New legislation temporarily changes how Tier 6 contribution rates will be 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 legislation removes overtime pay from the Tier 6 contribution rate calculation, if it was earned from April 1, 2020 through March 31, 2022. The earnings for this time period were used to determine contribution rates that you were set to pay from April 1, 2022 through March 31, 2024.
Removing overtime earnings may result in a change in a Tier 6 member’s 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 of their pensionable earnings in those years. 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 will work 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 should be lower, you will receive a credit of overpaid contributions through your employer that will be retroactive to April 1, 2022.
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 will 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.