deferred Compensation plan.

Changes to the POA Law

The law governing POA requirements was changed effective June 13, 2021. Any POA executed on or after that date must comply with the following requirements (the NYSLRS form complies with the requirements):

  • All POAs must be signed by two disinterested witnesses (witnesses who are not listed as an agent in the POA or named in the POA as a person who can receive gifts).
  • The use of a Statutory Gift Rider to grant gifting authority has been eliminated. If you do not use the NYSLRS POA form and instead submit a separately prepared Statutory POA form, gifting authority, even for a close family member, must be granted in the Modifications section of the POA. (See our Power of Attorney page for details.)

If you have an approved POA on file with NYSLRS, you do not need to send a new one. POAs executed before June 13, 2021, will be reviewed in accordance with the laws in effect at the time. POAs executed on or after June 13, 2021, that use an old POA form or do not comply with other requirements of the new law will not be valid.

How to Submit a POA Form

You can scan and email a copy of your POA to NYSLRS using our secure email form.

You can also mail your POA (original or photocopy). You may wish to mail it certified mail, return-receipt requested, so you know when NYSLRS receives it. Mail it to:

NYSLRS
110 State Street
Albany, NY 12244-0001.

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 may revoke your POA at any time by sending us a signed, notarized statement.

Please read the Power of Attorney page on our website for additional information.