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Tier 3 & 4 Members: When Is The Right Time To Retire?

Tier 3 and 4 members in the Article 15 retirement plan qualify for retirement benefits after they’ve earned five years of credited service. Once you’re vested, you have a right to a NYSLRS retirement benefit — even if you leave public employment. Though your pension is guaranteed, the amount of your pension depends on several factors, including when you retire. Here is some information that can help you determine the right time to retire.

Three Reasons to Keep Working

  1. Tier 3 and 4 members can claim their benefits as early as age 55, but they’ll face a significant penalty for early retirement – up to a 27 percent reduction in their pension. Early retirement reductions are prorated by month, so the penalty is reduced as you get closer to full retirement age. At 62, you can retire with full benefits. (Tier 3 and 4 Employees’ Retirement System (ERS) members who are in the Article 15 retirement plan and can retire between the ages of 55 and 62 without penalty once they have 30 years of service credit.)
  2. Your final average earnings (FAE) are a significant factor in the calculation of your pension benefit. Since working longer usually means a higher FAE, continued public employment can increase your pension.
  3. The other part of your retirement calculation is your service credit. More service credit can earn you a larger pension benefit, and, after 20 years, it also gets you a better pension formula. For Tier 3 and 4 members, if you retire with less than 20 years of service, the formula is FAE × 1.66% × years of service. Between 20 and 30 years, the formula becomes FAE × 2.00% × years of service. After 30 years of service, your pension benefit continues to increase at a rate of 1.5 percent of FAE for each year of service.

When is the Right Time to Retire infographic

 

If You’re Not Working, Here’s Something to Consider

Everyone’s situation is unique. For example, if you’re vested and no longer work for a public employer, and you don’t think you will again, taking your pension at 55 might make sense. When you do the math, full benefits at age 62 will take 19 years to match the money you’d have received retiring at age 55 — even with the reduction.

An Online Tool to Help You Make Your Decision

Most members can use Retirement Online to estimate their pensions.

A Retirement Online estimate is based on the most up-to-date information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit, which could help you determine the right time to retire. When you’re done, you can print your pension estimate or save it for future reference.

If you are unable to use our online pension calculator, please contact us to request a pension estimate.

This post has focused on Tier 3 and 4 members. To see how retirement age affects members in other tiers, visit our About Benefit Reductions page.

ERS Tier 5 Milestones

If you became an Employees’ Retirement System (ERS) Tier 5 member when the tier began in 2010, you’ve crossed one of many milestones in your public service career. You are now vested, which means you are guaranteed a NYSLRS pension even if you leave public employment at a later date.

So, what are milestones, and how do they affect NYSLRS members throughout their career?

Tier 5 milestones

Why Milestones Matter

As a NYSLRS member, you’ll cross a series of thresholds throughout your career. These member milestones occur when you earn a certain amount of service credit. Because these milestones affect how your pension will be calculated, a better understanding of them will help you plan for retirement.

You can find these milestones on the Membership Milestones page and in your retirement plan booklet. Most members ERS Tier 5 members will retire under the Article 15 retirement plan. (This booklet does not cover ERS Tier 5 members in special plans, such as deputy sheriffs and state corrections officers, but they can also find information on the Membership Milestones page.)

Major Milestones for Tier 5

The day you joined NYSLRS, you were automatically covered by certain job-related death and disability benefits. This is the first milestone for ERS Tier 5 members. After your first year of service, you became eligible to borrow from your retirement contributions, and after two years you became eligible to purchase credit for previous public service.

After becoming vested at ten years, the next big milestone is 20 years, when your retirement benefit improves. If you retire with less 20 years of service, your pension will equal 1.66 percent of your final average salary (FAS) for each year of service. But with 20 to 30 years of service credit, your benefit will equal 2 percent of your FAS, multiplied by your years of service.

For each year of service beyond 30 years, you will receive 1.5 percent of FAS.

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