Study Finds Retiree Spending a Big Supporter Of The Economy

retirees-in-NYS_top-10-countiesA recent National Institute on Retirement Security (NIRS) study reveals that pension benefit payments provide important support to the economy, generating more than $943 billion in total economic activity and 6.2 million jobs in the United States.

The NIRS study reports on the national economic impacts of public and private pension plans, as well as the impact of state and local plans on a state-by-state basis. It measures the ripple effect of the pension benefit income spent by retirees in 2012 – about $228.5 billion paid to 9 million retired employees of state and local government and their beneficiaries. Retiree spending helped to support labor income, paying nearly $307 billion, and also generated $135 billion in tax revenue at the local, state and federal levels.

New York Retirees Contribute Their Fair Share

At the time of the NIRS study, NYSLRS retirees* were responsible for more than $11 billion worth of economic activity in New York State. The pension benefits they received stimulated our local economies in a number of ways:

  • NYSLRS Retirees Stayed in New York: Seventy-eight percent of NYSLRS’ 413,436 pensioners – 302,954 retirees and beneficiaries – chose to live in New York in 2012. They made up 2.7 percent of the general population, but in some areas of the State, they accounted for nearly five percent of the residents.
  • NYSLRS Retirees Paid New York Taxes: In 2012-2013, NYSLRS retirees paid $1.4 billion in real property taxes – that’s 4.6 percent of the total collected in the entire State. Additionally, NYSLRS retirees paid an estimated $488 million in state and local sales tax in 2012.
  • NYSLRS Retirees Created Jobs: NYSLRS retirees were responsible for the creation of an estimated 61,000 jobs.

Public Pensions Are A Sound Investment In Our Future

The pensions earned by public service retirees don’t just benefit those who receive them, but they pay dividends to local businesses, build strong communities and create jobs. And, as the number of retired public service employees in New York grows, we can look forward to their help in building a stronger New York.

*Read Retirees Contribute (PDF) to see the latest numbers on how NYSLRS retirees have affected the state economy.

Countdown To Retirement: What To Do 8 Months Before Your Retirement Date

There are important things you need to do in the final months leading up to your retirement date. Our Countdown to Retirement Series will help you remember what to do and when to do it.

Last month we talked about what you should do when you’re 12 months away from retirement. This post goes over what to be aware of at 8 months out, when you should start reviewing what other sources of retirement income you’ll have available besides your New York State & Local Retirement System (NYSLRS) pension.

Review Your Post-Retirement Income

There’s a good chance your pension alone will not provide you with the same level of income during retirement as you had while you were employed. This is why it’s important to review any other sources of income you may have available to you in retirement, such as:

Some experts say that you’ll need at least 80 percent of your pre-retirement income to keep your current standard of living. You also may be retired for 15 to 20 years, or longer. It’s important to have a financial plan in place in case you need extra income once you’re retired, so take some time to review what you’ll have available.

Counting Down

Your planned retirement date is less than a year away. Check back for more Countdown to Retirement posts on issues such as your eligibility for post-retirement health insurance coverage and what to do after you’ve filed your Application for Service Retirement form.If you have any pre-retirement questions, please contact us.

NYSLRS Members Contribute to the Educational Bottom Line

schoolbus-81717_640As thousands of children in New York go back to school today and tomorrow, thousands of New York State & Local Retirement System (NYSLRS) members are headed back to school as well.

Although most public school teachers and teaching assistants in the Empire State belong to either the New York State Teachers’ Retirement System or the New York City Teachers’ Retirement System, non-instructional employees, like teacher aides, bus drivers, nurses and food service personnel, are members of NYSLRS. Like teachers, these professionals can be members of the New York State United Teachers (NYSUT) union and contribute to our children’s education too by helping to keep our students safe and healthy and assisting in classrooms. That’s why all of our NYSLRS members in the public education field should justifiably feel proud of the work they do.

And it’s not just elementary, middle-school and high school children who are influenced by these professionals. There are also 6,421 NYSLRS members in NYSUT affiliate United University Professions (UUP) – the union that represents more than 35,000 individuals on some 29 State University of New York campuses. NYSLRS members represented by UUP work as staff assistants, senior staff assistants and staff associates, among many others.

You’ll also find NYLRS members working for BOCES and New York State schools for the deaf and blind.

Where To Educate Yourself About ERS Benefits

As of March 31, 2014, NYSLRS had 524,427 active members. Perhaps you’re one of them. Our website is a good place to learn about your benefits and get information on planning for your retirement. If you’re a new member of NYSLRS, you might be interested in Benefit Information for Tier 6 Members: Frequently Asked Questions. You can also sign up for E-News, our email newsletter, for the latest retirement news. And if you have any questions, please contact us.

Retirement Planning – Divorce and Your Pension

One aspect of retirement planning some members may not consider is how a divorce may affect their retirement benefit. In New York, retirement benefits are considered marital property and can be divided between you and your ex-spouse. While some divorced couples may choose not to divide retirement benefits, it’s important to think about what you will need to do if your pension will be affected by divorce.

Preparing for Retirement: Part Five – Divorce and Your Pension

The Preparing for Retirement 7-part video series discusses the main aspects of retirement planning to help NYSLRS members nearing retirement make good, informed decisions for the future. In Part Five – Divorce and Your Pension, you’ll hear about how if you are divorced, your ex-spouse may be entitled to part of your pension. NYSLRS needs a valid domestic relations order (DRO) on file so we can have the instructions on how your pension benefits should be divided. You’ll also learn what resources NYSLRS has available to help you construct a DRO, if needed.

Important Links for Retirement Planning

Where to Find More Retirement Planning Information

If you are close to retirement and have more questions, consider scheduling an appointment to meet with an information representative at one of NYSLRS’ consultation sites in New York State. Don’t forget to check back for the rest of the Preparing for Retirement video series, which includes retirement planning topics like:

Designating a Beneficiary: An Important Planning Decision

When you join the New York State and Local Retirement System (NYSLRS), you are asked to designate a beneficiary. This is important because your beneficiary may be eligible to receive certain benefits if you die while still working. A beneficiary can be any person you choose – it does not have to be a family member. You can also name any organization, such as a charity or religious institution, or your estate. It’s also important to review your beneficiaries regularly to reflect your current wishes.

Types of Beneficiaries

There are two types of beneficiaries: primary and contingent.

A primary beneficiary is the person who will receive any benefit payable. You can list more than one primary beneficiary. If you do, each primary beneficiary will share the benefit equally. You can also choose different percentages for each beneficiary, as long as they total 100 percent.

Example: John Doe, 50 percent; Jane Doe, 25 percent; and Mary Doe, 25 percent.

A contingent beneficiary is a possible beneficiary who will receive the benefit only if all the primary beneficiaries die before you. Multiple contingent beneficiaries will share the benefit equally, unless you choose to divide the benefit among them differently.

How Do I Designate a Beneficiary?

Even though you designated a beneficiary when you first joined NYSLRS, you can update your beneficiaries at any time while you’re still in active service. You can submit a Designation of Beneficiary form (RS5127) to change your beneficiaries. Be sure to include the names, addresses and birth dates of all the beneficiaries you wish to designate. You can name up to four primary and four contingent beneficiaries on the form. Please contact us if you want to designate more beneficiaries, as we cannot accept attachments to the form.

Be sure to sign and date the form, and have your signature notarized. The notary must include his or her date of notary expiration and should not be designated as one of your beneficiaries. We can’t accept the form if there are any alterations, including erasures or the use of correction fluid.

Remember, submitting a new form replaces any previous beneficiaries you have chosen. The changes become effective when we receive and approve your form.

Where Can I Get More Information?

You can refer to our publication, Life Changes: Why Should I Designate a Beneficiary?,for more information about designating a beneficiary. If you have any other questions, please contact us.

Deferred Compensation: Another Source of Retirement Income

Many financial experts believe that you will need at least 70 to 80 percent of your pre-retirement income to enjoy the same standard of living once you retire. A sound financial plan can include your NYSLRS pension, Social Security benefits, and personal savings, but you still may need to supplement your retirement income the longer you are retired. A deferred compensation plan can be another source of retirement income to consider when saving for retirement.

What is Deferred Compensation?

Deferred compensation is a type of plan where part of your earned income is paid back to you at a later date. The money you set aside is tax-deferred, which means you do not pay federal or State tax on it until you begin to collect it.

The New York State Deferred Compensation Plan

The New York State Deferred Compensation Plan (NYSDCP) is a voluntary retirement savings plan created for New York State employees, and employees of participating employers. Participants in the NYSDCP have their contributions deducted automatically from each paycheck to their deferred compensation account. They can also choose from different investment options within the plan for their account.

If you work for local government employer, please check with your human resources officer or benefit administrator to learn about deferred compensation plans.

What Does Deferred Compensation Mean For Me?

Deferring income from your paychecks may mean you have less money to spend in the short-term but, in the big picture, you’re planning ahead for your financial future. You can enroll in a deferred compensation plan even if you’re approaching retirement or if you just started working. Usually, the sooner you start saving means you’ll be better prepared for your retirement.

Of course, there are other ways to save for retirement. A good financial planner, accountant or attorney can help you develop a practical plan that best meets your needs and goals.

Countdown To Retirement: What To Do 12 Months Before Your Retirement Date

Countdown to retirement - 12 MonthsThere are important things you need to do in the final months leading up to your retirement date. Our Countdown to Retirement Series will help you remember what to do and when to do it.

Last month we discussed what you need to be concerned about when you’re 18 months away from retirement. This second post describes what you should be aware of at 12 months out, when educating yourself about pre-retirement issues could spell the difference between a process that’s stress free and one that isn’t.

Locate Proof of Birth

We must have proof of your birth date before any benefits can ever be paid to you. We’ll accept your birth certificate as proof, but we’ll also accept one of the following documents:

If you send us the original, we will return it to you. If you don’t have the original, in most cases, a photocopy of the document is acceptable.

Please provide us with your proof of birth sooner rather than later, in the event you need to contact another party for your information. Also, if you’re thinking about choosing a retirement option that provides a lifetime benefit to a beneficiary, we will need proof of your beneficiary’s birth date too.

Send Us Your DRO

According to New York law, pensions earned during the marriage are considered marital property. As a result, if you are divorced, your retirement benefit could be split between you and your ex-spouse. Please make certain we have a valid domestic relations order (DRO) on file if you agreed to or were ordered by a court to have a portion of your pension benefits paid to your ex-spouse.

If you have any questions about DROs, you can always review our Guide to Domestic Relations Orders.

Counting Down from 12 Months

Your planned retirement date is just a year away. Check back for more Countdown to Retirement posts on pre-retirement issues, reviewing other retirement income, and preparing a post-retirement budget. If you have any pre-retirement questions, please contact us.

New York State Common Retirement Fund’s Emerging Manager Program

The New York State Common Retirement Fund (the Fund) can owe much of its high performance to its investment strategy, but another lesser-known investment approach that helps the Fund is its Emerging Manager Program. This program gives newer and smaller investment managers – people or firms who make investments on behalf of clients – the opportunity to invest for the Fund. And as you’ll see in this video, The Fund’s emerging managers deliver solid results.

8/7/14 Correction to video: We misstated the company name for interviewee Thurman White. Thurman White is from Progress Investment Management Co., not Program Investment Management Co.

The Emerging Manager Program: A Diverse Approach to Investing

The Fund’s Emerging Manager program started 20 years ago, when it granted almost $50 million to the public equity Emerging Manager platform. Today, in 2014, the Fund has provided $1.6 billion to that platform. The Fund is one of the few state pension funds in the country that features an emerging manager program across all major asset classes (private equity, public equity, hedge funds and real estate).

The goal of the program is to invest some of the Fund’s assets with smaller, newer managers, most of which are minority- and women-owned firms. By investing with emerging managers, who tend to focus on the smaller ends of the market, the Fund’s investment portfolio becomes more diverse, and ultimately, more sustainable. In turn, the emerging managers gain the capital and experience they need to become larger, best-in-class investment managers.

At this year’s emerging manager conference, Comptroller Thomas P. DiNapoli summed up the benefit of the Fund’s Emerging Manager Program. “When you look at our program, and the success of it, and the overall strength of the Fund, it’s proof that expanding opportunities and access, to women-owned firms, to firms of color, to emerging managers – it’s not only the right approach, but it’s certainly the best approach.”

Visit the Division of Pension Investment & Cash Management on our website for more information on the Fund and the Emerging Manager Program.

What Makes Up Your NYSLRS Pension?

Many factors go into the calculation of your NYSLRS pension, but there are three core components that help us determine what your pension will be. They are:

  • Your NYSLRS retirement plan
  • Your Final Average Salary (FAS)
  • Your service credit

We use this information to calculate your retirement benefit – but how does each part fit into that calculation?

Your NYSLRS Retirement Plan

When you first joined NYSLRS, in either the Employees’ Retirement System (ERS) or the Police and Fire Retirement System (PFRS), you were assigned to a tier. In most cases, if you know your System and tier, you can identify your NYSLRS retirement plan.

Your NYSLRS retirement plan determines the formula we would use to calculate your NYSLRS pension. It also defines, based on your tier and Retirement System, a minimum amount of time you need to work and earn service credit in order to be eligible for retirement. Some retirement plans have more requirements than others, so you should refer to your plan publication for more information.

Final Average Salary (FAS)

At NYSLRS, a Final Average Salary (FAS) is the average of the wages a member earned during a set period of time when his or her earnings were the highest. If you are an ERS or PFRS member in Tiers 1 through 5, we would calculate your FAS using a three-year period; for members in ERS and PFRS Tier 6, we’d use a five-year period. Some PFRS members, if their employer offers it, may be eligible for a one-year period. We will use your FAS, in combination with your age at retirement and your total amount of service credit, to calculate your NYSLRS pension.

There are some restrictions as to what can and can’t be included in a member’s FAS. For instance, for ERS Tier 3, 4 and 5 members, if the earnings in any year included in the FAS period exceed the average of the previous two years of earnings by more than 10 percent, the amount in excess of 10 percent is excluded from the computation.

For ERS and PFRS Tier 1 members, if your date of membership is 6/17/71 or later, the wages* in any 12-month period cannot exceed the earnings in the previous 12-month period by more than 20 percent. Any amount in excess of this will be excluded.

Other FAS limitations you should be aware of include the following:

  • For Tier 2 ERS and PFRS and Tier 3 PFRS members covered by Article 11, the FAS is based on the highest average of wages earned during any three consecutive years. Earnings in any year included in the period cannot exceed the average of the previous two years by more than 20 percent. Any amount in excess of this will be excluded.
  • For Tier 3 PFRS members covered by Article 14, the FAS is based on the highest average of wages* earned during any three consecutive years. Earnings in any year included in the period cannot exceed the average of the previous two years by more than 10 percent. Any amount over the 10 percent limit will be excluded.
  • For Tier 5 PFRS members covered by Article 22, the FAS is based on the highest average of wages earned during any three consecutive years. Earnings in any year included in the period cannot exceed the average of the previous two years by more than 20 percent.
  • For Tier 6 ERS and PFRS members, the FAS is based on the highest average of wages* earned during any five consecutive years. Earnings in any year included in the period cannot exceed the average of the previous four years by more than 10 percent.

You can find out what earnings go into your FAS by checking the Final Average Salary page on our website or your plan publication. Our publication, Your Retirement Benefits, also features examples on how we’ll determine your FAS.

Service Credit

As a NYSLRS member, by working for an employer who participates with NYSLRS, you earn service credit over the course of your career. For most members who work full-time, it takes 260 workdays per year to equal one year of service credit. Members who work a part-time schedule or in educational settings can refer to their plan publication to see how their service credit is calculated.

Your NYSLRS pension will be directly related to your service credit. Your NYSLRS retirement plan may require you to earn a specific amount of service credit in order to receive your full NYSLRS pension. In other cases, if you retire with less service credit and don’t meet the age requirements of your NYSLRS retirement plan, your NYSLRS 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 so you receive the service credit you’re entitled to. You can check the total amount of service credit you’ve earned in your latest Member Annual Statement. Also, take some time to look into the FAS information for your NYSLRS retirement plan to be aware of any FAS limits.

If you have questions, or want to find out more detailed information about what makes up your NYSLRS pension, please contact us.

 

*Wages include regular salary, overtime, and recurring longevity payments earned within the period used to determine final average salary.

Retirement Planning — Start Thinking Outside The Box

Even though your retirement planning is helping you get ready for your last day of work, take the time to start thinking about what your life will be like after retirement. Will your financial situation be stable once you start receiving your pension, or will you need to supplement your income with your personal savings or Social Security? What will your health insurance situation be like when you are no longer working? These are important questions to ask before you file for retirement, and it’s the perfect time to start finding answers.

Preparing for Retirement: Part Four – Plan Outside the Box

The Preparing for Retirement 7-part video series discusses the main aspects of retirement planning to help NYSLRS members nearing retirement make good, informed decisions for the future. In Part Four – Plan Outside the Box, you’ll hear about other aspects of retirement planning you may be overlooking. By making sure your post-retirement financial situation is secure, you can be better prepared for the future.

Important Links for Retirement Planning

Where to Find More Retirement Planning Information

If you are close to retirement and have more questions, consider scheduling an appointment to meet with an information representative at one of NYSLRS’ consultation sites in New York State. Don’t forget to check back for the rest of the Preparing for Retirement video series, which includes retirement planning topics like: