Tag Archives: FAS

NYSLRS – One Tier at a Time: PFRS Tier 5

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 5. Anyone who joined PFRS from January 9, 2010 through March 31, 2012 is in Tier 5. There were 1,967 PFRS Tier 5 members as of March 31, 2021, making up 5.6 percent of PFRS membership.

About Special Plans

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

Nearly 80 percent of PFRS members are in plans covered under Sections 384, 384-d, 384-e or 384-f of the 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 5.

PFRS Tier 5

If you’re a PFRS Tier 5 member, you can find detailed information about your benefits in the retirement plan booklets listed below:

For special plans under miscellaneous titles, please visit our Publications page.

Check out other posts in the PFRS series:

Final Average Earnings

As a NYSLRS member, you have a defined benefit retirement plan that provides a lifetime pension when you retire. The formula used to calculate these benefits is based on two main factors: service credit and final average earnings. You’re probably familiar with service credit — it’s generally the years you’ve spent working for a participating employer. But what are final average earnings (FAE)?

When we calculate your pension, we find the set of consecutive years (one, three or five, depending on your tier and retirement plan) when your earnings were highest. The average of these earnings is your FAE. Usually your FAE is based on the years right before retirement, but they can come anytime in your career. The years used in determining your FAE do not necessarily correspond to a calendar year. For FAE purposes, a “year” is any period when you earned one full-time year of service credit.

Types of Final Average Earnings

Your tier and plan determine how your final average earnings is calculated:

  • Three-year FAE: Members in Tier 1, 2, 3, 4 and 5.
  • Five-year FAE: Members in Tier 6.
  • One-year FAE: Members in the Police and Fire Retirement System (PFRS). Your employer must choose to offer this benefit. It’s not available to PFRS members covered by Article 14 and generally not available to PFRS Tier 6 members.

If you are not sure what retirement plan you are in, you may want to read our recent blog post.

Exclusions and Limits

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 through the years used in your FAE, some of those earnings may not be used toward your pension. The specific limits vary by tier; check your retirement plan booklet on our Publications page for details.

final average earnings

Since 2010, with the creation of Tiers 5 and 6, the Legislature and the Governor have introduced additional limits to the earnings that can be used toward the FAE:

Tier 5

  • Overtime pay is capped — For Employees’ Retirement System (ERS), $20,763.51 in 2021. For PFRS, the cap is 15 percent of earnings.

Tier 6

  • Overtime pay is capped – For ERS, $17,301 in 2021. For PFRS, the cap is 15 percent of earnings.
  • Lump sum vacation pay and wages from more than two employers are no longer included in your FAE.
  • Any earnings above the Governor’s salary cannot be included in your FAE.

Calculating Your Final Average Earnings

Your final average earnings is based on money earned during the period used to calculate your pension. This may include payments you receive after you retire, such as retroactive pay from a contract negotiation or pay for unused vacation days.

Calculating your FAE at retirement can take time because we must collect salary information from your employer(s) and factor in items such as retroactive payments and earnings you receive after your date of retirement. This is necessary to ensure that your pension calculation is accurate and that you receive all the benefits you are entitled to.

Find out more about how FAE is calculated on our website.

Know Your Benefits: Your NYSLRS Pension

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.

Tier 6 FAS Limits (ERS)

 

 

First, a year of earnings in the FAS period can’t exceed the average of the previous four year’s earnings by more than 10 percent. Anything beyond that will not be included in the pension calculation.

Additionally, several types of payments will not be part of the FAS calculation for ERS Tier 6 members:

  • Lump-sum vacation pay,
  • Wages from more than two employers,
  • Payment for unused sick leave,
  • Payments for working during a vacation,
  • Any payments that cause your annual salary to exceed that of the Governor (currently $179,000),
  • Termination pay,
  • Payments made in anticipation of retirement,
  • Lump-sum payments for deferred compensation and
  • Any payments made for time not worked.

Generally speaking, here’s what an ERS Tier 6 FAS will include: regular salary, holiday pay, overtime pay (regular and noncompensatory) earned in the FAS period and up to one longevity payment per year, if earned in the FAS period.

Overtime Limits

While overtime pay generally is part of an ERS Tier 6 FAS, the amount that can be included is limited. The limit is adjusted for inflation each year based on the change in the Consumer Price Index over the one-year period ending September 30 of the previous year. Under a new law, beginning January 1, 2018, the Tier 6 limit will be updated on a calendar year basis instead of on a fiscal year basis.

The 2018 calendar year overtime limit for Tier 6 members is $16,406.

For more information about the Tier 6 FAS, find your retirement plan booklet on our Publications page, or check out our Final Average Salary and Overtime Limits for Tier 6 pages.

Top Five Pre-Retirement Goals for NYSLRS Members in 2018

January is a great time to set goals for the coming year. And setting pre-retirement goals is crucial in planning for a successful retirement. Here are five goals to consider for 2018:

Plan ahead for retirement

1. Choose a sensible savings plan that works for you.There are several ways to save for retirement, including starting a deferred compensation plan like the New York State Deferred Compensation Plan. An important part of developing a savings plan is to start early. The sooner you start saving, the more time your money has to grow. Check out our Weekly Investment Plan chart to see how a weekly investment can grow by age 65.

2. Track your expenses and income. Tracking your current expenses for a month or two will give you a better idea of how much you’re likely to spend in retirement and how much you’ll need to supplement your pension. Use the expense and income worksheets on our website to create a retirement budget. Be sure to include periodic expenses, such as car insurance and property taxes.

3. Request a pension estimate. If you’re within 18 months of your anticipated retirement date, it’s a good idea to request an estimate of what your retirement benefit will be. You can do this by sending us an email using our secure contact form or by calling 1-866-805-0990 (518-474-7736 in the Albany, NY area). If you are not certain that you’ve received credit for all your public service in New York State, you can submit a Request for Estimate form (RS6030) and be sure to provide detailed information about your public employment in section eight of the form. If your planned retirement date is farther away, you may want to use our online Benefit Calculator. This estimates your pension based on information you provide, so have your Member Annual Statement handy before you start, or sign in to your Retirement Online account to check your current service credit.

4. Pay off any NYSLRS loans. An outstanding loan balance at retirement will permanently reduce your NYSLRS retirement benefit. You cannot make loan payments after you retire, and the pension reduction does not go away after we recover the balance of the loan. Visit the Loans page on our website for information about making additional payments or increasing your loan payment amount.

5. Consider seeking the advice of a financial planner. Financial planners don’t manage your money, but can help you assess your present financial condition and develop a practical plan to meet your specific goals and needs. Also consider doing your own research by seeking Do-It-Yourself financial planning guides on the web.

If you ever have any retirement-related questions, please contact us.

ERS Tiers 1 and 2: The New Career Plan

Did you become a member of the Employees’ Retirement System (ERS) before July 1, 1973? If you’re still working in public service, you’re one of the 3,508 active members in Tier 1. If you joined after July 1, 1973 but before July 27, 1976, then you’re one of 4,127 active members in Tier 2.

Most ERS Tier 1 and Tier 2 members are in the New Career Plan (Section 75-h or 75-i). Currently, 96 percent of active Tier 1 members and almost 95 percent of active Tier 2 members are covered by this plan. Here’s a quick look at the benefits in the New Career Plan:

Benefit Eligibility

Tier 1

  • Members must be at least age 55 to be eligible to collect a retirement benefit.
  • There are no minimum service requirements — they may collect full benefits at age 55.

New Career Plan — ERS Tier 1

Tier 2

  • Members must have five years of service and be at least age 55 to be eligible to collect a retirement benefit.
  • The full benefit age is 62.
  • Almost 95 percent of active Tier 2 members are covered by the New Career Plan (Section 75-h or 75-i).

New Career Plan — ERS Tier 2

Final Average Salary

Final average salary (FAS) is the average of the wages earned in the three highest consecutive years of employment. For Tier 1 members who joined NYSLRS June 17, 1971 or later, each year used in the FAS calculation is limited to no more than 20 percent above the previous year’s earnings. For Tier 2 members, each year of earnings is limited to no more than 20 percent above the average of the previous two years’ earnings.

Benefit Calculations

  • For Tier 1 and 2 members, the benefit is 1.66 percent of the FAS for each year of service if the member retires with less than 20 years. If the member retires with 20 or more years of service, the benefit is 2 percent of the FAS for each year of service.
  • Tier 1 members and Tier 2 members with 30 or more years of service can retire as early as age 55 with no reduction in benefits.
  • Both Tier 1 and Tier 2 members who worked continuously from April 1, 1999 through October 1, 2000 receive an extra month of service credit for each year of credited service they have at retirement, up to a maximum of 24 additional months.

If you have questions about the New Career Plan, please read the Tier 1 plan publication or the Tier 2 plan publication. You can find other plan publications on our website.

NYSLRS Basics: Pension Payment Options

When you retire, you need to decide how we’ll pay out your retirement benefit. You do that by choosing a pension payment option. Each payment option provides you with a monthly benefit for life. Nine of our payment options let you receive a smaller benefit so you can provide for a beneficiary when you die. There is also an option that pays you the largest amount of your benefit, but pays nothing to a beneficiary.

Read the full descriptions of our payment options on our website.

Payment options

Filing Your Option Election Form

When you’ve decided which payment option you’d like, you need to file an option election form. You must file before the first day of the month following your retirement date. If you file on time, you have 30 days before you receive your first benefit payment to change your payment option. If you miss this deadline, we’re required by law to process your benefit based on the basic retirement benefit listed in your plan. (The Single Life Allowance (Option 0) is the basic retirement benefit for some plans, while the Cash Refund — Contributions (Option ½) is the basic retirement benefit for others. Check your retirement plan publication to see what your options are.)

