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 32 percent of PFRS membership, totaling 10,942 members, making it the second largest tier in PFRS.
Check out the graphic below for the basic retirement information for PFRS Tier 6 members.
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:
Most State and municipal employees are required to join the New York State and Local Retirement System (NYSLRS) when they are hired. But for some employees, such as part-time and seasonal workers, membership is optional. If you’re a member and you know someone who could join NYSLRS, consider sharing this piece with them.
NYSLRS is the third largest retirement system in the nation,
with more than 1.1 million members, retirees and beneficiaries. State
Comptroller Thomas P. DiNapoli administers the Retirement System and is trustee
of the New York State Common Retirement Fund, which holds and invests NYSLRS
assets. The Fund had a value of $210.5 billion as of March 31, 2019.
Why Join NYSLRS?
Joining NYSLRS will improve your chances of a secure
financial future. You’ll earn credit toward a pension that will provide monthly
payments throughout your retirement. But NYSLRS also provides other important
As a NYSLRS member, you’ll be eligible for a pension after you earn ten years of service credit. (This is called being vested.) If you work part-time, service credit is pro-rated. For example, if you work half of the hours that a full-time employee works, you’ll receive six months credit for every year you work.
Also, as a NYSLRS member you’ll be able take loans from your
contributions if you’ve earned a year of service credit and meet other
requirements. You’ll be eligible for a death benefit once you have one year of service
credit, and disability benefits after you have ten years of service credit. (If
your disability results from an on-the-job accident, not due to your own
willful negligence, there is no minimum service requirement.)
Over 3,000 employers participate in NYSLRS, allowing you to
continue to build on your benefits if you go to work for another government
employer. Your benefits also may be transferable to six other public retirement
plans in New York.
As a Tier 6 member, you’ll contribute between 3 and 6
percent of your earnings to the Retirement System. Tier 6 contribution rates
vary based on each member’s annual compensation. If you don’t join NYSLRS when
you first start working and later decide to purchase your previous service
credit, you will need to contribute 6 percent of those earnings plus interest,
even if your salary level for the prior time period would have resulted in a
lower contribution rate.
Your NYSLRS pension will be based on your service credit and
salary, not on the amount you contribute. A NYSLRS pension is a lifetime
benefit. Unlike a 401-k, there is no risk that your pension benefits will be
reduced during your retirement.
But what if you join NYSLRS and decide to leave public
service before you are vested? You won’t lose your contributions. In fact, you
can withdraw your accumulated contributions, plus interest, and roll that money
into a retirement savings plan at your new job.
If you would like to join NYSLRS or just want more information, please contact your employer’s human resources (personnel) office. You may also be interested in our booklet, Membership in a Nutshell.
When you apply for a NYSLRS pension, you’ll be asked to pick a pension payment option. All payment options will provide you with a monthly benefit for the rest of your life. With the Single Life Allowance, all payments stop at your death and nothing is paid to a beneficiary.
Providing for a Beneficiary
If you’re married and need to provide for your spouse, or if you have someone else you would like to provide a lifetime pension for after you’re gone, there are payment options that let you do that. In exchange for a reduction in your monthly payment, Joint Allowance options allow a beneficiary to collect all or part of your pension after you die. The amount of the reduction in your pension is based on your life expectancy and the life expectancy of your beneficiary. That means the younger your beneficiary, the deeper the reduction.
You can only choose one beneficiary under a Joint Allowance option, and your beneficiary selection cannot be changed after you retire, regardless of the circumstances. The benefit reduction for Joint Allowance options will continue even if your beneficiary dies before you do.
Pop-Up Payment Options
If we could predict the future, pension choices would be a lot easier. But a Pop-Up payment option is one way to hedge your bets. Like Joint Allowance options, these plans allow you to provide a lifetime payment for a beneficiary after your death. But if your beneficiary dies before you, your future monthly payments would be increased to the amount you would have been receiving had you chosen the Single Life Allowance. (The pop-up only affects future payments. You would not be entitled to any retroactive payments.)
The monthly reduction in your benefit will be greater if you choose a Pop-Up option over a regular Joint Allowance.
Find Out More
There are also options that allow you to leave a monthly payment to more than one beneficiary, and options that leave a benefit for a certain amount of time. Visit our Payment Option Descriptions page for details about all of the available payment options.
For a better idea of how these payments options would work out for you and your beneficiary, you can use our online pension projection calculator. It uses the information you enter to show how much you could expect to receive under each option. Most members who are within five years of retirement eligibility can also request a benefit projection by contacting our Call Center at 1-866-805-0990 (press 2 for members, follow the prompts, then press 5 to request a benefit projection), or you can submit a Request for Estimate form (RS6030).
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 salary, 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.
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
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.
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.
Most NYSLRS members contribute a percentage of their earnings to the Retirement System. Unlike a 401k or IRA, these contributions don’t determine the amount of your pension. So how do NYSLRS contributions work?
NYSLRS retirement plans differ from defined contribution
plans, such as 401k 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
lifetime benefit, and there is the risk that the money will run out during the
worker’s retirement years.
Your NYSLRS contributions, however, don’t go into a personal
retirement account. That’s because NYSLRS is a defined benefit plan. Your
contributions go into the New York Common Retirement Fund along with employer
contributions and investment income. This pool of money pays out retirement
benefits for you and other NYSLRS members.
Once you’re vested, you’re entitled to a pension that will provide monthly payments for the rest of your life. The amount of those payments will be based on your years of service and final average salary, not on how much you contributed to the Retirement System.
How Much Do
If you joined NYSLRS since April 1, 2012, you are in Tier 6.
Tier 6 contributions range from 3 to 6 percent of earnings.
To put that into perspective, financial experts advise workers in defined contribution plans to save 10 to 15 percent of their earnings in their retirement accounts.
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 benefits.
Our publication A Guide for Retirees is a valuable resource to read if you’re retired or planning to retire soon. This guide details the continuing benefits and services NYSLRS provides for its retirees.
What’s Inside A Guide for Retirees?
The first section of A Guide for Retirees outlines
your benefits in clear, straightforward language. It provides an estimate of when
to expect your first pension check, along with a couple reminders to help avert
any delay in your payment. There’s also a brief description of how we calculate
your benefit and information about what to do if you believe your benefit was
Your NYSLRS retirement benefit will provide you with monthly
payments for the rest of your life. But that doesn’t mean the amount of your pension
won’t change. For example, your benefit will increase once you are eligible for
a cost-of-living adjustment.
Signing up for Medicare or getting a divorce can also change your benefit
The booklet also describes benefits that your survivors may
be eligible for, such as the post-retirement death benefit.
A Guide for Retirees describes services NYSLRS
provides for retirees, including:
Automated Information Line. You can call 24 hours a day, seven days a week to request a form, check your COLA eligibility, get general tax information and more.
Direct Deposit. Have your pension deposited directly into your bank account.
Pension Verification Letters. You can create your own in Retirement Online or we can send one at your request.
Individual Consultations. You can discuss your benefits with one of our information representatives in person or over the phone.
Your benefits come with certain responsibilities. Most
importantly, you need to let us know if your address changes. Even if you’re
getting your pension through direct deposit, we need to have your correct
address so we can send you tax documents and other important information.
This section also reminds you to keep your beneficiary
information current, contact us if your check is lost or stolen, and review
your withholding regularly.
Read our recent blog posts about other NYSLRS publications:
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.
How COLA is
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 option. Once COLA payments begin, you will receive an increase to
your monthly benefit each September.
The September 2019 COLA equals 1 percent, for a maximum annual increase of $180.00, or $15.00 per month before taxes.
Eligible for a COLA?
To begin receiving COLA payments, you must be:
Age 62 or older and retired for five or more
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 an 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
When Will You See the Increase?
Eligible retirees will see the first 2019 COLA payment in their September pension payment. It will be available to those with direct deposit on September 27, 2019. If you receive a paper check, the COLA will be included in the check to be mailed September 30, 2019.
If you are not eligible yet, you will receive your first COLA 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.
Retroactive payments are lump sum payments you receive from your employer. These payments can be from new union contracts, arbitration awards or legal settlements that took place while you were on your employer’s payroll.
Your final average salary (FAS) is a major factor in your pension benefit calculation. Your FAS is the average of your three (five for Tier 6 members) highest consecutive years of earnings. For most people, their highest years of earnings come at the end of their careers.
If you receive a retroactive payment from your employer, it could affect your final average salary. Let’s look at how.
How Retroactive Payments Can Affect Your Benefit
When we calculate your FAS at retirement, retroactive payments are applied to the pay periods when they were earned, not when they were paid. In general, retroactive payments can increase your FAS as long as the time period in which you earned that money is part of the time period your FAS is based on.
Your employer should let us know if you receive a retroactive payment before or after you retire. If you are a State employee who receives a retroactive payment after you retire, we will recalculate your pension automatically; you do not need to notify us. If you receive a retroactive payment from a non-State employer after your pension calculation is finalized, send a letter to our Recalculation Unit in the Benefit Calculations & Disbursement Services Bureau. Please include a copy of your check stub and/or any correspondence you received from your employer. You may also email and upload this information to the Retirement System through our secure contact form.
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, 2018, there were 17,380 Tier 2 members in these plans; most of whom are covered by either Section 384-d (36.5 percent) or 384-e (62.8 percent).
Check out the graphic below for the basic retirement information for PFRS Tier 2 members.
NYSLRS pension payment options are designed to fit your needs after you retire. Understanding these options will make it easier for you to choose the one that’s right for you.
While the basic option, the Single Life Allowance, would provide you with a monthly payment for the rest of your life, all payments would end at your death. Other options, in exchange for a reduced benefit, allow you to provide for a spouse or other loved one after you’re gone.
Five and Ten Year Certain options don’t provide a lifetime benefit for a beneficiary, but they have advantages you may want to consider.
How These Pension Payment Options Work
The Five Year Certain or Ten Year Certain options provide you with a reduced monthly benefit for your lifetime. If you die within the five- or ten-year period after your retirement, your beneficiary would receive pension payments for the remainder of the five or ten years. If you live beyond the five- or ten-year period, your beneficiary would not receive a pension benefit upon your death.
Let’s say you choose the Five Year option. If you die two years after retiring, your beneficiary will receive a benefit for three years. If you choose the Ten Year option, and die after two years, your beneficiary will get a benefit for eight years. In either case, your beneficiary would receive the same amount you were receiving, though they would not be eligible for any COLA increases.
Another feature of these plans is that you can change the beneficiary at any time within the five- or ten-year period.
Whatever your situation, you should review the payment options and choose carefully. Visit our Payment Option Descriptions page for details about all available pension payment options. For a better idea of how these payment options would work out for you and your beneficiary, try our online Benefit Calculator.