Tag Archives: retirement age

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.

Tier 3 & 4 Members: When Is The Right Time To Retire?

Tier 3 and 4 members in the Article 15 retirement plan qualify for retirement benefits after they’ve earned five years of credited service. Once you’re vested, you have a right to a NYSLRS retirement benefit — even if you leave public employment. Though your pension is guaranteed, the amount of your pension depends on several factors, including when you retire. Here is some information that can help you determine the right time to retire.

Three Reasons to Keep Working

  1. Tier 3 and 4 members can claim their benefits as early as age 55, but they’ll face a significant penalty for early retirement – up to a 27 percent reduction in their pension. Early retirement reductions are prorated by month, so the penalty is reduced as you get closer to full retirement age. At 62, you can retire with full benefits. (Tier 3 and 4 Employees’ Retirement System (ERS) members who are in the Article 15 retirement plan and can retire between the ages of 55 and 62 without penalty once they have 30 years of service credit.)
  2. Your final average earnings (FAE) are a significant factor in the calculation of your pension benefit. Since working longer usually means a higher FAE, continued public employment can increase your pension.
  3. The other part of your retirement calculation is your service credit. More service credit can earn you a larger pension benefit, and, after 20 years, it also gets you a better pension formula. For Tier 3 and 4 members, if you retire with less than 20 years of service, the formula is FAE × 1.66% × years of service. Between 20 and 30 years, the formula becomes FAE × 2.00% × years of service. After 30 years of service, your pension benefit continues to increase at a rate of 1.5 percent of FAE for each year of service.

When is the Right Time to Retire infographic

 

If You’re Not Working, Here’s Something to Consider

Everyone’s situation is unique. For example, if you’re vested and no longer work for a public employer, and you don’t think you will again, taking your pension at 55 might make sense. When you do the math, full benefits at age 62 will take 19 years to match the money you’d have received retiring at age 55 — even with the reduction.

An Online Tool to Help You Make Your Decision

Most members can use Retirement Online to estimate their pensions.

A Retirement Online estimate is based on the most up-to-date information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit, which could help you determine the right time to retire. When you’re done, you can print your pension estimate or save it for future reference.

If you are unable to use our online pension calculator, please contact us to request a pension estimate.

This post has focused on Tier 3 and 4 members. To see how retirement age affects members in other tiers, visit our About Benefit Reductions page.

Retirement Planning: Know Your Membership Milestones

Even if your retirement is years in the future, you should be aware of certain membership milestones that may help you narrow down when to retire.

There are two types of membership milestones: those pertaining to age and those pertaining to service credit. Since most NYSLRS members reach service credit milestones first, we’ll start with them.

Service Credit Milestones

Vesting is a key retirement milestone. Once you become vested, you will be eligible for a NYSLRS pension even if you leave public employment before retirement. Members in Tiers 1-4 with at least five years of credited service are vested. (Most members in these tiers have already reached this milestone.) Tier 5 and 6 members must have ten years of credited service to be vested.

membership milestones - service credit

After reaching 20 years of service, most members will be eligible to have a higher percentage of their final average earnings included in their pension benefit. How that benefit is calculated depends on your retirement plan and tier. You can find more information in your retirement plan booklet.

Members in some special plans can retire with 20 years of service, regardless of their age. Other special plans allow for retirement after 25 years, regardless of age.

At 30 years of service, Tier 2-4 members who are at least 55 years old can retire without a pension reduction.

Age Milestones

Once you reach your full retirement age, you can retire without a pension reduction. For Tiers 2-5, the full retirement age is 62. The full retirement age for Tier 6 members is 63.

membership milestones - age

Members in regular retirement plans can retire as early as age 55, but they may face a pension reduction if they retire before their full retirement age. The closer you are to your full retirement age at retirement, the less the reduction will be.

If you would like to see what your pension would be at different ages, use Retirement Online’s pension benefit estimator.

More About NYSLRS Membership Milestones

For more information about NYSLRS milestones, please see:

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 earnings, 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.

pension reductions based on 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.

You can check your service credit total and estimate your pension using Retirement Online. Most members can use our online pension calculator to create an estimate based on the salary and service information NYSLRS has on file for them. You can enter different retirement dates to see how your choices would affect your potential benefit.

NYSLRS – One Tier at a Time: PFRS 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 PFRS Tier 6. Anyone who joined PFRS on or after April 1, 2012 is in Tier 6. Tier 6 members currently make up about 36 percent of PFRS membership, totaling 12,883 members, making it the second largest tier in PFRS. Check out the graphic below for the basic retirement information.

PFRS Tier 6

Where to Find PFRS Tier 6 Information

If you’re a PFRS Tier 6 member, please find your retirement plan publication from the list below for more details about your benefits:

For special plans under miscellaneous titles, please visit our Publications page. Check out other posts in the series:

NYSLRS – One Tier at a Time: PFRS Tier 2

Today’s post looks at Tier 2 in the Police and Fire Retirement System (PFRS). A majority of PFRS members are in Tier 2, which began on July 31, 1973 and ended on June 30, 2009. Most Police and Fire Retirement System members are in “special” retirement plans that allow for retirement after 20 or 25 years, regardless of age, without penalty.

The special plans that cover municipal police officers and firefighters fall under Sections 384, 384(f), 384-d, and 384-e of Retirement and Social Security Law. As of March 31, 2020, there were 15,045 Tier 2 members in these plans; most of whom are covered by either Section 384-d (37.2 percent) or 384-e (62.1 percent).

Check out the graphic below for the basic retirement information for PFRS Tier 2 members.

PFRS Tier 2

 

For more detailed information about your benefits, please review your retirement plan publication:
Special 20- and 25-Year Plans for PFRS Tier 1, 2, 3, 5 and 6 Members (Sections 384, 384-d and 384-e) (VO1517).

Your Checklist to Apply for Retirement

After months of planning and preparation, you’re ready to apply for retirement. To get your NYSLRS  pension benefit, you need to send in an application. Let’s look at what you should include with the form to help make the retirement process go more smoothly.

Filling Out the Retirement Application

Unless you’re filing for a disability retirement, you’ll need to fill out the Application for Service Retirement (RS6037). As you fill out the form, make sure you:

  • Know your registration number. You can find it on your most recent Member Annual Statement or retirement estimate.
  • Know your past employment. To help ensure you receive the proper credit for your public service, please list your public employment history. Include any military service and memberships in other New York public retirement systems.
  • Include your beneficiary’s information. You won’t make an official beneficiary designation with this form, but including these details will help us give you specific amounts for the pension payment options  that offer a lifetime benefit for a beneficiary.
  • See a notary. The form must be filled out completely and signed by a notary public.

Proof of Birth

Make sure we have proof of your birth date. You can send it with your retirement application or before or after, but we cannot pay pension benefits without it. We accept photocopies of the following as proof:

Other Forms

Option Election

You’ll need to choose your pension payment option, or how you want your pension paid. Option election forms are available on our website, but we will also send you a form after we process your application. If you choose an option that provides your beneficiary a lifetime pension benefit when you die, you must provide proof of your beneficiary’s birth date.

Federal Income Tax Withholding

Your NYSLRS pension isn’t subject to New York State income tax, but it is subject to federal tax. You can fill out a W-4P form  any time to tell us how much to withhold from your monthly benefit. We don’t withhold income tax for other states. Visit the Retired Public Employees Association’s website to see whether your benefit will be taxed in another state.

Direct Deposit

Direct deposit is the fastest and most secure way to receive your pension benefits. You can enroll in our direct deposit program when you file for retirement. Just fill out a Direct Deposit Enrollment Application (RS6370), and return it to us.

Domestic Relations Order

If an ex-spouse is entitled to part of your pension, you should send us a copy of your domestic relations order (DRO) as soon as possible. The DRO gives us specific instructions on how to divide your benefits. We cannot finalize your pension until we review it and calculate the court-mandated distribution of your benefit. For more detailed information, please read our Guide to Domestic Relations Orders.

Questions

If you have other questions about applying for retirement, read our publication, Life Changes: How Do I Prepare to Retire? or contact us.

Retirement Planning vs. Reality

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.

Will Your Retirement Age Affect Your Benefit?

Only you can decide when it’s time to retire, but you should know that your age at retirement can affect your pension benefit. Some New York State and Local Retirement System (NYSLRS) members are in special plans that allow for retirement after a certain number of years, regardless of age (for example, police officers, firefighters, correction officers or sheriffs). But for most members, you can retire with full benefits at the age specified by your plan. Most members can choose to retire as early as age 55, but if you do, you may receive a permanently reduced pension benefit.

Full Retirement Ages

Most retirement plans have an age requirement to retire with full benefits. For Employees’ Retirement System (ERS) members in Tiers 2, 3, 4 and 5 and Police and Fire Retirement System (PFRS) members in Tiers 2, 3, 5 and 6, the full retirement age is 62. For ERS Tier 6 members, it’s 63. PFRS Tier 6 members who have left their PFRS employer are eligible for their benefits at age 63.

Service Credit Exceptions

In some retirement plans, members with a certain amount of service credit can retire at age 55 without being subject to benefit reductions. Benefit reductions don’t apply to ERS Tier 2, 3 or 4 members who have 30 or more years of service credit and Tier 2, 3, 4 and 5 Uniformed Court Officers and Peace Officers employed by the Unified Court System who have 30 or more years of service.

Benefit Reductions

Retirement benefits for all other ERS Tier 5 and Tier 6 members, and PFRS Tier 2, 3, 5 and 6 members not in a special 20- or 25-year plan, will be reduced for early retirement — even if they have 30 years of service credit.

These benefit reductions are prorated by month, so the closer you are to your full retirement age, the less the reduction will be. Once you retire with a reduced benefit, that reduction is permanent.

Here’s a look at how reductions break down by membership tier:

Contact us if you have any questions about benefit reductions or any other retirement-related topics. Please review your retirement plan booklet for a full description of the benefits you’re entitled to as well as any reductions and restrictions.