Tag Archives: New York State and Local Retirement System

Public Employees Value Their Retirement Benefits

A recent survey gauged how important retirement benefits are to state and local government workers, and the crucial role that pensions and other benefits play in recruiting and retaining workers.

In 2015, more than 19 million Americans worked for state or local governments, according to U.S. Census Bureau data. Retirement benefits, including defined benefit and defined contribution plans, were available to most of those workers.

Last year, the National Institute on Retirement Security commissioned a survey of more than 1,100 public sector employees. Teachers, police officers, firefighters and other public workers were asked questions on a variety of work-related subjects, from job satisfaction to health care benefits. The majority of public workers surveyed (86 percent) cited retirement benefits as a major reason they stay in their jobs.

retirement benefits

Defined Benefit vs. Defined Contribution

An overwhelming number (94 percent) of government employees surveyed said pensions help attract and retain workers. The same percentage had a favorable view of defined benefit pension plans.

As a NYSLRS member, you are part of a defined benefit plan, also known as a traditional pension plan. Your pension is a lifetime benefit based on years of service and earnings. It is not based on your individual contributions to the Retirement System.

With defined contributions plans, such as 401(k)-style retirement savings plans, the employer, employee or both make contributions to an individual retirement account. The money in the account is invested, and the amount the employee has at retirement is based on investment returns. A market downturn can affect the value of the benefit and employees risk outliving their money.

When Retirement Benefits Get Reduced

In an effort to cut costs, some state and local governments have replaced defined benefit plans with defined contribution plans. But these moves have had unexpected consequences.

The Institute’s study cites the experience of Palm Beach, Florida, which gutted its defined benefit plan. The town soon realized that it was spending large sums to recruit and train new police officers, only to see them move to nearby communities with better benefits. The town reconsidered and improved its pension plan.

Then there’s the case of West Virginia, where officials found that switching to a defined contribution plan for teachers actually cost more money. Because the traditional pension plan stopped receiving contributions from new teachers and their employers, it became harder for the state to meet its pension obligations. After 14 years, the state went back to offering a defined benefit plan to all new teachers. Teachers already in the 401(k)-style plan were allowed to switch to the traditional plan, and 79 percent made the switch. State officials project that the return to a defined benefit system will save them $1.2 billion in the first 30 years.

Meanwhile, Alaska is still struggling with its decision to drop its defined benefit plan. A report by the Alaska Department of Public Safety cited “the inability to provide a defined benefits retirement system” as a factor in the “critically low staffing levels” for Alaska state troopers.

How to Read Your Retirement Plan Booklet

In an earlier blog, we explained how to locate your retirement plan booklet. Your retirement plan booklet is an essential resource that you should consult throughout your career. It will help you in planning for your retirement and guide you when your retirement date draws near. Today we discuss what information you’ll find in that booklet and what it means.

retirement plan booklet

About Your Membership

This section has information about your membership and tier status. Look here to find out if your plan requires contributions toward retirement, when you will be eligible for a retirement benefit, and how to withdraw your membership.

Service Credit

Service credit is one of the main factors in determining how much your pension will be. If you work full-time for the State or a participating municipal employer for 12 months, you’ll earn a year of service credit. If you work part-time, your service credit is prorated.

You’ll also find information about how your service credit is calculated, how to purchase credit for previous public employment and military service, how leaves of absence affect service credit, and how sick leave can be used for extra service credit at retirement.

Final Average Salary

Final average salary (FAS) is another major factor in determining the amount of your pension. Your FAS is your highest average earnings during a period of consecutive years. This can be three or five years, depending on your tier.

This section describes what types of payments are used in calculating your FAS and any limitations that may apply.

Service Retirement Benefits

This section describes your retirement eligibility and how your benefit is calculated. If you have questions about how much your pension will be, this is an important section of your retirement plan booklet to read through.

Choosing a Pension Payment Option

There are several ways you can collect your pension. Some payment options, in exchange for a reduction in your monthly payment, will allow you to provide for your spouse or other beneficiary after you die. When reading through this section, consider each payment option carefully, as you’ll only have a limited time to change it after you retire.

Items That May Affect Your Pension

This section describes different factors that can change the amount of your pension. For example, if you retire with an outstanding loan, your pension will be permanently reduced. Also, if you get a divorce, your ex-spouse may be entitled to a portion of your benefit.

A Cost of Living Adjustment (COLA), on the other hand, could increase your benefit once you become eligible.

Vested Retirement Benefits

If you leave public employment before retirement age, but have met the minimum service requirement to receive a pension, you can apply for a vested retirement benefit when you become eligible.

Disability and Death Benefits

Your NYSLRS benefits include more than a pension. If you are no longer able to perform your job because of a medical condition, you may be eligible for a disability retirement. If you die before retirement, your survivors may be eligible for a death benefit.

Receiving Your Benefits

Before you can receive a retirement benefit, you must file the appropriate form with the Office of the State Comptroller. Here you’ll learn where to find the form and what deadlines apply.

Where to Find Your Retirement Plan Booklet

Look for your retirement plan booklet on the Publications page on our website.

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.

Other Milestone Blogs

Too Much Free Time?

Could retirement bring you too much free time? When people think about retirement planning, they usually think about money. Will you have enough to maintain a comfortable lifestyle for a retirement that could last decades? But regardless of your finances, there is one thing you’re likely to have a lot more of after you retire: time. Figuring out how you’ll spend that time should also be part of your retirement planning process.

Free time after retirement

Counting the Hours

According to the U.S. Labor Department, the average American worker spends about nine hours a day at work. Add another hour a day commuting time, and that’s ten hours a day or 50 hours each week.

All those hours you spent working, and traveling to and from work, will instantly become free time. While that may sound great to many people, all that extra time can have downsides.

If not put to good use, that extra time can lead to boredom and even depression. What’s more, if you’re married and you and your spouse are both retired, you may find yourselves wondering how to spend that time together.

Make a Plan for Free Time

For many couples, having extra time together is a dream come true. However, some couples find themselves getting in each other’s way, and that can sometimes lead to problems.

But there are ways to cope. For example, finding activities outside the home, both together and separately, can help. As with most things, you’ll be better off if you recognize there may be a problem, discuss it with your spouse, and come up with a plan.

There are more thoughts on the subject, and some good advice, in this article: 10 Tips to Help Your Marriage Survive Retirement.

Why Designate a Beneficiary?

When you designate a beneficiary, you choose a person to receive a benefit after your death. By choosing a beneficiary, you’re ensuring that money goes to the person you want to receive it.

Why Should I Designate a Beneficiary? is a short, but informative booklet that explains beneficiary designations and how you can change them.

It is important to designate a beneficiary because that person may be eligible to receive a death benefit. If you are a State employee, they may also be eligible for New York State survivor’s benefit. Most retirees are eligible for a post-retirement death benefit depending on their retirement plan and tier. You can designate a beneficiary to receive this one-time, lump sum benefit after your death.

A beneficiary is often a spouse, a child or another relative, but it does not have to be a family member or even a person. You can designate a trust or organization to receive your ordinary death benefit.

designate a beneficiary

Types of Beneficiaries

The booklet describes the two types of beneficiaries.

A primary beneficiary is the person who receives your death benefit. You can name more than one primary beneficiary. Each will share the benefit equally, unless you indicate specific percentages to be paid to each beneficiary.

A contingent beneficiary will receive your death benefit if all the primary beneficiaries die before you.

The booklet also has a section describing special beneficiary designations, which is helpful if you wish to name a minor child, a trust or an estate as a beneficiary

When to Designate a Beneficiary

You should review your beneficiary information periodically to make sure your beneficiary designations are up to date and reflect your current desires. Retirement Online provides convenient access to this information, which you can also find in your most recent Member Annual Statement.

If you get married, get a divorce or have a child, you may wish to change your beneficiary designation. Retirement Online is the convenient and secure way to update your beneficiaries. Sign in to your account, then click “Manage My Beneficiaries.” You can also complete a Designation of Beneficiary form and mail it to NYSLRS.

You can change the beneficiary designation for your death benefit at any time. But remember, a beneficiary designation is a legal document, so you’ll want to avoid some common errors that could make your choices void. Fortunately, this booklet includes a list of guidelines that will help you avoid these pitfalls, and it is available online whenever you need to consult it.

Other Publications

Read our recent blog posts about other NYSLRS publications.

Should You Join NYSLRS?

Most State and municipal employees are required to join the New York State and Local Retirement System (NYSLRS) when they are hired. But for some employees, such as part-time and seasonal workers, membership is optional. If you’re a member and you know someone who could join NYSLRS, consider sharing this piece with them.

join NYSLRS for membership benefits

What is NYSLRS?

NYSLRS is the third largest retirement system in the nation, with more than 1.1 million members, retirees and beneficiaries. State Comptroller Thomas P. DiNapoli administers the Retirement System and is trustee of the New York State Common Retirement Fund, which holds and invests NYSLRS assets. The Fund had a value of $210.5 billion as of March 31, 2019.

Why Join NYSLRS?

Joining NYSLRS will improve your chances of a secure financial future. You’ll earn credit toward a pension that will provide monthly payments throughout your retirement. But NYSLRS also provides other important benefits.

What Does NYSLRS Offer?

As a NYSLRS member, you’ll be eligible for a pension after you earn ten years of service credit. (This is called being vested.) If you work part-time, service credit is pro-rated. For example, if you work half of the hours that a full-time employee works, you’ll receive six months credit for every year you work.

Also, as a NYSLRS member you’ll be able take loans from your contributions if you’ve earned a year of service credit and meet other requirements. You’ll be eligible for a death benefit once you have one year of service credit, and disability benefits after you have ten years of service credit. (If your disability results from an on-the-job accident, not due to your own willful negligence, there is no minimum service requirement.)  

Over 3,000 employers participate in NYSLRS, allowing you to continue to build on your benefits if you go to work for another government employer. Your benefits also may be transferable to six other public retirement plans in New York.

Making Contributions

As a Tier 6 member, you’ll contribute between 3 and 6 percent of your earnings to the Retirement System. Tier 6 contribution rates vary based on each member’s annual compensation. If you don’t join NYSLRS when you first start working and later decide to purchase your previous service credit, you will need to contribute 6 percent of those earnings plus interest, even if your salary level for the prior time period would have resulted in a lower contribution rate.   

Your NYSLRS pension will be based on your service credit and salary, not on the amount you contribute. A NYSLRS pension is a lifetime benefit. Unlike a 401-k, there is no risk that your pension benefits will be reduced during your retirement.

But what if you join NYSLRS and decide to leave public service before you are vested? You won’t lose your contributions. In fact, you can withdraw your accumulated contributions, plus interest, and roll that money into a retirement savings plan at your new job.

More Information

If you would like to join NYSLRS or just want more information, please contact your employer’s human resources (personnel) office. You may also be interested in our booklet, Membership in a Nutshell.

How Do I Prepare to Retire?

If you plan to retire in the near future, consider How Do I Prepare to Retire? a must-read.

This NYSLRS publication is a road map for the retirement process — a guide to the steps you’ll need to take before and after you file your retirement application. It highlights resources you can tap to get a better understanding of your benefits, including the NYSLRS website and Retirement Online.

prepare to retire

Retirement Planning Tips

Before you retire, you may need to tie up some loose ends regarding your membership. How Do I Prepare to Retire? discusses how to get credit for all of your service, paying off any outstanding NYSLRS loans, and other matters you should attend to before you file for retirement.

The biggest decision you’ll make as you plan your retirement is setting a date. This booklet includes a discussion about the impact early retirement may have on your pension amount. You’ll also find information about how your final average salary is calculated and how to get an estimate of your future benefits.

Retirement Countdown

Once you seriously begin to consider retirement, the booklet details a few steps you can take to make your path to the big day as smooth as possible.

  • File Proof of Your Date of Birth. Before we can pay any benefits, we must have proof of your date of birth.
  • File Your Domestic Relations Order. If you have a court order showing how your benefits are to be divided with an ex-spouse, we’ll need a certified copy.
  • Review Your Health Insurance. Check what coverage you’ll have or investigate health insurance options. (NYSLRS does not administer health insurance for our retirees, but you may be able to pay for yours through pension deductions.)

Filing for Retirement

Filing an Application for Service Retirement sets the ball in motion. In most cases, your application must be on file with the Office of the State Comptroller 15 to 90 days before you retire. You need to send it directly to NYSLRS; don’t give it to your employer. You can mail it, preferably by certified mail, or drop it off at one of our consultation sites.

This booklet tells you what to do and what to expect as we finalize your pension. There are important documents you’ll need to file, such as a W-4P form, so we know how much we should withhold from your pension. But don’t fret too much about these things: just keep How Do I Prepare to Retire? handy and consult it whenever you have a question.

Other Publications

Read our recent blog posts about other NYSLRS publications.

Retirement Age and Your NYSLRS Pension

For some NYSLRS members, your retirement age matters when it comes to receiving your NYSLRS retirement benefits.

Your pension will be based largely on your years of service and final average salary, but your age at retirement is also a factor. How age plays into the equation depends on your tier and retirement plan.

Members in regular retirement plans can retire as early as age 55, but they may face significant pension reductions if they retire before their full retirement age. The full retirement age for members in most tiers is 62, and it’s 63 for Employees’ Retirement System (ERS) Tier 6 members and for Police and Fire Retirement System (PFRS) Tier 6 members who leave public employment before retirement age, but have enough service to receive a pension. If you joined NYSLRS on or after April 1, 2012, you are in Tier 6.

retirement age

Benefit reductions are prorated by month. The closer you are to your full retirement age when you retire, the less the reduction will be. Here are some examples of how that would work.

  • ERS Tiers 2, 3 and 4, PFRS Tiers 2, 3 (Article 11), 5 and 6: If you retire at age 58 1/2, your pension will be permanently reduced by 16.5 percent.
  • ERS Tier 5: If you retire at age 58 1/2, your pension will be permanently reduced by 20.83 percent.
  • ERS Tier 6: If you retire at age 58 1/2, your pension will be permanently reduced by 29.5 percent.

Once you retire with a reduced benefit, the reduction is permanent — it does not end when you reach retirement age.

Retirement Age Exceptions

Tier 1 members can retire at 55 without a benefit reduction. Benefit reductions don’t apply to ERS Tier 2, 3 or 4 members if they retire with 30 years of service. Tier 5 Uniformed Court Officers and Peace Officers employed by the Unified Court System can also retire between 55 and 62 without penalty if they have 30 years of service.

More Information

Understanding how age affects your NYSLRS benefits is crucial to retirement planning. To learn more, please review your retirement plan booklet on our Publications page.


Your Contributions to NYSLRS

Most NYSLRS members contribute a percentage of their earnings to the Retirement System. Unlike a 401k or IRA, these contributions don’t determine the amount of your pension. So how do NYSLRS contributions work?

NYSLRS retirement plans differ from defined contribution plans, such as 401k plans. In those plans, a worker, their employer or both contribute to an individual retirement account. The money is invested and hopefully accumulates investment returns over time. This type of plan does not provide a lifetime benefit, and there is the risk that the money will run out during the worker’s retirement years.

Your NYSLRS contributions, however, don’t go into a personal retirement account. That’s because NYSLRS is a defined benefit plan. Your contributions go into the New York Common Retirement Fund along with employer contributions and investment income. This pool of money pays out retirement benefits for you and other NYSLRS members.

Once you’re vested, you’re entitled to a pension that will provide monthly payments for the rest of your life. The amount of those payments will be based on your years of service and final average salary, not on how much you contributed to the Retirement System.

How Much Do I Contribute?

If you joined NYSLRS since April 1, 2012, you are in Tier 6. Tier 6 contributions range from 3 to 6 percent of earnings.

To put that into perspective, financial experts advise workers in defined contribution plans to save 10 to 15 percent of their earnings in their retirement accounts.

Visit our Member Contributions page for other tier contribution rates.

Tier 6 contributions

Can I Withdraw My Contributions?

If you leave public employment with less than ten years of service, you can withdraw your contributions, plus interest. If you withdraw, you will not be eligible for a NYSLRS retirement benefit. If you have more than ten years of service, you cannot withdraw, but you will be entitled to a pension when you reach retirement age. But remember, you will not receive this pension automatically; you must file a retirement application before you can receive any benefits.

A Guide for Retirees

Our publication A Guide for Retirees is a valuable resource to read if you’re retired or planning to retire soon. This guide details the continuing benefits and services NYSLRS provides for its retirees.

What’s Inside A Guide for Retirees?

The first section of A Guide for Retirees outlines your benefits in clear, straightforward language. It provides an estimate of when to expect your first pension check, along with a couple reminders to help avert any delay in your payment. There’s also a brief description of how we calculate your benefit and information about what to do if you believe your benefit was calculated incorrectly.

Your NYSLRS retirement benefit will provide you with monthly payments for the rest of your life. But that doesn’t mean the amount of your pension won’t change. For example, your benefit will increase once you are eligible for a cost-of-living adjustment. Signing up for Medicare or getting a divorce can also change your benefit amount.

The booklet also describes benefits that your survivors may be eligible for, such as the post-retirement death benefit.

A Guide for Retirees

Services We Offer

A Guide for Retirees describes services NYSLRS provides for retirees, including:

  • Retirement Online. A fast and secure way to do business with NYSLRS.
  • Automated Information Line. You can call 24 hours a day, seven days a week to request a form, check your COLA eligibility, get general tax information and more.
  • Direct Deposit. Have your pension deposited directly into your bank account.
  • Pension Verification Letters. You can create your own in Retirement Online or we can send one at your request.
  • Individual Consultations. You can discuss your benefits with one of our information representatives in person or over the phone.

Your Obligations

Your benefits come with certain responsibilities. Most importantly, you need to let us know if your address changes. Even if you’re getting your pension through direct deposit, we need to have your correct address so we can send you tax documents and other important information.

This section also reminds you to keep your beneficiary information current, contact us if your check is lost or stolen, and review your withholding regularly.

Other Publications

Read our recent blog posts about other NYSLRS publications: