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Working After Retirement: Retiree Earnings Limit

Working After Retirement: Retiree Earnings Limit

As a NYSLRS retiree, you can work and still receive your pension, but you should be aware there may be a limit on how much you can earn each year without affecting your NYSLRS pension. Whether the earnings limit applies to you depends on:

  • Whether you receive a service retirement or disability retirement;
  • Whether you will be working for a New York State public employer, private employer (yourself or other); and
  • Your age.

Please read the information below carefully to find out more.

Working While Receiving a Service Retirement Benefit

An earnings limit of $35,000 generally applies to NYSLRS retirees who:

  • Are under age 65;
  • Receive a service retirement benefit (see disability benefit rules below); and
  • Return to work for a public employer (including contract or consultant work, if you joined NYSLRS on or after May 31, 1973).

2024 Update Regarding the Earnings Limit

In response to the COVID-19 emergency, NYS executive orders suspended the earnings limit. The last order expired in June 2023. This means for most retirees under the age of 65, the $35,000 limit applies to the entire calendar year starting 2024.

The earnings limit for retirees employed by school districts and Boards of Cooperative Educational Services (BOCES), however, is suspended through June 30, 2024. The earnings limit suspension for school employees does not apply to retirees who work for a college, university or charter school.

There is no earnings limit if you are self-employed or if you work for:

  • The federal government;
  • A state or local government in another state; or
  • A private employer.

Also, beginning in the calendar year you turn 65, the earnings limit no longer applies.

Note: Special rules apply to elected officials.

Working While Receiving a Disability Retirement Benefit

Almost all earnings for retirees who are working while receiving a disability retirement benefit are limited whether they work for a public or private employer. The limit is specific to each retiree. To find out your earnings limit, please contact us.

How the Limit Applies

The limit applies to all earnings for the calendar year, including money earned in the calendar year, but paid in a different calendar year (for example earned in December but paid in January).

The limit does not apply to:

  • Payments received after you retire from your employer, such as for vacation or sick time you earned when you were still working; and/or
  • A retroactive payment for a new union contract, if the earnings are for employment before you retired.

Reporting Your Earnings

It is your responsibility to notify NYSLRS if you earn more than the limit. If you know you are going to exceed the limit, contact us at least a month before you do.

You can message us using the secure contact form, or you can fax a letter to 518-402-2498. Be sure to include the name of your employer, the approximate date you expect to exceed the limit and a daytime phone number in case we have questions.

If You Exceed the Limit

If you earn more than the limit, you must:

  • Pay back NYSLRS for the pension payments you received after the date you reached the limit. If you continue to work, your pension will be suspended for the remainder of the calendar year and resume the following January.

    OR

  • Rejoin NYSLRS, in which case your pension will be suspended until you retire again at some future date. (You’d need to reapply.)

Earnings Limit Waiver

Under Section 211 of the Retirement and Social Security Law, the earnings limit can be waived if your prospective employer gets approval before hiring you. Approval is not automatic; it is based on the employer’s needs and your qualifications. In most cases, the New York State Department of Civil Service would be the approving agency. A Section 211 waiver covers a fixed period, normally up to two years.

For More Information

Before you decide to return to work, please read our publication What If I Work After Retirement? It includes information such as how earnings limits are calculated for retirees receiving a disability retirement benefit, consequences to consider before returning to NYSLRS membership and more. If you have questions, please contact us.

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.

What to Know About ERS Tier 6

Tier status is a major factor in determining your NYSLRS retirement benefits. Employees’ Retirement System (ERS) members who joined NYSLRS on or after April 1, 2012, are in Tier 6. They have plenty of company. There were 285,750 ERS Tier 6 members as of March 31, 2020, making up nearly 45 percent of ERS membership.

ERS Tier 6 members contribute to the Retirement System based on their earnings, but the amount of their pensions will be determined by years of service and final average salary, not by the amount of their contributions.

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.

If you’re an ERS Tier 6 member, you can find out more about your benefits in one of these plan booklets: