Tag Archives: Tier 6

Add a NYSLRS Publication to Your Summer Reading List

Looking for some summer reading to add to your e-reader? Check out these publications from NYSLRS for important retirement information.

Add a NYSLRS Publication to Your Summer Reading List

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

Are you one of more than 350,000 Tier 6 Employees’ Retirement System (ERS) members covered by Article 15? Your retirement plan publication explains some of the benefits and the services available to you, including service retirement, disability retirement, death benefits and more. Read it now.

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

If you’re not in Tier 6, you’re likely among more than 260,000 Tier 3 and 4 ERS members covered by Article 14 and 15. Check out your publication to find out about the benefits and the services available to you. Read it now.

3. Service Credit for Tiers 2 Through 6

The service credit you earn as a NYSLRS member is an important factor in the calculation of your pension. This publication explains the service you can earn credit for and how you can request to purchase credit for additional public employment or military service. Read it now.

4. What If I Leave Public Employment?

While we hope you stay a NYSLRS member throughout your working career, we understand that circumstances can change. If you leave public employment, this publication explains what you’ll need to do and what happens to your NYSLRS membership. Spoiler: It depends on how much service you have. Read it now.

5. What If I Work After Retirement?

Generally, NYSLRS retirees under age 65 can earn up to $35,000 per calendar year from public employers in New York State without affecting their NYSLRS pension. However, you should be aware of the laws governing post-retirement employment and how working after retirement may impact your retirement benefits. If you are considering working while collecting your pension, you should read this publication. If you already work in public employment as a NYSLRS retiree, read our Update Regarding Retiree Earnings Limit blog post for information about recent legislation and Governor’s executive orders that affect the limit.

Other Publications

Looking for other retirement plans? Maybe you’re a police officer, a firefighter, a sheriff or a correctional officer. You can find your retirement plan publication on our website. Visit our Publications page for more general information topics such as Life Changes: Why Should I Designate a Beneficiary?

Popular Blog Posts You May Have Missed

New York Retirement News is dedicated to keeping NYSLRS members and retirees informed about developments that may affect their benefits. In case you missed them, or just want to take another look, here are some of our most popular blog posts from the past year.

popular blog posts
 
  1. Becoming Vested
    Becoming vested is a crucial milestone in your NYSLRS membership. Under legislation enacted in April 2022, Tier 5 and 6 members are now vested after five years of service. Previously, these members needed ten years of service credit to be eligible for a service retirement benefit.

  2. Update Regarding Retiree Earnings Limit
    Normally, most NYSLRS retirees who return to work for a public employer are limited in how much they can earn before their pension would be suspended. The limit is $35,000 per calendar year, however, executive orders from the Governor and legislation temporarily suspended this limit. Read the blog post for current information.

  3. Enhanced Death Benefit for Survivors of COVID-19 Victims
    Survivors of NYSLRS members who contract COVID-19 on the job may be entitled to an enhanced death benefit if the member dies as a result of the disease. This accidental death benefit covers eligible deaths through December 31, 2024.

  4. Find Your Retirement Plan Publication
    Your retirement plan publication is an essential resource that provides comprehensive information about your NYSLRS benefits. It explains 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. Our new tool can help you find your plan publication.

  5. What is a Defined Benefit Plan?
    As a NYSLRS member, you are part of a defined benefit plan, also known as a traditional pension plan. Defined benefit plans are often confused with defined contribution plans, but there are major differences between the two types of plans.

Other Popular Blog Posts

Our blog covers a variety of topics, including supplementing your NYSLRS pension with retirement savings, new retirement online features for retirees and age milestones for retirement planning. We also busted some common retirement myths. Keep reading for more posts on NYSLRS benefits, legislation updates and other retirement information. If you haven’t already subscribed to New York Retirement News, fill out our Subscribe form now to receive an email when we publish new posts.

Thank you for reading New York Retirement News!

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. This post looks at Tier 6 members of the Employees’ Retirement System (ERS).

Your tier determines such things as your eligibility for benefits, the calculation of those benefits, death benefit coverage and whether you need to contribute toward your benefits.

ERS has six tiers. Anyone who joined ERS on or after April 1, 2012 is in Tier 6. There were 350,986 ERS Tier 6 members as of March 31, 2022. At 54 percent of membership, Tier 6 is the largest ERS tier.

Most ERS Tier 6 members (unless they are in special retirement plans) retire under the Article 15 retirement plan. Check out the graphic below for the basic retirement information for Tier 6 members in this plan.

ERS Tier 6

Membership Milestones

As of April 9, 2022, Tier 6 members only need five years of service credit to become vested. If you are a vested member in the Article 15 retirement plan, you are eligible for a lifetime pension benefit as early as age 55, but if you retire before the full retirement age of 63, your benefit will be reduced.

If you retire with fewer than 20 years, the benefit is 1.66 percent of your final average earnings (FAE) for each year of service. If you retire with exactly 20 years of service, the benefit is 1.75 percent of your FAE for each year of service (35 percent of your FAE).

If you retire with more than 20 years of service, you’ll receive 35 percent for the first 20 years, plus 2 percent for each additional year. For example, with 35 years of service you can retire at age 63 with 65 percent of your FAE.

Where to Find More ERS Tier 6 Information

For more information about ERS Tier 6 membership, find your NYSLRS retirement plan publication. It’s a comprehensive description of the benefits provided by your specific plan.

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.

Members may not be able to use the Retirement Online calculator in certain circumstances, for example, if they have recently transferred a membership to NYSLRS, or if they are a Tier 6 member with between five and ten years of service. These members can contact us to request an estimate or use the “Quick Calculator” on our website. The Quick Calculator generates estimates based on information you provide.  

How Your Tier 6 Contribution Rate Can Change

Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members (those who joined NYSLRS on or after April 1, 2012), that percentage, or contribution rate, can change from year to year.

Tier 6 contribution rate

When Tier 6 Contribution Rates are Determined

A Tier 6 member’s contribution rate is calculated annually. New rates become effective on April 1, the beginning of the State’s fiscal year. Once your rate is determined for a given fiscal year, it doesn’t change for the rest of that fiscal year.

Recently enacted legislation removed overtime earned from April 1, 2020 through March 31, 2022, from the Tier 6 contribution rate calculation. For some Tier 6 members, this means lower contribution rates for up to two years, including this coming State fiscal year. Read about it in our blog post, Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates.

How Your Tier 6 Contribution Rate is Calculated

Tier 6 contribution rates are based on what you earn during a State fiscal year, from April 1 through March 31. The minimum rate is 3 percent of your earnings, and the maximum is 6 percent. Your contribution rate is calculated by NYSLRS based on the earnings reported by your employer.

If you are a Tier 6 member with three or more years of membership in NYSLRS, your rates are based on your earnings from the last completed fiscal year. We provide rates to your employer in March, a few weeks before they need to apply any rate changes for the Tier 6 employees at your organization. For example, the contribution rate being provided to your employer in March 2023 is based on earnings for the fiscal year that ended March 2022 (so, what you earned from April 1, 2021 through March 31, 2022).

This video will help explain how your contribution rate is determined:

If you are a new NYSLRS member, during your first three years of membership your contribution rate is based on an estimated annual wage that your employer provided when you were enrolled as a new member.

Learn More

The amount you contribute to the Retirement System will not affect the amount of your pension. A NYSLRS pension is a defined-benefit plan. Under this type of plan, once you are eligible for a pension and apply for retirement, you will receive a monthly payment for the rest of your life. The amount of your pension will be calculated using a formula based on your retirement plan, years of service and final average earnings. You can learn more about your pension by reading your retirement plan publication. Use our Find Your NYSLRS Retirement Plan Publication tool to find yours.

Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates

April 2022 legislation temporarily changes how Tier 6 contribution rates are calculated.

As a Tier 6 member, your contribution rate is based on your past earnings and can change from year to year. Usually, Tier 6 contribution rates are calculated using a member’s base pay, which includes regular earnings, holiday pay and longevity pay. Overtime pay (up to a certain limit) is also included in the calculation of the contribution rate.

The legislation removes overtime earned from April 1, 2020 through March 31, 2022 from the Tier 6 contribution rate calculation. For some Tier 6 members, this has resulted in lower contribution rates for up to two years. The lower rates affect earnings that are being paid from April 1, 2022 through March 31, 2024.

Although overtime is temporarily removed from the calculation of Tier 6 contribution rates, your contribution rate is still applied to all your pensionable earnings, including overtime. 

Our video Understanding Your Tier 6 Contributions helps explain how your contribution rate is determined.

contribution rates

Who is Affected by the Rate Change?

The temporary exclusion of overtime affects Tier 6 members who:

  • Earned overtime from April 1, 2020 through March 31, 2022; and
  • Make mandatory contributions toward their retirement (most Tier 6 members do).

The rate decrease does not apply to:

  • Members who are already paying the minimum rate of 3 percent;
  • Members who did not earn overtime during the COVID pandemic; and
  • New members whose rate is based on an estimated wage rather than actual earnings.

If you are a Tier 6 member who is affected by the legislation, we worked with employers to review your past earnings and to determine whether your rate should be lowered. Members who should have contributed at a lower rate beginning April 1, 2022 received a refund. The rate that will be applied to your earnings from April 1, 2023 to March 31, 2024 already takes the legislation into account.

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. This post looks at Tier 6 members of the Police and Fire Retirement System (PFRS).

Your tier determines such things as your eligibility for benefits, the calculation of those benefits, death benefit coverage and whether you need to contribute toward your benefits.

PFRS has five tiers. Anyone who joined PFRS on or after April 1, 2012 is in Tier 6. There are 16,027 Tier 6 members, which accounts for more than 45 percent of PFRS membership, making it the second largest PFRS tier.

About Regular Plans and Special Plans

Under a regular retirement plan, you need to reach certain age and service requirements to receive your NYSLRS pension. If you’re covered by a special retirement plan, there is no age requirement, and you can receive your pension after completing 20 or 25 years of service.

Eighty percent of PFRS members are in plans covered under Sections 384, 384-d, 384-e or 384-f of the New York State Retirement and Social Security Law. Read our Police and Fire Retirement System blog post for information about different PFRS plans.

Check out the graphic below for the basic retirement information for PFRS Tier 6 members.

PFRS Tier 6

Where to Find PFRS Tier 6 Information

For more information about PFRS Tier 6 membership, find your NYSLRS retirement plan publication. It’s a comprehensive description of the benefits provided by your specific plan.

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.

As of April 9, 2022, Tier 5 and 6 members only need five years of service credit to be vested. Tier 5 members with five or more years of service can estimate their pension benefit in Retirement Online. If you are a Tier 6 member with between five and ten years of service credit, you can contact us to request a benefit estimate.

Overtime Limits for Tier 5 and 6 Members

While the exact formula used to calculate a NYSLRS pension varies by tier and plan, your pension will be based on your service credit and final average earnings (FAE). Your FAE is the average annual earnings you received during the period when your earnings were highest (36 consecutive months for Tier 5 and 60 consecutive months for Tier 6). Your FAE can include overtime pay you earned in that period, but, for Tier 5 and 6 members, the law limits how much overtime can be used when calculating your pension.

You can still earn overtime pay beyond the limit — it just won’t be factored into your FAE. On the other hand, members aren’t required to make contributions on overtime pay that is above the limit.

overtime limits

Tier 5 Overtime Limits

The overtime limit for Tier 5 Employees’ Retirement System (ERS) members increases each calendar year by 3 percent. In 2023, the limit for Tier 5 ERS members is $22,028.01.

For Tier 5 Police and Fire Retirement System (PFRS) members, the overtime limit is 15 percent of your regular earnings each calendar year.

Tier 6 Overtime Limits

The overtime limit for Tier 6 ERS members increases each calendar year based on the annual increase of the Consumer Price Index (CPI). In 2023, the limit for Tier 6 ERS members is $19,729.

For Tier 6 PFRS members, the overtime limit is 15 percent of your regular earnings each calendar year.

Learn More

There may be other limitations to your FAE. For example, for most members, if your earnings increase significantly during the years used in your FAE, it’s possible that some of those earnings may not be used toward your pension. The specific limits vary by tier. Visit our Final Average Earnings page for more information.

You can learn more about the overtime limits, FAE and retirement calculations in your retirement plan booklet. Find yours using our Find Your NYSLRS Retirement Plan Publication tool.

ERS Tier 6 Milestones

If you joined the Employees’ Retirement System (ERS) on or after April 1, 2012, you are a Tier 6 member. Let’s look at the milestones you will reach over the course of your public service career and how they will affect your benefits.

Why Milestones Matter

As a NYSLRS member, you earn service credit for your paid public employment. Generally, one year of full-time work equals one year of service credit. As you earn service credit, you’ll reach career milestones that will make you eligible for certain benefits or for improvements to your existing benefits. Understanding these milestones and when they occur will help you better plan your career and retirement.

Your milestones depend on your tier and your retirement plan. Most ERS Tier 6 members are in the Article 15 retirement plan (named for a section of the New York State Retirement and Social Security Law). If you see Plan A15 listed in the ‘My Account Summary’ section of your Retirement Online account or in your annual statement, you’re in this plan.

ERS Tier 6 milestones

Major Milestones for Tier 6

Here are some important milestones for Tier 6 members in the Article 15 retirement plan:

  • With ten years of service credit, you can apply for a non-job-related disability benefit if you are permanently disabled and cannot perform your duties because of a physical or mental condition.
  • With ten years of service credit, your beneficiaries may be eligible for an out-of-service death benefit if you leave public employment and die before retirement.
  • Ten years also marks the point when you are no longer able to withdraw your membership and receive a refund of your contributions if you leave public employment.
  • You are eligible to retire once you are age 55 and have five years of service credit. However, for most Tier 6 members, there would be reductions to your benefit if you retire before age 63.
  • You can retire with full benefits at age 63.
  • If you retire with fewer than 20 years of service, your pension will equal 1.66 percent of your final average earnings (FAE) for each year of service.
  • If you retire with more than 20 years of service, your benefit will equal 1.75 percent of your FAE for each year of service.
  • Then, for each year of service beyond 20 years, you will receive an additional 2 percent of your FAE.

Note: The law limits the final average earnings of all members who joined on or after June 17, 1971. For example, for most members, if your earnings increase significantly during the years used in your FAE, it’s possible that some of those earnings may not be used toward your pension. The specific limits vary by tier. Visit our Final Average Earnings page for more information.

The amount of your pension also depends on several factors, including your years of service credit and your age when you retire. Most members can estimate your pension in Retirement Online and enter different retirement dates to see how those choices would affect your benefit. As of April 9, 2022, Tier 5 and 6 members only need five years of service credit to be vested. If you are a Tier 5 or 6 member with between five and ten years of service credit, you can contact us to request a benefit estimate.

ERS Tier 6 Special Plans

Some public employees, such as corrections officers or deputy sheriffs, are in special retirement plans and can receive a pension after completing 20 or 25 years of service, regardless of age. If you are not in the Article 15 retirement plan described above, you should read your retirement plan publication to learn about your plan’s milestones.

Our Find Your NYSLRS Retirement Plan Publication tool can help. 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 on the second page of your latest Member Annual Statement. You can also use the new tool to search for your plan publication by retirement system, tier and occupation type (uniformed or non-uniformed).

NYSLRS Membership by Tier

NYSLRS, which administers the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS), had 685,450 members as of March 31, 2022. Our members are State government, local government, school district and other public-sector employees from across New York — 650,251 in ERS and 35,199 in PFRS. About 74 percent of our members were active, which means they were on a public payroll as of March 31.

NYSLRS Membership Over Time

A decade ago, more than 80 percent of NYSLRS members were in Tiers 3 and 4. Now, those tiers represent less than 40 percent of our membership. Tier 6, which includes members who joined NYSLRS since April 1, 2012, now has 367,013 members, or 53.5 percent of total membership.

NYSLRS Membership by Tier

Here’s a look at our NYSLRS membership by tier, as of March 31:

Tier 1: NYSLRS’ oldest tier, whose members first joined the system before July 1, 1973 (July 31, 1973, for PFRS members), is dwindling. Tier 1 represented only 0.2 percent of our membership. There were only 1,043 Tier 1 ERS members and 17 Tier 1 PFRS members.

Tier 2: With 18,074 members, Tier 2 represented 2.6 percent of membership. Ninety-four percent of Tier 2 members were in PFRS.

Tiers 3 & 4: Tiers 3 and 4, which have similar retirement plans, had 263,734 members, 38.5 percent of the total membership. Tiers 3 and 4 are primarily ERS tiers. There is no Tier 4 in PFRS, and only 173 PFRS members were in Tier 3.

Tier 5: Tier 5 covers members who joined from January 1, 2010, through March 31, 2012. With 35,569 members, Tier 5 represented 5.2 percent of membership.

Tier 6: This tier covers members who joined since April 1, 2012. Its ranks grew by about 13 percent during the last fiscal year.

Why Your Tier Matters

Your tier is an essential component of your NYSLRS membership because it is one of the factors that determines your benefits. You can find out more by reading your retirement plan booklet. Our recent blog posts explain how to find your plan booklet and how to get the most out of it.

ERS Tier 6 Benefits – A Closer Look

Financial advisers say you will need to replace between 70 and 80 percent of your salary to maintain your lifestyle after retirement. Your NYSLRS pension could go a long way in helping you reach that goal, especially when combined with your Social Security benefit and your own retirement savings. Here’s a look at how Employees’ Retirement System (ERS) members in Tier 6 (who are vested once they’ve earned five years of credited service), can reach that goal. Members who joined NYSLRS since April 1, 2012 are in Tier 6.

formula for a financially secure retirement

Calculating an ERS Tier 6 Member’s Pension

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. Note: The law limits the FAE of all members who joined on or after June 17, 1971. For example, for most members, if your earnings increase significantly through the years used in your FAE, some of those earnings may not be used toward your pension.  

Although ERS members can generally retire as early as age 55 with reduced benefits, the full retirement age for Tier 6 members is age 63.

For ERS Tier 6 members in regular plans (Article 15), the benefit is 1.66 percent of your FAE for each full year you work, up to 20 years. 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 for each additional year of service. (Benefit calculations for members of the Police and Fire Retirement System and ERS members in special plans vary based on plan.)

Say you begin your career at age 28 and work full-time until your full retirement age of 63. That’s 35 years of service credit. You’d get 35 percent of your FAE for the first 20 years, plus 30 percent for the last 15 years, for a total benefit that would replace 65 percent of your salary. If you didn’t start until age 38, you’d get 45 percent of your FAE at 63.

Examples of ERS Tier 6 Pension Calculation

So, that’s how your NYSLRS pension can help you get started with your post-retirement income. Now, let’s look at what the addition of Social Security and your own savings can do to help you reach your retirement goal.

Other Sources of Post-Retirement Income

Social Security: According to the Social Security Administration, Social Security currently replaces about 40 percent of the wages of a typical worker who retires at full retirement age. In the future, these percentages may change, but you should still factor it in to your post-retirement income.

Your 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.