Tag Archives: retirement

Knowing Your Retirement Plan is the Key to Retirement Planning

Information is the key to being fully prepared for your retirement years. The single most important thing you can do to achieve this goal is to know what NYSLRS retirement plan you’re in. Once you know that, the next thing you must do is understand the benefits your plan provides.

Your retirement plan booklet covers things like how long you’ll need to work in order to receive a pension, how your pension amount is determined, and what kind of death and disability benefits may be available to you. You can find a copy of your plan booklet on our website’s Publications page.

But here’s the challenge: NYSLRS manages 335 retirement plan combinations, which are described in 51 plan booklets. How do you figure out which is yours? The information below should help.

Retirement plan booklet infographic

Two Key Questions

To get started, you need to answer two questions.

Question One: Which retirement system are you in? NYSLRS is made up of two different systems:

  • The Employees’ Retirement System (ERS), which is for public employees in non-teaching positions. It also includes some law enforcement personnel, such as correction officers, sheriffs and sheriffs’ deputies.
  • The Police and Fire Retirement System (PFRS), which is for paid firefighters and police officers, including SUNY police, State Park police, Encon officers and State Forest Rangers.

Question Two: Which tier are you in? There are six tiers in ERS and five tiers in PFRS. Your tier, based on when you joined NYSLRS, determines such things as when you become eligible for benefits and how much you contribute. You can find your tier by checking your Account Information in Retirement Online or by checking the NYSLRS website.

For many members, knowing your retirement system and tier are enough. But for other members, especially those in law enforcement, it may help to have your retirement plan number as well. The plan number indicates the section of Retirement and Social Security Law the plan is based on. For example, Plan A15 indicates that you are covered by Article 15. You can find your plan number in the Account Information section of Retirement Online.

Roughly three-quarters of all ERS members are covered by Article 15; they just need to know their tier to find the correct booklet.

State policeSUNY policeState Encon OfficersState Park Police and Forest Rangers each have their own plan booklet, which can be found in the PFRS section of the Publications page. That’s also where you’ll find the Special 20- and 25-Year Plans, which cover officers in most municipal police departments. (Members in these special plans should see 384, 384-d or 384-e listed in Retirement Online.)

If you are still unsure which retirement plan booklet covers your benefits, you can send us an email using our secure contact form, or you can ask your employer.

Take the Time to Understand Your Retirement Plan

It cannot be stated enough how important it is to read your plan publication to learn all you can about your benefits. It is the key to solid retirement planning. Remember, no one has a more vested stake in your retirement than you do.

What Happens After You File for Retirement

The day has finally come — you filed for retirement. You submitted your retirement application through Retirement Online (or mailed a paper retirement application) and now you’re looking forward to your first pension payment. Here’s what to expect next.

Submit Any Additional Paperwork

After you file for retirement, we will send you and your employer an acknowledgement letter, which will list your retirement date. We may reach out to you for additional information to complete the retirement process — what option you selected, what federal tax to withhold, and your banking information for electronic payments.

file for retirement

Fortunately, if you used Retirement Online, you were able to select your payment option, provide tax withholding information, and enroll in our Direct Deposit Program when you completed the online application.

If you mailed a paper application and did not include this information, we’ll send you the necessary forms to fill out and send back to us. The forms are also available on our website if you want to print your own:

  • W-4P form: If you don’t submit a W-4P, we’ll withhold federal taxes based on the status “married with three dependents.” You can change your withholding at any time.
  • Direct Deposit Enrollment form: We encourage you to sign up for direct deposit, so you’ll have safe and reliable access to your pension payments on the last business day of each month. Paper checks are mailed on the second to last business day of each month and may take longer to receive.
  • Option Election form: If you haven’t received a pension estimate from our office in the past 18 months, you don’t need to include your pension payment option election when you file a paper application — you can wait until after you review an estimate to choose an option. We’ll send you an estimate, along with an option election form, after we receive your retirement application.

Receive Your First Payment

Once NYSLRS receives your retirement application, we will determine your initial pension benefit amount based on the earnings and service information we have on file at the time of your retirement.

Most NYSLRS retirees get their first pension payment at the end of the month following the month they retire. Please note: we cannot send your first payment until we have proof of your date of birth. A copy of your New York driver’s license, birth certificate, passport or naturalization papers are acceptable proofs. If you didn’t have proof of date of birth available when you submitted your retirement application, you can email us a copy by attaching it to our secure contact form or upload it using Retirement Online.

Possible Adjustments to Your Pension

If we receive additional payroll information from your employer, such as eligible lump sum payments, a retroactive pay increase or lagged regular earnings, we may need to adjust your pension payment.

Because of the many variables that are often involved in verifying service and salary details with your former employer, finalizing your retirement benefit amount can take some time. The time this takes depends on the complexity of your circumstances. For example, if you worked for multiple public employers, it may take longer to pull together all your earnings information. Also, if you are transferring service from another retirement system, filing a Domestic Relations Order or are seeking to purchase past service credit, you should expect a delay in receiving a finalized pension amount.

Once we have all the information we need, we’ll recalculate your pension amount. In most cases, your initial payments will be very close to the final benefit amount, but if your payment increases, you will receive a retroactive payment for the amount you are owed back to your date of retirement (the difference between your initial payments and your final retirement benefit amount).

Retirement Online Makes Applying for Retirement Fast, Easy

You can now file for a service retirement benefit using Retirement Online. This new feature makes applying for retirement faster and easier than ever before. If you don’t already have an account, sign up today.

And, if you become ill with COVID-19, you may want to file for retirement to protect your loved ones.

filing a retirement application

File for a Service Retirement Online

After signing in to your Retirement Online account, scroll down to the ‘My Account Summary.’ On the right, under the heading ‘I want to…,’ click the green “Apply for Retirement” button.

From there, you’ll go through a series of screens where you’ll be able to:

A big advantage of filing for Retirement Online is that you do not have to get anything notarized.

After you click the “Submit” button, it is important that you do not close your browser until you receive a confirmation message that states your retirement application has been successfully submitted.

This help guide offers step-by-step instructions.

Notarized Signatures

If you decide to file your application by mail, you will have to have your signature notarized on the application and on the payment option election form.

You can have forms notarized using audio-video technology, which allows a notary to witness a signature remotely. You can find more information about the virtual notary process on the New York Secretary of State website.

If you are in quarantine and perhaps unable to use a virtual notary, you can submit a signed form that is not notarized. You’ll need to include a letter to NYSLRS to explain that you were under quarantine when the form was signed, and submit notarized forms once the quarantine is lifted.

Filing for Service Retirement by Mail

You can still print an Application for Service Retirement and pension payment option election form and mail them to NYSLRS. If you mail the application, we recommend “certified mail, return receipt requested.” When we receive the form, the postmark date will serve as the filing date.

If you use regular mail, the filing date is the date we receive it. However, if you were to die after your application is mailed, but before we receive it, a legible postmark will serve as a filing date. (If you mail it from a post office, you can ask for a hand cancellation, which may help ensure the postmark is legible.)

If you plan to mail your application, you may want to read our blog post, Your Checklist to Apply for Retirement.

Disability Retirement Benefit

If you become seriously ill, you may wish to file for a disability retirement benefit. That way, if you were to die before your retirement date, your beneficiary may still be eligible for a continuing pension, rather than a one-time, in-service death benefit. You may apply for a disability retirement at the same time you apply for a service retirement — there is no 15-day waiting period when filing for disability retirement.

For information about applying for a disability retirement benefit as a result of becoming seriously ill from COVID-19, please read the Filing for Retirement Benefits During the COVID-19 Emergency blog post or visit our Disability Retirement Benefits page.

For More Details, Read Your Retirement Plan Booklet

Your service and disability retirement benefits and death benefits are based on your tier, plan, service credit, and other factors. For details about your available benefits, please read your retirement plan booklet, available on our Publications page, or you can call our Contact Center at 866-805-0990 if you have questions.