What To Consider When Choosing A Payment Option

Choosing your payment option is a big decision. Once the 30-day deadline has passed, you can’t change your payment option. Here are some questions to ask yourself:

  • Do you want a payment made to one or more beneficiaries after your death?
  • Do you know about your beneficiary’s future income in retirement? Will your beneficiary receive their own pension? How much will they receive from Social Security benefits or other retirement savings accounts?
  • Do you have life insurance coverage? Life insurance payments could help your beneficiary make ends meet.
  • What are your financial obligations? Will your beneficiary have enough income to cover expenses if you die?

The answers to these questions can help you decide which option meets your needs. If you have any questions, email us from our website.

Would you like to read more NYSLRS Basics posts? Check out our earlier post on when you can retire.

NYSLRS Basics: When Can You Retire?

There are core elements behind each NYSLRS retirement plan that every member should know. Knowing your retirement plan details like what your pension payment options are and how your final average salary (FAS) works is essential. Learning these NYSLRS Basics can give you a good foundation of information and help you prepare for retirement.

When Can I Retire?

This is a popular question we hear from members. Because of the large number of retirement plans we manage, there isn’t one single answer to this question, but we do have answers.

If you’re in a regular retirement plan (the vast majority of members are in regular plans), you can retire any time on or after your 55th birthday. However, some service credit requirements do apply:

  • Tier 1 members, depending on their plan, may need two or five years of service credit if they recently changed employers
  • Tier 2, 3, or 4 members need five or more years of service credit
  • Tier 5 and 6 members need ten or more years of service credit

Note: service credit is defined as the credit you receive for your paid public employment with a NYSLRS participating employer.

If you’re in a special retirement plan (most police officers, firefighters, sheriffs and correction officers are in special plans), you can retire at any age as long as you’ve met the service credit requirement for that plan. Special plan members can retire once they reach 20 or 25 years of service credit, whichever their plan requires.

Retiring at Age 55 vs. Full Retirement Age

Keep in mind that even though you could retire as early as 55, you may receive a benefit reduction* for not waiting until the full retirement age. (Visit our Early Age Reduction page to see the reductions for your tier.) Under NYSLRS regular retirement plans, you can retire with no reduction once you reach your full retirement age.Full_Benefit_Retirement_Age

It’s important to know that if you decide to retire with a reduced benefit, the reduction is permanent – it doesn’t end once you reach your full retirement age. Keep this in mind once you start preparing for retirement.

Knowing what your full retirement age is and when you’re first eligible to retire is just one part of the NYSLRS Basics series. Look out for a future post on retirement option selection.


*There are some exceptions: Tier 1 members can retire at age 55 without a benefit reduction; ERS Tier 2, 3 & 4 members and Tier 5 Uniformed Court Officers and Peace Officers employed by the Unified Court System can retire at age 55 with 30 or more years of service credit without a benefit reduction.

NYSLRS – One Tier at a Time: ERS Tier 1

When you joined the New York State and Local Retirement System (NYSLRS), you were assigned to 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) — so there are many different ways to determine benefits for our members. Our series, NYSLRS – One Tier at a Time, walks through each tier and gives you a quick look at the benefits members are eligible for before and at retirement.

One of our smallest tiers is ERS Tier 1, which represents 0.7 percent of NYSLRS’ total membership. Overall, there are 4,520 ERS Tier 1 members. Today’s post looks at the major Tier 1 retirement plan in ERS – the New Career Plan (Section 75-h or 75-i).
ERS-Tier-1-Benefits_001
If you’re an ERS Tier 1 member in an alternate plan, you can find your retirement plan publication below for more detailed information about your benefits:

Be on the lookout for more NYSLRS – One Tier at a Time posts. Want to learn more about the different NYSLRS retirement tiers? Check out some earlier posts in the series:

NYSLRS – One Tier at a Time: ERS Tier 2

When you joined the New York State and Local Retirement System (NYSLRS), you were assigned to 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) – so there are many different ways to determine benefits for our members. Our series, NYSLRS – One Tier at a Time, walks through each tier and gives you a quick look at the benefits members are eligible for before and at retirement.

NYSLRS created Tier 2 on July 1, 1973, marking the first time NYSLRS created any new member group. Today’s post looks at one of the major Tier 2 retirement plans in ERS. ERS Tier 2 as a whole represents less than one percent of NYSLRS’ total membership.

ERS-Tier-2-Benefits_001aIf you’re an ERS Tier 2 member in an alternate plan, you can find your retirement plan publication below for more detailed information about your benefits:

Be on the lookout for more NYSLRS – One Tier at a Time posts. Next time, we’ll take a look at another ERS tier. Want to learn more about the different NYSLRS retirement tiers? Check out some earlier posts in the series: