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NYSLRS Basics: Special Beneficiary Designations

What makes special beneficiary designations so special?

As a NYSLRS member, it’s important for you to name beneficiaries. Your beneficiaries may be eligible to receive a death benefit upon your death.

You can choose anyone you wish to receive your death benefit; it does not have to be a family member. In fact, it doesn’t even have to be a person. You can name your estate, a charity or a trust.

But before we talk more about these special beneficiary designations, let’s quickly go over the two main types of beneficiaries. These are important to know as some special designations may affect who you can designate.

About Primary and Contingent Beneficiaries

A primary beneficiary is someone you choose to receive your benefit if you die. A contingent beneficiary would only receive the benefit if the primary beneficiary dies before you. If a beneficiary dies before you, you should update your beneficiary information to ensure that your benefit is distributed according to your wishes.

As a reminder, Retirement Online is the convenient and secure way to view and update your beneficiaries. If you don’t already have an online account, you can learn more on our website.

About Special Beneficiary Designations

Here are some examples of special beneficiary designations and the rules for each one:

special beneficiary designations

Estates

You may name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as your primary beneficiary, you cannot name a contingent. If a benefit is payable, the executor of your estate will distribute it according to the terms of your will.

Trusts

If you have executed a trust agreement or provided for a trust in your will, your trust can be your primary or contingent beneficiary. To name a trust, sign in to Retirement Online or use our Trust with Contingent Beneficiaries form (RS5127-T). We’ll need a copy of your trust document, which you can mail to NYSLRS or upload using Retirement Online.

With this type of designation, the trust is the beneficiary, not the individuals who will receive the trust. If you revoke the trust or it expires, you will want to make new beneficiary designations as soon as possible to ensure benefits are paid according to your wishes.

You should talk to an attorney if you’d like more information on trust agreements.

Entities

You may name any charitable, civic, religious, educational or health-related organization as a primary or contingent beneficiary. Be sure to include the organization’s full name and address in your designation.

Minor Children

If your beneficiary is under age 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may instead choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Custodians can be designated in Retirement Online. Before making this type of designation, please contact us for more information.

More Information

Please note that some of these beneficiary designations will be subject to a NYSLRS legal review.

For more information, please read our publication “Why Should I Designate a Beneficiary?” You can find your current NYSLRS beneficiaries listed in Retirement Online, or in your most recent Member Annual Statement.

NYSLRS Membership Basics

Whether you’re a new member or have been part of the Retirement System for years, you’re sure to have questions about your NYSLRS membership. What is vesting? Final average earnings? Maybe you’re wondering what tier you’re in or why that even matters. While NYSLRS administers many different retirement plans, the core concepts of a NYSLRS membership remain the same. Here are the basics.

Your NYSLRS Membership Basics

Four Things to Understand About Your NYSLRS Membership

When learning about your NYSLRS benefits, you should become familiar with these four basic concepts:

  • Tier. Your tier is based on the date you joined NYSLRS and helps determine the benefits available to you. If you’re a new NYSLRS member, you’re likely in Tier 6. Tier 6 members joined NYSLRS on or after April 1, 2012.
  • Service Credit. You earn a year of service credit for each year you work for a participating NYSLRS employer. Part-time work is prorated. Your total service credit at retirement is a major factor in determining the amount of your pension.
  • Vesting. You become vested after you earn five years of service credit. It’s a significant milestone to reach because once you become vested, you’ll be eligible for a NYSLRS pension when you reach retirement age, even if you leave public service.
  • Final Average Earnings. Final average earnings is the average of your earnings during a period when your pay is highest. It’s another major factor in determining the amount of your pension.

Once you understand these basics, it can make learning more about your NYSLRS membership and benefits easier and help you get ahead on your retirement planning.

Your NYSLRS Pension and Other Benefits

Being a NYSLRS member means you are part of a defined benefit retirement plan. This means your NYSLRS pension will be a lifetime benefit, and it will be based on your final average earnings and service credit, not the contributions you make toward your retirement.

NYSLRS also provides other important benefits for its members, including:

Where to Get More Information

We want to provide you with the information you’ll need to plan for your retirement and make critical decisions about your future. Here are the resources available to you:

Retirement Online is the quickest way to access account information such as your tier, retirement plan and estimated total service credit. Sign up for a Retirement Online account if you don’t already have one.

If you have questions about your NYSLRS membership or benefits, you can find answers on our NYSLRS website. You can find different webpages, such as our Understanding Your NYSLRS Benefits page, that explain what benefits and services are available to you. Reading your retirement plan publication is a great way to get a comprehensive understanding of your benefits. Go to our Publications page to find your retirement plan and other helpful information.

If you have questions about your account or your NYSLRS benefits, please email us using our secure contact form.

Becoming Vested

Becoming vested is a crucial milestone in your NYSLRS membership.

You become vested after you earn enough years of service credit. Once you’re vested, you have earned the right to receive a retirement benefit, even if you leave public employment before retirement.

New Legislation Changes Vesting Requirements for Tier 5 and 6 Members

As of April 9, 2022, Tier 5 and 6 members only need five years of service credit to be vested. This affects members of both the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS). Previously, Tier 5 and 6 members needed 10 years of service to be eligible for a service retirement benefit (the new legislation does not change eligibility for disability retirement benefits that are established by your retirement plan).

Becoming Vested - New Legislation Changes Requirements for Tier 5 and 6 Members

You can sign in to your Retirement Online account to view your total estimated service credit. Over the next few months, we will update members’ accounts to reflect any changes to vesting status as a result of these new vesting requirements. If your total estimated service credit in Retirement Online is more than five years, rest assured, you are considered vested and your vesting status will be changed to “Yes.” This will be done by NYSLRS and there is no need to contact us.

In addition, we are working to update the pension estimate tool in Retirement Online. Until vesting status updates are made to the tool, pension estimates produced in Retirement Online will not accurately reflect the vesting status of members impacted by the new legislation.

Effective immediately, if you are a Tier 5 or 6 member with five or more years of service and you meet the minimum age requirements for your retirement plan, you can apply for a service retirement benefit if you wish. We are updating our online services to enable Tier 5 and 6 members to apply for retirement through Retirement Online. In the meantime, you may file for retirement using our paper application. If you have between five and 10 years of service credit and you have questions about filing for retirement, please contact us.

This legislation did not change Tier 5 or 6 benefit rules such as how long you must contribute, your pension benefit calculation, your full retirement age, reductions to retire early or the cost to purchase previous service. However, additional new legislation may affect contribution rates for some Tier 6 members. Information about this legislation will be posted on our blog when it becomes available.

Tier 5 and 6 members who left public employment with five or more years of service and did not withdraw their membership are now considered to be vested.

Tier 5 and 6 members who leave public employment with more than five years of service but less than 10 years, as of April 9, 2022, now have the option to either apply for a retirement benefit once you reach retirement age or withdraw your contributions. You cannot withdraw your contributions once you have 10 years of service. As a reminder, once you withdraw your contributions, you end your membership with NYSLRS and are no longer eligible for a retirement benefit.

If you were a Tier 5 or 6 member and have been off the payroll for more than seven years prior to April 9, 2022, your membership is considered withdrawn and terminated. You would need to return to payroll and reinstate your withdrawn membership in order to be eligible for five-year vesting.

All Members — When Will I Be Vested?

NYSLRS members in Tier 2, 3, 4, 5 and 6 need five years of service credit to be vested.

If you work part-time, it will take you longer to become vested. For example, if you work half-time, you earn six months of credit toward vesting for each year on the job.

If you purchase credit for previous service or military service, that credit can be used toward vesting.

What You Need to Do

Vesting is automatic. You do not need to file any paperwork to become vested. To find out if you’re vested, you can sign in to your Retirement Online account and find your total estimated service credit in the ‘My Account Summary’ section. Again, if your total estimated service credit in Retirement Online is listed as more than five years, you are considered vested.

Vested members will need to apply for a service retirement benefit in order to receive a pension. Applications must be submitted within 15 – 90 days before the date you wish to retire (you must be eligible to retire on the date you choose).

Most NYSLRS members are eligible to collect a pension as early as age 55, but, depending on your tier and retirement plan, benefits may be reduced if you retire before your full retirement age.

You can estimate your pension benefit based on the salary and service information we have on file for you. From your Retirement Online account, under ‘My Account Summary’ click “Estimate my Pension Benefit.”

NYSLRS – One Tier at a Time: PFRS Tier 5

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:

Know Your Benefits: Death Benefits

If you die while still on the job, your beneficiary may be eligible to receive a death benefit. Here is an overview of member death benefits.  

(If you are retired, visit our Death Benefit page for retirees to learn about available benefits.)

Know your death benefits

Types of Death Benefits

Most members who die while they’re still working will leave their beneficiaries what’s called an ordinary death benefit. The benefit is a lump sum payment usually equal to one year of your earnings per year of service, up to a maximum of three years, but the calculation of the death benefit can be different if you’re in a special retirement plan. Please visit our Death Benefits page to see which calculation applies to you. Generally, to qualify for the ordinary benefit, you must have at least one year of service credit and your death must occur while you are on the public payroll. Check your retirement plan booklet for other qualifying circumstances.

Some members who die because of an on-the-job accident (not due to their own willful negligence) may leave their beneficiary an accidental death benefit. If paid to a surviving spouse or dependent parent, the benefit is a lifetime pension. For Employees’ Retirement System (ERS) Tier 4, 5 and 6 members, the benefit is 50 percent of your earnings from your last year of service. For a majority of other members, the benefit is 50 percent of your final average earnings (less any workers’ compensation benefit). There is no minimum service credit requirement to qualify for the accidental benefit.

Death benefits vary by tier and retirement plan, so check your retirement plan for specific benefit and eligibility information and contact us if you have questions.

Reporting a Death

NYSLRS cannot pay out any death benefits until after we are notified of a member’s death and have a certified copy of the member’s death certificate. That’s why it’s so important to talk with your family now about your benefits and how to report your death to NYSLRS. Survivors can report a member’s death using our online form.

Update Your Beneficiaries

In most cases (unless beneficiaries are determined by law, as in the case of accidental death benefits), your death benefit will be paid to the last beneficiaries you designated, so it’s important to be sure yours are up to date. Your beneficiaries are listed in your Retirement Online account and on your Member Annual Statement. You can update your beneficiary information using Retirement Online.

How Full-Time and Part-Time Service Credit Works

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.

Ten Things Every NYSLRS Retiree Should Know

Even after you retire, it’s important to stay informed about your NYSLRS benefits. Here are ten things every NYSLRS retiree should know.

NYSLRS retiree
  1. Your retirement benefits are guaranteed by the State Constitution. Under Article 5, Section 7, your pension benefit cannot be “diminished or impaired.”
  2. The Common Retirement Fund, the pool of money your retirement benefits are paid from, is safe and secure. It has been widely recognized as one of the best-funded and best-managed public pension funds in the nation.
  3. Your NYSLRS pension is not subject to New York State or local income taxes, but it may be subject to federal income tax. Visit our Taxes and Your Pension page for more information.
  4. If you move to another state, your pension may be subject to that state’s income tax. Find out which states tax NYSLRS pensions.
  5. More than 95 percent of NYSLRS retirees use direct deposit for their monthly payment and their payments promptly arrive in their accounts on the last business day of each month. You can find out when your next pension payment is coming by checking our online pension payment calendar.
  6. You can stay informed about your benefits with Retirement Online. Creating an account is easy, and in many cases, you can use Retirement Online instead of sending in forms or calling NYSLRS.
  7. If you need proof of your retirement income to rent an apartment or get a mortgage, you can generate a pension verification letter in Retirement Online.
  8. Once you become eligible for a cost-of-living adjustment (COLA), you will receive annual increases in your pension amount. When your net benefit amount changes, NYSLRS will inform you.
  9. Your beneficiaries may be entitled to a death benefit after you die.
  10. A Guide for Retirees is a handy resource on our website. It provides important information about your benefits and the services NYSLRS provides for its retirees.

Not retired yet? Read our blog post Ten Things Every NYSLRS Member Should Know.

Ten Things Every NYSLRS Member Should Know

There’s a lot to know about being a NYSLRS member, and sometimes it can feel overwhelming learning about your retirement benefits when you join or when you’re getting ready to retire. That’s why we’d like to focus on ten things that are important to all our members.

NYSLRS member
  1. Your retirement benefits are guaranteed by the State Constitution. Under Article 5, Section 7, your pension cannot be “diminished or impaired.”
  2. You are part of a defined benefit pension plan. A defined benefit plan provides a lifetime benefit at retirement based on earnings and years of service.
  3. The Pension Fund, the pool of money your retirement benefits will be paid from, is safe and secure. It has been widely recognized as one of the best-funded and best-managed public pension funds in the nation.
  4. Your retirement plan booklet contains a wealth of information about your benefits.
  5. Your tier determines your eligibility for benefits and how those benefits are calculated.
  6. Becoming vested is a key milestone in every NYSLRS member’s career. Once you’re vested, you’ll be eligible for a pension even if you leave public employment before retirement age.
  7. Your final average earnings (FAE) is a major factor in calculating your NYSLRS pension, rather than being dependent on the contributions you make toward retirement.
  8. You can estimate your pension online. Most members can use Retirement Online to create a benefit estimate based on information we have on file for them. (And if you can’t use this calculator, we have alternatives for you.)
  9. You can stay informed about your benefits with Retirement Online. Creating an account is easy, and in many cases, you can use Retirement Online instead of sending in forms or calling NYSLRS.
  10. Retirement savings can supplement your pension and Social Security and give you more flexibility in retirement. The sooner you start, the more time you have to grow your savings.

Already retired? Read our blog post, Ten Things Every NYSLRS Retiree Should Know.

NYSLRS – One Tier at a Time: ERS Tier 5

When you joined the New York State and Local Retirement System (NYSLRS), you were 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 State Law. 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 ERS Tier 5, which covers ERS members who joined from January 1, 2010 through March 31, 2012. There were 37,114 ERS Tier 5 members — 5.8 percent of all ERS members — as of March 31, 2021.

ERS Tier 5 Information

ERS Tier 5 Membership Milestones

ERS Tier 5 members need ten years of service credit to become vested, which means they’ll be eligible for a lifetime pension when they retire.

When a Tier 5 member can retire is based on whether they are in the regular retirement plan (Article 15) or a special plan. Most Tier 5 members are in the regular plan, which means they can retire as early as age 55, but if they retire before age 62, their benefit will be reduced.

Tier 5 members in special plans, such as sheriffs and correction officers, can retire with 20 or 25 years of service (depending on their retirement plan), regardless of age, without penalty.

See your plan booklet (listed below) for details.

The Final Average Earnings (FAE)

An ERS Tier 5 member’s final average earnings is the average of their earnings in the three highest-paid consecutive years of employment. Earnings in any year included in the period cannot exceed the average earnings of the previous two years by more than 10 percent.

Tier 5 Service Retirement Benefit

If an ERS Tier 5 member retires with less than 20 years, the benefit is 1.66 percent of their FAE for each year of service.

If a Tier 5 member in a regular plan retires with 20 to 30 years of service, the benefit is 2 percent of their FAE for each year of service. For each year of service beyond 30 years, they will receive 1.5 percent of their FAE. For example, a Tier 5 member with 35 years of service can retire at 62 with 67.5 percent of their FAE.

For Tier 5 members in special plans, the benefit is generally 50 percent of their FAE with 20 or 25 years of service, depending on their retirement plan.

Where to Find More Information

ERS Tier 5 members can find more details about their benefits in the publications listed below:

For benefit information about special plans for miscellaneous titles, please visit our Publications page. Stay tuned for more NYSLRS – One Tier at a Time posts.

NYSLRS – One Tier at a Time: ERS Tier 6

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 ERS Tier 6, which includes anyone who joined ERS since April 1, 2012. There were 311,469 ERS Tier 6 members as of March 31, 2021 making them the largest tier group in ERS.

ERS Tier 6

ERS Tier 6 Membership Milestones

ERS Tier 6 members need ten years of service credit to become vested. Once vested, they’re eligible for a lifetime pension benefit as early as age 55, but if they retire before the full retirement age of 63, their benefit will be reduced. Tier 6 correction officers, however, can retire with 25 years of service, regardless of age, without penalty.

The Final Average Earnings (FAE) Calculation

An ERS Tier 6 member’s final average earnings is the average of their earnings in the five highest-paid consecutive years of employment. Earnings in any year included in the period cannot exceed the average earnings of the previous four years by more than 10 percent.

Tier 6 Service Retirement Benefit

Generally, if an ERS Tier 6 member retires with less than 20 years, the benefit is 1.66 percent of their FAE for each year of service. If a member retires with exactly 20 years of service, the benefit is 1.75 percent of their FAE for each year of service (35 percent of the member’s FAE).

If a member retires with more than 20 years of service, they receive 35 percent for the first 20 years, plus 2 percent for each additional year. For example, a member with 35 years of service can retire at 63 with a pension worth 65 percent of their FAE.

Where to Find More ERS Tier 6 Information

ERS Tier 6 members can find more details about their benefits in the publications listed below:

For benefit information about special plans for other job titles, please visit our Publications page. Stay tuned for more NYSLRS – One Tier at a Time posts.