Your Contributions to NYSLRS

Most NYSLRS members contribute a percentage of their earnings to the Retirement System. Over time, those contributions, with interest, can add up to a tidy sum. But what happens to that money? Will you get your contributions back when you retire? The answer to that question is “no.” Let’s look at what happens to your NYSLRS contributions.

How NYSLRS Retirement Plans Work

NYSLRS plans are defined benefit pension plans. Once you’re vested, you’re entitled to a lifetime benefit that will be based on your years of service and final average earnings. The amount of your contributions does not determine the amount of your pension. (Use Retirement Online to estimate your pension.)

Your NYSLRS plan differs from defined contribution plans, such as a 401-k plan, which are essentially retirement savings 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 guaranteed lifetime benefit and there is the risk that the money will run out during the worker’s retirement years. Experts recommend that workers who have defined contribution plans contribute anywhere from 10 to 20 percent of their income to their plan. NYSLRS members, in contrast, contribute between 3 and 6 percent of their income, depending on their tier and retirement plan.

Where Your Contributions Go

When you retire, your contributions go into the New York State Common Retirement Fund. The Fund is the pool of money that is invested and used to pay retirement benefits for you and other NYSLRS members.

contributions

Your Contribution Balance

You can find your current contribution balance in Retirement Online. But if your contributions don’t determine your pension, what difference does it make what the balance is? For one thing, your contribution balance helps determine the amount you can borrow if you decide to take a loan from NYSLRS. Also, you may be able to withdraw your contributions, with interest, if you leave the public workforce before retirement age.

Withdrawing Your Contributions

You cannot withdraw your contributions while you are still working for a public employer in New York State. 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 benefit.

What to Consider When Choosing Your Retirement Date

Before you pin down a retirement date, there are several factors you should consider.

Your Retirement Date

NYSLRS has made it a lot easier for you to determine the best time to retire. Most members can now use our online pension calculator to estimate what their benefit would be at different retirement dates and ages. Just sign in to your Retirement Online account and click the “Estimate my Pension” button to get started.

choosing your retirement date

Your Health

Your current health, and your long-term health prospects, should be a factor in selecting your retirement date. If your health is poor, you may want to consider retiring earlier to give yourself more time to enjoy retirement. On the other hand, if you anticipate significant out-of-pocket health costs, working longer might give you more time to save for those costs.

If your health is good, your retirement may last longer than average. In most cases, staying on the job a little longer will increase your NYSLRS pension and provide an opportunity to increase your savings.

Your Savings

NYSLRS has always encouraged its members to save for retirement as a supplement to their NYSLRS pension and Social Security. Retirement savings are a hedge against inflation, can help in an emergency and allow you to do the things you want to do during retirement.

Having retirement savings gives you more flexibility, and if you have enough saved, that may offset any penalty if you decide to retire early. On the other hand, if you have no savings or are short of what you’d like to have, working a little longer offers a chance to save more.

State employees and some municipal employees can take advantage of the New York State Deferred Compensation Plan. If you don’t work for New York State, check with your employer to see if you are eligible. If you are not eligible, your employer may be able to direct you to an alternative retirement savings program. (The Deferred Compensation Plan is not affiliated with NYSLRS.)

In 2020, you can save up to $19,500 per year in a Deferred Compensation account, under Internal Revenue Service rules. Starting in the year you turn 50, you can save an additional catch-up amount. The age 50-plus catch-up amount for 2020 is $6,500, for a total limit of $26,000.

Your Current Job

The type of work you do is an important factor in determining when to retire. A physically demanding job can get even harder as you age, but if you’re working in an office, that’s generally not the case.

But there are other things to consider about your current job. Some members want to retire as soon as they’re eligible to go, but if your job gives you satisfaction and a sense of purpose, are you ready to walk away from it? Do you look forward to social interactions with your coworkers? Will you miss your job more than you enjoy being retired?

Your Plans for Retirement

Is retirement the end of something or the beginning of something new? Answering that question could go a long way to determining your ideal retirement date. If you have dreams of starting your own business or going mountain climbing in Spain, you may not want to delay retirement.

