Tag Archives: pension benefits

Calculating Your Final Average Earnings

As a NYSLRS member, you have a defined benefit plan that provides a lifetime pension when you retire. Your NYSLRS pension benefit amount will be determined by several factors, including your tier, service credit, and final average earnings (FAE).

When we calculate your pension, we find the consecutive years when your earnings were highest. These are usually your years of employment immediately before retirement, but they can be anytime in your career and do not need to match up with calendar years or fiscal years.

Update: Tier 6 Final Average Earnings Based on Highest Three Years

A new law improves the pension benefits of NYSLRS Tier 6 members. When you retire, your FAE will be based on the average of your three highest consecutive years of earnings, the same as members in other tiers.

These improvements apply to members who retire on or after:

  • April 1, 2024, for Police and Fire Retirement System (PFRS) Tier 6.
  • April 20, 2024, for Employees’ Retirement System (ERS) Tier 6.

Previously, your FAE was the average of your highest five consecutive years of earnings.

If you recently retired and the change applies to you, we will automatically update your pension calculation — you don’t need to contact us. The new law does not apply to members who retired before the dates above.

Understanding Final Average Earnings Limits

If your earnings increase significantly through the years used in your FAE, some of those earnings may not be used toward your pension.

Your limit depends on whether you’re an ERS or PFRS member and your tier. For most members, if the earnings in any 12-month period in your FAE exceed the average of the previous two years by more than 10 percent, the amount above 10 percent will not be included in your FAE calculation.

Calculating Your Final Average Earnings

For more information, including limits for other tiers, visit our Final Average Earnings page.

Types of Earnings Included in Your FAE

The specific types of earnings included in your FAE calculation depend on your retirement plan and tier. Please check your plan publication for details.

In most cases, your FAE will include the payments listed below, if they are earned in the FAE period. (In some cases, restrictions may apply.)

In most cases, the following payments will not be included in your FAE calculation:

  • Unused sick leave;
  • Payments made as a result of working your vacation;
  • Any form of termination pay;
  • Payments made in anticipation of retirement; and
  • Any payments made for time not worked.

How Your Tier 6 Contribution Rate Can Change

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 change from year to year based on your earnings. The minimum rate is 3 percent of your earnings, and the maximum is 6 percent.

Overtime Pay Temporarily Excluded from Tier 6 Contribution Rates

The 2024–25 State budget included a new law which temporarily excludes overtime pay from the calculation of Tier 6 contribution rates. This may lower contribution rates for some Tier 6 members from April 1, 2024 through March 31, 2026.

For more information, read our blog post, Overtime Pay Temporarily Excluded from Tier 6 Contribution Rates.

Tier 6 contribution rates

When Tier 6 Contribution Rates are Determined

A Tier 6 member’s contribution rate is calculated annually. New rates become effective on April 1, the beginning of the state’s fiscal year. Once your rate is determined for a given fiscal year, it doesn’t change for the rest of that fiscal year. We provide rates to your employer in March, a few weeks before they need to apply any rate changes.

How Your Tier 6 Contribution Rate is Calculated

If you are a new NYSLRS member, during your first three years of membership your contribution rate is based on an estimated annual wage that your employer provided when you were enrolled as a new member.

If you have been a member for three or more years, NYSLRS calculates your rate using the earnings reported to us by your employer from the last completed fiscal year, April 1, 2022 through March 31, 2023.

Rates are calculated using your base pay, which includes:

This video will help explain how your contribution rate is determined:

How Your NYSLRS Pension Works

The amount you contribute to the Retirement System does not affect the amount of your pension. A NYSLRS pension is a defined-benefit plan. Under this type of plan, once you are eligible for a pension and apply for retirement, you will receive a monthly payment for the rest of your life. The amount of your pension will be calculated using a formula based on your retirement plan, years of service and final average earnings.

You can learn more about how your pension will be calculated by reading your retirement plan publication. Use our Find Your NYSLRS Retirement Plan Publication tool to find yours.

Comptroller DiNapoli’s Fight Against Pension Fraud

Since taking office in 2007, Comptroller Thomas P. DiNapoli has been committed to fighting public corruption and protecting the New York State and Local Retirement System from pension fraud.

fighting pension fraud

Teamwork

Comptroller DiNapoli, through his Division of Investigations, partners with federal, state, and local law enforcement at every level of government. The Division’s pension fraud investigations have resulted in dozens of arrests and convictions and the recovery of nearly $3 million dollars.

The Retirement System’s Pension Integrity Bureau (PIB) is responsible for recovering erroneously paid pension benefits. In many cases, this is due to the survivors’ failure to report the death of a retiree in a timely manner, but some cases involve schemes to conceal the retiree’s death to continue pocketing pension payments. When PIB comes across apparent criminal activity, it refers the case to the Division of Investigations.

Recent Cases

In June 2021, an Ontario County woman pleaded guilty to grand larceny for stealing $2,076 that was intended for a deceased friend. The woman and her friend, who was retired from the Tonawanda Public Works Department, had a joint bank account. After his death, the woman unlawfully withdrew his pension payment and $3,216 in Veterans Affairs benefits and closed the account.

That same month, an Orange County woman was arrested and charged with grand larceny for allegedly stealing her late mother’s pension payments. She attempted to hide her mother’s death from NYSLRS and more than $50,000 in pension payments were deposited into a joint account after her mother’s death. The woman allegedly used the money to pay bills and make personal purchases, including fast food, liquor, clothing, gas and entertainment.

Other Notable Cases

Some people have taken elaborate measures to keep the pension payments coming in. For example, there was the Queens man who left his father’s body in a morgue for more than a year while he siphoned off $7,542 in pension payments and $17,790 in Social Security from his father’s bank account.

In many instances, the pension fraud involves substantial amounts of money which can lead to serious penalties for those who get caught. A few years ago, a Florida woman was sentenced to 2-to-6 years in State prison after she was convicted of stealing more than $120,000 in pension payments after her uncle’s death. She sent false information to his bank indicating he was still alive, then used her power of attorney to withdraw pension payments for several years.

Then there was the man who impersonated his dead brother in order to collect more than $180,000 in pension benefits. The Retirement System learned of the brother’s death and stopped payments to a trust account the man controlled. The man phoned the NYSLRS Call Center pretending to be his deceased brother demanding his money and insisted he was alive. The ploy failed and he was sentenced to 6 months in jail and 5 years probation. He also signed a $180,140 judgment and had to repay NYSLRS.

Your Pension Fund is Secure

The Pension Fund, which provides the money for pension payments and was valued at an estimated $254.8 billion as of March 31, 2021, has long been recognized as one of the best-managed and best-funded public pension funds in the nation. The State Comptroller’s ongoing effort to combat pension fraud and abuse is just one more reason that the Fund remains safe and secure.

New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555.

The Common Retirement Fund: 100 Years of Strength and Security

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.

Common Retirement Fund - A Snapshot of Growth

Investments

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.

Looking Forward

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 overall investment return was 33.55 percent for the State fiscal year that ended March 31, 2021, reflecting the financial markets’ dramatic rebound from lows reached during the COVID-19 pandemic. The return on investments increased the Fund’s value to an estimated $254.8 billion. More than 1.1 million NYSLRS members, retirees and beneficiaries can continue to rely on the Retirement System for their retirement security.

Filing for Retirement Benefits During the COVID-19 Emergency

The unfortunate reality of the COVID-19 emergency is that some NYSLRS members may become seriously ill and some may die from the disease. That is why it is vitally important that members understand how to apply for retirement benefits, if they need to take that step.

NYSLRS members who become seriously ill from COVID-19 may wish to file for a disability retirement benefit so their beneficiary may be eligible for a continuing pension, rather than a one-time in-service death benefit, if the member dies. 

These members, or their employer on their behalf, need to file the disability retirement application that is appropriate for them according to their retirement plan.

filing for disability retirement benefits during the COVID-19 emergency

Please visit our Disability Benefits page and select “Find Your Application” to help you find the right application. Additionally, the member,  or the member’s spouse, should file a pension payment option election form to identify a beneficiary to receive the continuing benefit. An option election form cannot be filed by the employer. A continuing benefit cannot be paid to a beneficiary unless we receive an option election form.

Applications and option election forms can be emailed directly to NYSLRS’ Disability Processing Unit. If the member dies after applying, the disability retirement application would be effective upon death. If the member recovers, he or she would be allowed to withdraw the disability retirement application. 

Eligible members may also file for a service retirement.  However, a service retirement cannot be canceled if your retirement date has passed. You can file a disability and a service retirement application at the same time. Service retirements can be filed electronically using Retirement Online.

Please call our Contact Center at 866-805-0990 if you have questions.

Five and Ten Year Pension Payment Options

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.

pension payment options

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.