Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members (those who joined NYSLRS on or after April 1, 2012), that percentage, or contribution rate, can vary from year to year.
When Tier 6 Contribution Rates are Determined
A Tier 6 member’s contribution rate is calculated annually. New rates become effective each year on April 1, the beginning of the State’s fiscal year. Once your rate is set for a fiscal year, it will not change for the rest of that fiscal year. However, depending on your earnings, it may change the following year.
How Your Tier 6 Contribution Rate is Calculated
As a Tier 6 member, your contribution rate is based on how much you earn. Changes in your earnings may result in changes to your rate. The minimum rate is 3 percent of your earnings, and the maximum is 6 percent.
During your first three years as a NYSLRS member, your contribution rate is based on an estimated annual wage we receive from your employer. After three years, the rate is based on what you actually earned two years earlier. If you are a Tier 6 member with three or more years of membership in NYSLRS, this video will help explain how your contribution rate is determined:
The amount you contribute to the Retirement System will not affect the amount of your pension. Your NYSLRS pension is a lifetime benefit based on your retirement plan, years of service and final average earnings. You can learn more about your pension by reading your plan booklet on our Publications page. For help finding the right plan book, read our blog post Knowing Your Retirement Plan is the Key to Retirement Planning.
In 1921, NYSLRS’ pension fund held several million dollars and provided benefits to just a few dozen State employees. Today, the Common Retirement Fund (Fund) provides more than a billion dollars per month to hundreds of thousands of retirees and beneficiaries.
The System’s founders showed foresight in establishing the framework for a sustainable retirement system capable of providing long-term pension security for its members and retirees. Today, one hundred years later, we are considered one of the strongest public pension funds in the country, thanks in large part to the stewardship of Comptroller DiNapoli, trustee of the Common Retirement Fund and administrator of NYSLRS for the past 14 years.
Comptroller DiNapoli’s diligent efforts to maintain the financial well-being of the Fund, the fact that NYSLRS’ participating employers contribute their share into the Fund, and New York’s constitutional requirement that lifetime pension benefits be guaranteed to all NYSLRS retirees — all these elements combine to ensure that NYSLRS retirees will enjoy secure benefits for generations to come.
The Common Retirement Fund has been widely recognized as one the best-funded and best-managed public pension fund’s in the nation. (In June 2020, the Pew Charitable Trusts ranked NYSLRS as the second-best-funded public retirement system in the nation, based on 2018 data.) The cornerstone of the Fund’s reputation is its sound investment policies. At the direction of Comptroller DiNapoli, Fund managers use a long-term investment strategy designed to take advantage of growth opportunities during good economic times, while helping the Fund weather economic downturns.
The Comptroller seeks the input of a wide range of internal and external advisors, consultants and legal counsel who help to determine the best investment choices and allocation of assets for the Fund. These advisors provide independent advice and oversight of all investment decisions, serve as part of the chain of approval on all investment decisions before they reach the Comptroller for final approval and participate on advisory committees that meet periodically throughout the year.
Fund assets are invested in a diversified portfolio. About 55 percent of the assets are invested in publicly traded stocks. Other investments include bonds, mortgages, real estate and private equity.
The Fund is also strengthened by a forward-looking approach to addressing climate change-related investment risks and capitalizing on the opportunities created by the transition to a low-carbon economy. Comptroller DiNapoli recognizes that climate change poses an enormous threat to the global economy and to the Fund’s investment portfolio. Recently, he announced plans to transition the Fund’s portfolio to net zero greenhouse gas emissions by 2040. This process will include a review of investments in energy companies and, where consistent with his fiduciary responsibility to maintain the long-term financial health of the Fund for NYSLRS members, divestment of companies that don’t meet minimum standards. This policy will help ensure that the Fund adapts to a changing global economy and maintains its growth in coming decades.
The Common Retirement Fund’s Impact on New York Businesses
The Common Retirement Fund’s In-State Private Equity Program invests in new and expanding New York companies and makes capital available to qualifying small businesses. As of March 31, 2020, the Fund’s private equity portfolio included investments in over 330 New York businesses with a total value of $1.9 billion. These investments boost the State’s economy while at the same time generating significant returns for the Fund.
As the Common Retirement Fund’s assets have grown over the years, so have its obligations. As of March 31, 2020, there were 487,407 NYSLRS retirees and beneficiaries, who were paid $13.4 billion in benefits over the previous year. That’s up from 67,689 retirees and beneficiaries, who were paid $194 million in benefits in 1971. Roughly a third of NYSLRS members are expected to retire over the coming decade.
Comptroller DiNapoli’s focus on continuing the Fund’s record of strong growth ensures that the Retirement System will be ready to meet the challenges of the future. The New York State Common Retirement Fund’s estimated return in the third quarter of State Fiscal Year 2020-21 was 10.01 percent for the three-month period ending December 31, 2020, and the Fund ended the quarter with an estimated value of $247.7 billion. More than 1.1 million NYSLRS members, retirees and beneficiaries can continue to rely on the Retirement System for their retirement security.
Defined benefit pension plans, including NYSLRS, provide retirement security for millions of Americans. Here in New York, NYSLRS pays out more than $10 billion in benefits each year to nearly 400,000 New York State residents. Much of that money is spent at home, contributing to local economies and supporting jobs.
What’s happening here is mirrored across the country. In 2018, defined benefit pension plans paid $578.7 billion to 23.8 million retired Americans, and those payments had a significant impact on the nation’s economy according to a recent study by the National Institute on Retirement Security (NIRS).
What Is a Defined Benefit Pension Plan?
A defined benefit pension plan provides a pension that is based on a preset formula that takes into account salary and years of service. Unlike a 401(k)-style retirement plan (also known as defined contribution plan), it is not based on how much you or your employer contribute to your retirement account. A defined benefit plan provides a fixed monthly payment at retirement and is usually a lifetime benefit.
With a defined contribution plan, the amount of money the employee has accumulated at retirement depends on the investment returns of their individual account. A market downturn, especially near retirement, can affect the value of their benefit. With a defined benefit plan, market risk is shared, so a downturn doesn’t affect the benefit.
Most importantly, defined benefit pension recipients don’t have to worry about their money running out during their retirement years.
Who Gets Defined Benefits?
Defined benefit pension plans were once much more common in the United States. Today, defined benefit plans are more commonly offered by public employers, though about 16 percent of full-time private sector employees had access to a define benefit plan in 2018.
Who received these benefits? According to the NIRS study:
$308.7 billion was paid to 11 million state and local government retirees and beneficiaries;
$105.9 billion was paid to 2.6 million federal retirees and beneficiaries; and
$164.1 billion was paid to 10.1 million private sector retirees and beneficiaries.
Employers Benefit from Defined Benefit Plans
Not surprisingly, the financial security provided by defined benefit plans has proved popular among workers. In 2019, the NIRS surveyed 1,100 public employees about their benefits. Most said retirement benefits are good tools for recruiting and retaining workers, and 86 percent said their retirement benefits are a major reason they stick with their jobs.
National Economic Benefits of Defined Benefit Plans
The $578.7 billion in pension payments generated spending that supported 6.9 million American jobs with paychecks totaling $394.2 billion, the study estimated. But the economic benefit didn’t stop there. This is because of what economists call the multiplier effect, the measure of the true impact of each dollar spent as it works its way through the economy.
The study found that each pension dollar paid had a $2.19 multiplier effect, which resulted in nearly $1.3 trillion in economic output. Real estate, food service, healthcare, and wholesale and retail trade were the sectors most impacted.
The study also noted that defined benefit pension payments have a stabilizing effect on local economies. Because they have a steady source of income, retirees with a defined benefit plan are less likely than retirees with defined contributions to curtail spending during economic downturns.
“These plans are a cost effective way to provide secure lifetime income for retired Americans and their beneficiaries after a lifetime of work. Moreover,” the study concluded, “DB pension plans generate economic benefits that reach well beyond those who earned benefits during their working years.”
COVID-19 has resulted in tens of thousands of deaths across New York State. Sadly, the pandemic’s victims include NYSLRS members who carried out their essential duties despite personal risk.
The families of these selfless members can take some comfort in knowing that they may be eligible for enhanced death benefits. Recently enacted legislation provides certain beneficiaries of public employees who contract COVID-19 on the job and die from COVID-19 with an accidental death benefit.
Most NYSLRS members are eligible for a death benefit if they die while in service; this “ordinary death benefit” provides a member’s designated beneficiary or beneficiaries a single, lump sum payment, worth up to three years’ salary. Alternatively, an “accidental death benefit” may be available to certain beneficiaries if the member’s death is a result of an on-the-job accident. The NYSLRS accidental death benefit is a pension paid to beneficiaries that are defined in statute, first to a surviving spouse, if no spouse to dependent children, then to dependent parent(s).
Generally, the accidental death benefit is equal to 50 percent of the member’s final average salary or last year’s salary depending on the retirement plan the member is enrolled in. You can find your retirement plan information on our Publications page. In addition to the accidental death benefit, a special accidental death benefit may also be payable to a member of the New York State and Local Police and Fire Retirement System.
“This new law is an important step toward protecting public workers who are on the front lines fighting the coronavirus and helping their communities,” said New York State Comptroller Thomas P. DiNapoli. “If something happens to them, they deserve their retirement benefits and the peace of mind that their families are provided for.”
A NYSLRS member’s statutory beneficiary would be eligible for the accidental death benefit if the member:
Worked at either their normal workplace or another assigned workplace, not their residence, as directed by their employer, on or after March 1, 2020;
Contracted COVID-19 within 45 days of the last day that the member reported for work;
Died on or before December 31, 2022; and
Died from COVID-19 or COVID-19 caused or contributed to their death.
The COVID-19 benefit also applies to members who were working as of March 1 but retired prior to July 1, 2020. If the retiree met the eligibility requirements, contracted COVID at work or within 45 days of last reporting to work, and died after retiring, but on or before December 31, 2020, their statutory beneficiary has the option of converting the service retirement benefit or disability retirement benefit to an accidental death benefit.
The COVID-19 benefit is available for all NYSLRS members (Employees’ Retirement System as well as Police and Fire Retirement System members), regardless of job title, or tier.
How to Claim the Benefit
When someone calls NYSLRS to report a death, they should let us know it was COVID-related. We’ll also ask for an original death certificate. We will then reach out to the beneficiary to assist them in claiming the benefit. For the COVID-19 death benefit, NYSLRS will confirm with the employer the dates that the member reported to work and request the required documentation showing COVID-19 as the cause of death. The COVID-19 death benefit will be reduced by any ordinary death benefits paid out to a beneficiary by NYSLRS.
Fortunately, it is now easier than ever to find out. Most NYSLRS members can create their own pension estimate in minutes using Retirement Online.
A Retirement Online estimate is based on the most up-to-date account information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit. When you’re done, you can print your pension estimate or save it for future reference.
How to Create Your Pension Estimate
Before you can use the new pension calculator, you will need a Retirement Online account. Once you sign in, go to the My Account Summary section of your account homepage and click the “Estimate my Pension Benefit” button.
You can enter an estimated retirement date (or retirement age), your current salary and expected annual salary increases. You can also include any service credit you plan to purchase and anticipated lump sum payment for unused vacation. If you add the birthdate for a beneficiary, you’ll also see the estimated monthly payment you would receive if you were to choose a payment option that provides a benefit for a survivor.
Any pension estimate you generate with the online calculator would be an approximation of your potential benefit; it is not a guarantee that you’ll receive a certain amount when you retire.
Alternative Ways to Get an Estimate
While more than 90 percent of NYSLRS members (most Tier 3 through 6 members) can use the new benefit calculator, some members should have NYSLRS generate their benefit estimate.
For example, if you recently transferred your membership to NYSLRS or are covered under certain special plans, it would be better if NYSLRS created an estimate for you. The system will notify you if your estimate cannot be completed using Retirement Online’s estimate tool. Please contact us to request a pension estimate if you receive this notification. Also, if you are in Tiers 1 through 4, you can still use the Quick Calculator on the NYSLRS website. The Quick Calculator generates estimates based on information you provide.
Even if your retirement is years in the future, you should be aware of certain membership milestones that may help you narrow down when to retire.
There are two types of membership milestones: ones pertaining to age and ones pertaining to service credit. Since most NYSLRS members reach service credit milestones first, we’ll start with them.
Service Credit Milestones
Vesting is a key retirement milestone. Once you become vested, you will be eligible for a NYSLRS pension even if you leave public employment before retirement. Members in Tiers 1-4 with at least five years of credited service are vested. (Most members in these tiers have already reached this milestone.) Tier 5 and 6 members must have ten years of credited service to be vested.
After reaching 20 years of service, most members will be eligible to have a higher percentage of their final average earnings included in their pension benefit. How that benefit is calculated depends on your retirement plan and tier. You can find more information in your retirement plan booklet.
Members in some special plans can retire with 20 years of service, regardless of their age. Other special plans allow for retirement after 25 years, regardless of age.
At 30 years of service, Tier 2-4 members who are at least 55 years old can retire without a pension reduction.
Once you reach your full retirement age, you can retire without a pension reduction. For Tiers 2-5, the full retirement age is 62. The full retirement age for Tier 6 members is 63.
Members in regular retirement plans can retire as early as age 55, but they may face a pension reduction if they retire before their full retirement age. The closer you are to your full retirement age at retirement, the less the reduction will be.
Most American workers believe they will have enough money to live comfortably after they retire, but do you share their retirement confidence?
As a NYSLRS member with a defined benefit pension plan, you have reason to be optimistic about retirement. But there is more to a financially secure retirement than having a pension. Think of retirement security as a three-legged stool, with three parts working together to provide financial stability when your working days are over. Understanding each of these sources of income will help you better plan for your future and boost your retirement confidence.
Leg 1: Your NYSLRS Pension
At retirement, vested NYSLRS members are eligible for a pension based on their final average earnings and the number of years they’ve worked in public service. Your pension is a lifetime benefit, which means you’ll receive a monthly payment for the rest of your life, no matter how long you live. Unlike workers who rely on a 401(k)-style retirement plan, you won’t have to worry about your money running out.
Most members can use Retirement Online to estimate how much their pension will be. But if you’re a long way from retirement, it may be better to think in terms of earnings replacement. Financial advisers estimate you’ll need to replace 70 to 80 percent of your income to retire with financial confidence. Your pension can help get you there. For example, if you retire with 30 years of service, your NYSLRS pension could replace more than half of your earnings. (Replacement percentages vary among retirement plans. You can find out more in your retirement plan booklet.)
Leg 2: Social Security
Less than half of Americans believe Social Security will be there for them when they retire, according to a recent poll, and younger workers are even more pessimistic about Social Security’s future. While there’s no denying that Social Security faces challenges, things aren’t as bleak as some people think.
Social Security trustees estimate that Social Security reserves will be depleted by 2035 and they will only be able to pay about 76 percent of scheduled retirement benefits. But consider this: Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. In the future, even if it only replaces 25 to 30 percent of pre-retirement earnings, it would still be a significant source of retirement income.
But these are worse case scenarios. The truth is that lawmakers have many policy options that could reduce or eliminate the long-term financing shortfalls in Social Security. It seems likely those options will be explored.
Leg 3: Retirement Savings
Having a secure, lifetime pension will be a substantial financial asset, but it’s still important to save money for retirement. A retirement nest egg can help in case of an emergency, act as a hedge against inflation and boost your retirement confidence.
Saving is the retirement factor you have the most control over. You decide when to start, how much to save and how your money will be invested. The key is to start saving early, so your money has time to grow, even if you can only afford to save a small amount in the beginning.
With the New York State Deferred Compensation Plan, you can start out by saving as little as $10 per pay period. That money would be automatically deducted from your paycheck, so you won’t even have to think about it. The money is tax-deferred, which means you don’t pay income taxes on your Plan account contributions or earnings until you begin to take payments from your account. This may lower your taxable income now and in retirement. The Deferred Compensation plan is not affiliated with NYSLRS, but New York State employees and some municipal employees can participate. If you’re a municipal employee, ask your employer if you’re eligible for the Deferred Compensation Plan or another retirement savings plan.
Member annual statements are distributed to NYSLRS members each spring (retiree statements are delivered by early March). It’s important that you make sure your contact information is correct to ensure you receive your Statement. (Note: Updating your contact information with your employer doesn’t update it with NYSLRS.)
Use Retirement Online to Check or Update Your Contact Information
The fastest way to check your contact information, and update it if needed, is through Retirement Online. Sign in to your Retirement Online account, go to the ‘My Profile Information’ area of your Account Homepage and click “Update” next to your mailing address or email address to make corrections.
If you don’t have a Retirement Online account, it’s easy to create one. Visit our Retirement Online for Members page and click ‘Register Now’ under the Sign In button. When you create your account, you’ll be asked to provide the ZIP code of your home address. If it doesn’t recognize your current ZIP code, it’s likely we have an older address on file for you. Please use the older ZIP code to create your account — you can update your address after you register. If you need assistance with Retirement Online, please contact us.
You can also update your contact information using our secure contact form, as long as your new mailing address is not a PO Box. Be sure to complete all fields and include your old and new contact information.
Get Your Statement Faster
You’ll receive your Statement faster if you choose the email option in Retirement Online. If you choose this option, you’ll receive an email that directs you to Retirement Online to see your Statement as soon as it’s ready. To choose your Statement delivery preference, go to the ‘My Profile Information’ area of your Retirement Online Account Homepage and click “Update” next to ‘Member Annual Statement by.’
You can also receive other correspondence from us by email by clicking “Update” next to ‘Contact by.’ If you choose ‘Mail’ or don’t select a preference, you will receive letters through the US Postal Service.
Note: For security purposes, certain correspondence (like tax forms) will only be sent by mail.
Questions about Your Statement?
Visit our Member Annual Statement page for answers to common questions. Remember that your Statement provides information as of March 31, 2021 — the end of the State fiscal year. However, you can sign in to Retirement Online throughout the year to view current account information.
Please share this post with friends, family or coworkers who are NYSLRS members so they can also check their contact information.
On January 3, 1921, NYSLRS began helping New York’s public employees achieve financial security in retirement. Now – 100 years later – we continue to fulfill that promise.
In 1920, the State Commission on Pensions presented Governor Al Smith a report they’d been working on for two years. The report showed that though there were already pension plans covering 8,300 banking department employees, teachers, State hospital workers, Supreme Court and other certain judiciary employees and prison employees, 10,175 State employees were not covered. To help ensure the financial security of public employees during their retirement years, the Commission recommended that a system be established to pay benefits to State employees – and the Commission wanted a system that would always have enough money on hand to pay benefits.
On May 11, 1920, Governor Smith signed legislation creating the New York State Employees’ Retirement System. By June 30 1921, 43 retirees were drawing pensions. The total amount of their annual pensions was $17,420.16. The first disability pension benefit of $256 per year was also paid.
Still Fulfilling Our Promise After 100 Years
Today, there are more than one million members, retirees and beneficiaries in our system, and NYSLRS is one of the strongest and best funded retirement systems in the country. Last fiscal year, NYSLRS paid out $13.25 billion in retirement and death benefits.
Our core mission for the last 100 years has been to provide our retirees with a secure pension through prudent asset management. This has been our promise since 1921 and will continue far into the future.
Sources: Report of the New York State Commission on Pensions, March 30, 1920; Chapter 741 of the Laws of 1920; and Report of the Actuary on the First Valuation of the Assets and Liabilities of the New York State Retirement System as of June 30, 1921.
NYSLRS retirees tend to stay in New York, where their pensions are exempt from State and local income taxes. In fact, 79 percent of NYSLRS 487,407 retirees and beneficiaries lived in the State as of March 31, 2020. And half of them lived in just ten of New York’s 62 counties.
So where in New York do these retirees call home? Well, there are a lot of NYSLRS retirees and beneficiaries on Long Island. Suffolk and Nassau counties are home to more than 61,000 recipients of NYSLRS retirement benefits, with annual pension payments exceeding $2 billion. But that shouldn’t be surprising. Suffolk and Nassau counties are the largest and third largest counties in the State outside of New York City by population. (The City, which has its own retirement systems for municipal employees, police and firefighters, had 23,700 NYSLRS retirees and beneficiaries.)
Erie County, which includes Buffalo, ranks number two among counties in the number of NYSLRS retirees, with more than 32,000. Albany County, home to the State capital, ranked fourth with close to 20,000. Monroe, Westchester, Onondaga, Saratoga, Oneida and Dutchess counties round out the top ten.
All told, NYSLRS retirees received $5.9 billion in retirement benefits in the top ten counties, and $10.8 billion statewide.
Hamilton County had the fewest NYSLRS benefit recipients. But in this sparsely populated county in the heart of the Adirondacks, those 499 retirees represent nearly 11 percent of the county population. During fiscal year 2019-2020, $10.8 million in NYSLRS retirement benefits was paid to Hamilton County residents.
Outside of New York, Florida remained the top choice for NYSLRS retirees, with more than 38,000 benefit recipients. North Carolina (9,413), New Jersey (7,893) and South Carolina (6,457) were also popular. There were 639 NYSLRS recipients living outside the United States as of March 31, 2020.