Tag Archives: NYSLRS pension

Some Pension Payment Options Can Provide a Lifetime Benefit for a Loved One

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When you apply for a NYSLRS pension, you’ll need to choose a payment option, which determines how your retirement benefit will be paid. All options will provide you with a monthly benefit for the rest of your life. The single life allowance option pays the highest monthly benefit, but all payments stop at your death. If you choose a different option, you may be able to provide a lifetime benefit to a beneficiary.

Most members can use Retirement Online to create a pension estimate based on the salary and service information we have on file for them. You can enter different retirement dates and beneficiaries to see how they affect your potential benefit and pension payment options. Go to the ‘My Account Summary’ section of your Retirement Online Account Homepage and click the “Estimate my Pension Benefit” button.

When you apply for service retirement through Retirement Online, an estimate of your pension payment under the various options will be generated to help you decide what option to choose. You can also ask NYSLRS to send you a benefit estimate that calculates your pension under the various options.

payment options

Joint Allowance Payment Options

In exchange for a reduction in your monthly payment, joint allowance options pay your beneficiary all or part of your pension after you die. The amount of the reduction in your pension is based on your life expectancy and the life expectancy of your beneficiary. The reduction is permanent even if your beneficiary dies before you do.

You can only choose one beneficiary under a joint allowance option, and you can’t change your beneficiary after you retire, regardless of the circumstances. If your beneficiary dies before you, all payments will stop when you die.

Pop-Up Payment Options

Like joint allowance options, pop-up options allow you to provide a lifetime payment for a beneficiary after your death. But, if your beneficiary dies before you, your future monthly payments will increase to the amount you would have been receiving had you chosen the single life allowance at retirement. (The pop-up only affects future payments. You would not be entitled to any retroactive payments.)

The monthly reduction in your benefit will be greater if you choose a pop-up option over a regular joint allowance.

Payment Options for Multiple Beneficiaries

There are options that allow you to leave a monthly payment to more than one beneficiary, and options that leave a benefit for a certain amount of time. For more information, visit our Payment Option Descriptions page.

Consider Your Decision Carefully

There are many factors that might influence your payment option choice. Your age and overall health, the age and health of your partner, and your loved one’s access to other financial resources should all be considered.

You only have 30 days after the last day of your retirement month to change your option. After that date, you cannot change your option for any reason.

Other Death Benefits

Most NYSLRS retirees are eligible for a post-retirement death benefit if they retire directly from payroll or within one year of leaving covered employment. Eligibility depends on your retirement plan and tier. If you are eligible, your beneficiary will receive a one-time, lump sum payment. The amount of the post-retirement benefit is a percentage of the death benefit available during your working years. For information about this and other potential death benefits, please visit our Death Benefits for Retirees page.

Find Your Retirement Plan Publication

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Your retirement plan publication is an essential resource that explains your NYSLRS benefits in detail — how long you’ll need to work to receive a pension, how your benefit is determined, what death and disability benefits may be available and more. You should consult it throughout your career, but it’s especially important to read as you prepare for retirement.

finding your retirement plan publication

Finding Your Retirement Plan Publication

NYSLRS administers two retirement systems, six membership tiers and many retirement plans that are described in dozens of retirement plan publications. We want to make sure you find the specific retirement plan information that pertains to you, which is why we have a new tool to help you Find Your NYSLRS Retirement Plan Publication. To use it, you just need to know your retirement plan code. You can find your code in the ‘My Account Summary’ section of your Retirement Online account homepage, or check the second page of your latest Member Annual Statement. You also can also use the new tool to search for your plan publication by retirement system, tier and occupation type (uniformed or non-uniformed).

Looking Up Your Plan Milestones

Once you have found your publication, check to see what minimum age or service milestones you’ll need to reach to receive your pension. Most retirement plans allow for full pension benefits at 62 (63 for Tier 6 members) or a reduced benefit starting at age 55. Members in some plans can apply for their pension once they reach 20 or 25 years of service credit, regardless of age.

The years of service credit you earn may also change the calculation of your pension. For example, the percentage of earnings used to determine your retirement benefit may increase once you reach certain milestones — such as when you have 20 years of credited service — but that depends on what retirement plan you are in.

Knowing your plan-specific age and service requirements can help you decide when to retire and anticipate the income your benefit would provide in retirement. If you want to work until a certain age or need to earn a specific amount of service, now you can set that goal and prepare accordingly.  

For more detailed information on what you can find in your plan publication, check out our blog post, How to Read Your Retirement Plan Booklet.

Help for New Members

New NYSLRS members may also be interested in our New Member webpage. This page collects several resources that can help you understand your NYSLRS membership and pension.

The 3-Legged Stool: An Approach to Retirement Confidence

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Most American workers believe they will have enough money to live comfortably after they retire, but do you share their retirement confidence?

As a NYSLRS member with a defined benefit pension plan, you have reason to be optimistic about retirement. But there is more to a financially secure retirement than having a pension. Think of retirement security as a three-legged stool, with three parts working together to provide financial stability when your working days are over. Understanding each of these sources of income will help you better plan for your future and boost your retirement confidence.

retirement confidence

Leg 1: Your NYSLRS Pension

At retirement, vested NYSLRS members are eligible for a pension based on their final average earnings and the number of years they’ve worked in public service. Your pension is a lifetime benefit, which means you’ll receive a monthly payment for the rest of your life, no matter how long you live. Unlike workers who rely on a 401(k)-style retirement plan, you won’t have to worry about your money running out.

Most members can use Retirement Online to estimate how much their pension will be. But if you’re a long way from retirement, it may be better to think in terms of earnings replacement. Financial advisers estimate you’ll need to replace 70 to 80 percent of your income to retire with financial confidence. Your pension can help get you there. For example, if you retire with 30 years of service, your NYSLRS pension could replace more than half of your earnings. (Replacement percentages vary among retirement plans. You can find out more in your retirement plan booklet.)

Leg 2: Social Security

Less than half of Americans believe Social Security will be there for them when they retire, according to a recent poll, and younger workers are even more pessimistic about Social Security’s future. While there’s no denying that Social Security faces challenges, things aren’t as bleak as some people think.

Social Security trustees estimate that Social Security reserves will be depleted by 2035 and they will only be able to pay about 76 percent of scheduled retirement benefits. But consider this: Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. In the future, even if it only replaces 25 to 30 percent of pre-retirement earnings, it would still be a significant source of retirement income.

But these are worse case scenarios. The truth is that lawmakers have many policy options that could reduce or eliminate the long-term financing shortfalls in Social Security. It seems likely those options will be explored.

Leg 3: Retirement Savings

Having a secure, lifetime pension will be a substantial financial asset, but it’s still important to save money for retirement. A retirement nest egg can help in case of an emergency, act as a hedge against inflation and boost your retirement confidence.

Saving is the retirement factor you have the most control over. You decide when to start, how much to save and how your money will be invested. The key is to start saving early, so your money has time to grow, even if you can only afford to save a small amount in the beginning.

With the New York State Deferred Compensation Plan, you can start out by saving as little as $10 per pay period. That money would be automatically deducted from your paycheck, so you won’t even have to think about it. The money is tax-deferred, which means you don’t pay income taxes on your Plan account contributions or earnings until you begin to take payments from your account. This may lower your taxable income now and in retirement. The Deferred Compensation plan is not affiliated with NYSLRS, but New York State employees and some municipal employees can participate. If you’re a municipal employee, ask your employer if you’re eligible for the Deferred Compensation Plan or another retirement savings plan.

Retirement Planning vs. Reality

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As we sit down to plan our retirement, we ask ourselves some tough questions: Am I saving enough? Am I ready for the lifestyle change? Do I need to tighten my budget now or will I need to in retirement?

These questions are all aimed at helping us answer one central question: When is the right time to retire?

According to recent Gallup research, there is often a significant gap between the age we plan to retire and how old we are when we actually do.

Retirement Survey

Gallup’s April 2016 survey asked workers, “At what age do you expect to retire?” And, it asked retirees, “At what age did you retire?”

On average, there is a significant gap between the percent of workers who plan to retire within a certain age range and the percent of retirees who actually did. For example, 31 percent of workers intend to retire at age 68 or older. However, only 12 percent of retirees actually do. And, only 23 percent of workers think they’ll retire before age 62. Nevertheless, 36 percent of retirees ended up doing so. On average, Americans expect to retire at age 66, but actually retire at age 61.  That means a significant number of us may be underestimating how many years our retirement savings need to last.

Age and Your NYSLRS Pension

Regular readers may recall that most NYSLRS retirement plans have a minimum age requirement to retire with a full benefit. However, once you are vested, you are generally able to retire as early as age 55.

An early retirement may come with a significant — and permanent — benefit reduction, though. So, if you plan to retire with a full benefit at age 62 (or 63 for Tier 6 members), but end up retiring early instead, your pension will be less than you planned.

Retirement Planning

NYSLRS has several resources to help you make your retirement plans and stay on target. We distribute your Member Annual Statement (MAS) between May and July. It contains valuable information to help you understand your benefits and plan for the future, including: your earnings, your service credit total and up to three pension projections based on your specific details. You can also check out our Preparing for Retirement — A Checklist and 5 Step Plan for Retirement pages on our website. Our Life Changes: How Do I Prepare to Retire? publication offers a step–by–step guide to the retirement process, a list of available resources and some key factors to consider as you plan.

If you have any questions about your retirement plan, we’re glad to help. Email us using our secure email form, which allows us to safely contact you about your personal account information.

Know Your Benefits: Your NYSLRS Pension

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Generally, three main components determine your NYSLRS pension: your retirement plan, your final average salary (FAS) and your total service credit.

Your Retirement Plan

NYSLRS retirement plans are established by law. Your plan lays out the formula we’ll use to calculate your pension as well as eligibility requirements. It’s important to read your plan booklet, which you can find on our Publications page.  If you aren’t certain what retirement plan you’re in, check your Member Annual Statement or ask your employer.

NYSLRS Pension Chart

Final Average Salary

Your FAS is the average of your earnings during the set period of time when they were the highest. For ERS and PFRS members in Tiers 1 through 5, that period is three consecutive years; for Tier 6 members, it’s five consecutive years. Some PFRS members may be eligible for a one-year period, if their employer offers it. We will use your FAS, age at retirement, total service credit and the formula from your retirement plan to calculate your NYSLRS pension.

Generally, the earnings we can use for your FAS include regular salary, overtime and recurring longevity payments earned within the period. Some payments you receive won’t count toward your FAS, even when you receive them in the FAS period. The specifics vary by tier, and are listed in your retirement plan booklet.

In most cases, the law also limits how much your pensionable earnings can increase from year to year in the FAS period. Earnings above this cap will not count toward your pension.

Our Your Retirement Benefits publications, (ERS and PFRS), provide the limits for each tier and examples of how we’ll determine your FAS.

Service Credit

Service credit is credit for time spent working for a participating public employer. For most members who work full-time, 260 workdays equals one year of service credit. Members who work part-time or in educational settings can refer to their retirement plan publication for their service credit calculation.

Service credit is a factor in the calculation of your NYSLRS pension. Generally, the more credit you have, the higher your pension will be. Some special plans (usually for police officers, firefighters or correction officers) let you retire at any age once you’ve earned 20 or 25 years of service credit. In other plans, if you retire without enough service credit and don’t meet the age requirements of your retirement plan, your pension will be reduced.

Planning Ahead for Your NYSLRS Pension

As you get closer to retirement age, keep an eye on your service credit and FAS. Make sure we have an accurate record of your public employment history. You can sign in to Retirement Online or check your latest Member Annual Statement to see the total amount of service credit you’ve earned. You may also want to take a look at our budgeting worksheet or try our Benefit Projector Calculator as you plan for your retirement.

If you have questions, or want to find out more information about what makes up your NYSLRS pension, please contact us.