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.

Your pension is based on a preset formula that takes into account your salary and years of service. It will not be based on your individual contributions to the Retirement System.

If you retire with a NYSLRS pension, you will receive a monthly pension payment for the rest of your life.

Defined Contribution Plans

Defined benefit plans are often confused with 401(k)-style retirement savings plans, which are defined contribution plans.

With a defined contribution plan, the employer, employee or both make contributions to an individual retirement account, and the money in the account is invested. In most cases, it is the responsibility of the employee to make investment decisions, or the plan may offer pre-packaged investment options. At retirement, the employee will have an account that includes the accumulated value of contributions and investment returns, minus any fees.

The amount of money the employee has at retirement is dependent on the investment returns of the individual account, so market downturns, especially near retirement, can affect the value of the benefit. The employee also can run the risk of outliving their savings.

defined benefit plan

NYSLRS’s Defined Benefit Plans

NYSLRS actually administers more than 300 retirement plans, but all are defined benefit plans and share certain features. NYSLRS plans:

  • Provide a guaranteed lifetime retirement benefit;
  • Offer a pension that is based on final average salary and years of service;
  • Provide a right to pension benefits (vesting) with five years of service credit (ten for Tier 5 and 6 members);
  • Build a cost-of-living adjustment (COLA) into pensions to help offset the effect of inflation; and
  • Include disability and death benefits.

To find out details about your own NYSLRS plan, check your retirement plan booklet. You can find a copy on the Publications page of our website.

7 thoughts on “What is a Defined Benefit Plan?

  1. Linda

    I am 68 years old and in the union since February 2018. I work for Rockland County Boces. I am in the transportation department. Is it correct that I would have to be 78 in order to collect a pension? Is there not something for people who begin the process at an older age?

    1. NYSLRS

      NYSLRS members must be vested to be eligible for a pension. If you joined NYSLRS in 2018, you would need ten years of full-time service credit to become vested.

      However, if you leave public service in less than ten years, you can withdraw your mandatory contributions plus the interest they’ve earned.

      For more Tier 6 information, please visit this webpage.

  2. Frank K

    Why doesn’t this website allow us to see more information, such as life insurance, what tier we retired in, etc.

    1. NYSLRS

      We will be adding new features and additional information to Retirement Online in the future.

      In the meantime, to get the account-specific information you need, please contact our customer service representatives using the secure email form on our website (http://www.emailNYSLRS.com). One of our representatives will review your account and respond to your questions. Filling out the secure form allows us to safely contact you about your personal account information.

  3. Tim Ameres

    If I have an outstanding pension loan at the time of retirement I understand that my pension will be less.
    But if I pay the loan back in full during retirement will my pension be recalculated?

    1. NYSLRS

      Employees Retirement System members may repay their loan after retiring. If you choose to pay back your loan after you retire, you must pay back the full amount of the outstanding balance that was due when you retired in one lump-sum payment. Following your full repayment, your pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to your date of retirement.

      You should also be aware that if you retire with an outstanding loan, in most cases, you will need to report at least some portion of the loan balance as ordinary income (subject to federal income tax) to the Internal Revenue Service (IRS), and you may also be subject to a tax penalty.

  4. Mary Lou Travis

    I will begin collecting my(regular) retirement benefit this fall.
    I am a RN who was hurt/disabled at my Monroe County position. I am no longer able to work in my profession d/t this injury. Application for NYS Disability Retirement was denied because ” I should have been aware of the risks of my job of RN working with children”. Denied also when I appealed the decision. I followed all of the rules/ and filed all paperwork as requested on schedule. It took two years from filing everything to find out that I was denied. I am very dissatisfied with how NYS lawyer handled my claim.


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