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 I Contribute?
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.
Visit our Member Contributions page for other tier contribution rates.
Can I Withdraw My Contributions?
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.