But if you don’t have a plan to fill the long hours of retirement, you risk becoming bored or depressed. For some, that risk is a reason to keep working. But whether you decide to retire earlier or later, having a plan for retirement can help make it a more satisfying experience.

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.

Tier 6 Benefits – A Closer Look

Tier 6 members (those who joined NYSLRS since April 1, 2012) are eligible for a lifetime pension benefit once they’ve earned 10 years of credited service. And that pension can replace a portion of your salary throughout your retirement.

Your NYSLRS pension will be based on your Final Average Earnings (FAE) and the number of years you work in public service. FAE is the average of the five highest-paid consecutive years. For most members, those higher-paid years come at the end of their careers. Since retirement is still some years in the future for most of you, we won’t focus on the dollar amount of your FAE today. But we can look at what percentage of that salary would be replaced by your pension if you continue in the system until retirement age.

For Tier 6 members of the Employees’ Retirement System (ERS), the benefit is 1.66 percent of your FAE for each year you work, up to 20 years. (Benefit calculations for members of the Police and Fire Retirement System vary based on plan.) At 20 years, the benefit equals 1.75 percent per year (for a total of 35 percent). After 20 years, the benefit grows to 2 percent per year.

Financial advisers say you will need to replace between 70 to 80 percent of your salary to maintain your lifestyle during retirement. Let’s see how we can get there.
Tier 6 Salary Replacement
NYSLRS Pension: Say you begin your career at age 30 and work until your full retirement age of 63. That’s 33 years of Service Credit. You’ll get 35 percent of your FAE for the first 20 years, plus 26 percent for the last 13 years, for a total benefit that would replace 61 percent of your salary. If you started at age 25, and continue till 63, you’d get 71 percent of your FAE. If you didn’t start till age 35, you’d still get 51 percent at 63.

Social Security: You also should factor in Social Security. According to the Social Security Administration, Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. In the future, it’s estimated that Social Security might still replace between 25 and 30 percent of a typical worker’s pay.

Savings: Retirement savings can also replace a portion of your income. How much, of course, depends on how much you save. The key is to start saving early so your money has time to grow. New York State employees and some municipal employees can participate in the New York State Deferred Compensation Plan. If you haven’t already looked into Deferred Compensation, you might consider doing so now.

Cost-of-Living Adjustment (COLA)
Coming in September

Eligible NYSLRS retirees will see a cost-of-living adjustment (COLA) increase in their monthly pension payments beginning in late September (for payment dates, check our pension payment calendar).

This COLA is a permanent annual increase to your retirement benefit. It is based on the cost-of-living index and is designed to address inflation.

cola coming

How COLA is Determined

The law requires that COLA payments, subject to certain limitations, equal 50 percent of the previous year’s inflation rate, but are never less than 1 percent or more than 3 percent of your benefit. The adjustment is applied to the first $18,000 of your Single Life Allowance, even if you selected a different pension payment option. Once COLA payments begin, you will receive an increase to your monthly benefit each September.

The September 2020 COLA equals 1 percent, for a maximum annual increase of $180.00, or $15.00 per month before taxes.

Who is Eligible for a COLA?

To begin receiving COLA payments, you must be:

  • Age 62 or older and retired for five or more years; or
  • Age 55 or older and retired for ten or more years (uniformed employees such as police officers, firefighters and correction officers covered by a special plan that allows for retirement, regardless of age, after a specific number of years); or
  • A disability retiree for five years; or
  • The spouse of a deceased retiree receiving a lifetime benefit under a pension payment option elected by the retiree. An eligible spouse is entitled to one-half the COLA amount that would have been paid to the eligible retiree when the retiree would have met COLA eligibility; or
  • A beneficiary receiving the accidental death benefit for five or more years on behalf of a deceased Retirement System member.

When Will You See the Increase?

Eligible retirees will see the first 2020 COLA payment in their September pension payment. It will be available to those with direct deposit on September 30, 2020. If you receive a paper check, the COLA will be included in the check to be mailed September 29, 2020.

You can sign in to your Retirement Online account to view a current breakdown of your pension payment. If you have direct deposit and are eligible for a COLA increase, you will receive notification of the net change in your monthly payment amount in September.

If you are not eligible for a COLA yet, you will receive your first increase in the month after you become eligible. This payment will include a prorated amount to cover the month you became eligible. After that, you will receive a COLA increase each September.

Saving for Retirement. Is Now the Right Time?

If COVID-19 has taught us anything, it’s that dramatic change can happen quickly.

It’s clear that just about everyone’s life has been turned upside down during this pandemic. Many have been forced to rethink their plans, including plans for retirement.

In the midst of this upheaval, a clear trend has emerged: many people are spending less money, which may create an opportunity to start saving for retirement or increase your current savings.

Why Save for Retirement?

While retirees tend to spend less than they did while they were working, financial experts say you’ll still need 70 to 80 percent of your pre-retirement income to maintain your lifestyle during retirement.

NYSLRS members have the rare advantage of a well-funded, defined-benefit pension. As a NYSLRS member, once you’re vested, you’re entitled to a pension that, once you retire, will provide you with monthly payments for the rest of your life. Retirement savings can supplement your NYSLRS pension and Social Security, helping you reach that income-replacement goal.

Retirement savings can also be a hedge against inflation and a source of cash in an emergency. A healthy retirement account will give you more flexibility during retirement, helping ensure that you’ll be able to do the things you want to do. It can also provide peace of mind.

Saving for Retirement

Getting Started

For New York State employees and many other NYSLRS members, there’s an easy way to get started. If you work for a participating employer, you can join the New York State Deferred Compensation Plan. If you don’t work for New York State, check with your employer to see if you are eligible. If you are not eligible, your employer may be able to direct you to an alternative retirement savings program.

Once you sign up for Deferred Compensation, your contributions will automatically be deducted from your paycheck and deposited into your account. You can choose from a variety of investment packages or choose your own investment strategy. (The Deferred Compensation Plan is not affiliated with NYSLRS.)

Dig into the NYSLRS Summer Reading List

Looking for some summer reading? Why not check out these publications from NYSLRS? They’re light on colorful characters and exotic settings, but what they lack in plot intrigue, they make up for in important retirement information.

summer reading

1. Retirement Plan for ERS Tier 3 and 4 Members (Articles 14 and 15)

More than 250,000 Tier 3 and 4 members of the Employee’s Retirement System (ERS) are covered by this plan. The publication explains some of the benefits and the services available to you, including a service retirement, a vested retirement, a disability retirement, death benefits and more. Read it now.

2. Retirement Plan for ERS Tier 5 Members (Article 15)

If you joined ERS from January 1, 2010 through March 30, 2012, you are in Tier 5. This booklet describes benefits for Tier 5 members in regular retirement plans. Read it now.

3. Retirement Plan for ERS Tier 6 Members (Article 15)

More than 178,000 Tier 6 ERS members are covered by this Plan. The publication explains some of the benefits and the services available to you, including a service retirement, a vested retirement, a disability retirement, death benefits and more. Read it now.

4. Life Changes: A Guide for Retirees

Already retired? As a NYSLRS retiree, you know that you will receive a monthly retirement benefit for life. However there may be other benefits available to you, as well as services that we provide retirees. This guide will answer many of the questions you may have and explain your responsibilities as a retiree. Read it now.

5. What If I Work After Retirement?

In most cases, NYSLRS retirees under 65 can earn up to $35,000 per calendar year in a public-sector job, but there are no restrictions if you work for a private-sector employer. If you plan to work while collecting your pension, you should read this booklet. Read it now.

Other Plan Booklets

Not covered by the retirement plans above? Maybe you’re a police officer, a firefighter, a sheriff or a correctional officer. You can still find you plan booklet on our Publications page. They’re great reading any time of year. If you’re not sure which plan covers your benefits, you can ask your employer or Contact Us.