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.
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.