Tag Archives: pension

PFRS Milestones

The Police and Fire Retirement System (PFRS) covers more than 35,000 police officers and firefighters across New York State. Let’s look at the PFRS milestones you will reach over the course of your public service career and how they will affect your benefits.

Why Milestones Matter

As a NYSLRS member, you earn service credit for your paid public employment. Generally, one year of full-time work equals one year of service credit. As you earn service credit, you’ll reach career milestones that will make you eligible for certain benefits or for increases to your existing benefits.

Some milestones are common to most PFRS members; others are shared by members in a particular tier or retirement plan. For example, your plan determines when you would be eligible to apply for a non-job-related disability benefit. Understanding these milestones will help you plan for retirement.

Important PFRS Milestones

PFRS milestones

Special Retirement Plans

Most PFRS members are in special retirement plans, which allow you to retire after 20 or 25 years of service regardless of age.

If you retire at your 20- or 25-year milestone, your pension will be 50 percent of your final average earnings (FAE). Depending on your retirement plan, you may earn 1.66 percent of your FAE for each year you work beyond the 20 or 25 years, however for most PFRS members, a maximum of 32 years of service can be used in your pension calculation.

Final Average Earnings

A new law improves your pension benefits. 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. Read our blog post, Calculating Your Final Average Earnings, for more information, including how your FAE will be calculated and limitations.

Eligible Service

PFRS members in special plans should be aware that not all public employment counts towards reaching the 20- or 25-year milestone. Service usually must be in specific job titles to be creditable toward your pension benefit. For example, if you are in the New York State Police Plan, service with a city police department would be creditable, but service as a sheriff’s deputy or corrections officer would not be. PFRS members may be eligible to purchase credit for military service to reach 20 or 25 years.

More Information About Your Benefits

Most members can estimate their pension in Retirement Online. You can fine tune your estimate by entering your annual earnings and expected pay increases. You can also include any service credit you plan to purchase.

Your specific PFRS milestones, along with your eligible service and pension calculation, are determined by your retirement plan, so it is important to familiarize yourself with the details of your plan. You can visit our website to Find Your NYSLRS Retirement Plan Publication.

ERS Tier 6 Milestones

If you joined the Employees’ Retirement System (ERS) on or after April 1, 2012, you are a Tier 6 member. Let’s look at the ERS Tier 6 milestones you will reach over the course of your public service career and how they will affect your benefits.

Why Milestones Matter

As a NYSLRS member, you earn service credit for your paid public employment. Generally, one year of full-time work equals one year of service credit. As you earn service credit, you’ll reach career milestones that will make you eligible for certain benefits or for increases to your existing benefits. Understanding these milestones will help you plan for retirement.

Your milestones depend on your tier and your retirement plan. Most ERS Tier 6 members are in the Article 15 retirement plan (named for a section of the New York State Retirement and Social Security Law). If you see Plan A15 listed in the ‘My Account Summary’ section of your Retirement Online account, you’re in this plan.

Important ERS Tier 6 Milestones

ERS Tier 6 milestones

Here are some additional important milestones for Tier 6 members in the Article 15 retirement plan:

  • With ten years of service credit, you can apply for a non-job-related disability benefit if you are permanently disabled and cannot perform your duties because of a physical or mental condition.
  • With ten years of service credit, your beneficiaries may be eligible for an out-of-service death benefit if you leave public employment and die before retirement.
  • Ten years also marks the point when you are no longer able to withdraw your membership and receive a refund of your contributions if you leave public employment.
  • You are eligible to retire once you are age 55 and have at least five years of service credit. However, for most Tier 6 members, there would be reductions to your benefit if you retire before age 63.
  • You can retire with full benefits at age 63.
    • If you retire with fewer than 20 years of service, your pension will equal 1.66 percent of your final average earnings (FAE) for each year of service.
    • If you retire with more than 20 years of service, your benefit will equal 1.75 percent of your FAE for each year of service.
    • Then, for each year of service beyond 20 years, you will receive an additional 2 percent of your FAE.

Note: A new law improves your pension benefits. When you retire, your final average earnings (FAE) will be based on the average of your three highest consecutive years of earnings, the same as members in other tiers. Read our blog post, Calculating Your Final Average Earnings, for more information, including how your FAE will be calculated and limitations.

Most members can estimate their pension in Retirement Online. You can fine tune your estimate by entering your annual earnings and expected pay increases. You can also include any service credit you plan to purchase.

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.

Federal Tax Withholding and Your Pension

Most NYSLRS pensions are subject to federal income tax. If your last federal tax bill or return was larger than you expected and you want to change the amount withheld from your NYSLRS pension, Retirement Online makes it fast and convenient to update your federal tax withholding. If you haven’t signed up yet, learn more about Retirement Online and click “Register Now” to open your account.

federal tax withholding and your pension

Understanding Your Federal Tax Withholding

NYSLRS calculates the amount withheld from your monthly benefit payment based on the information you provide us on a W-4P form (Withholding Certificate for Pension or Annuity Payments).

The Internal Revenue Service (IRS) released a revised version of their W-4P form, which no longer allows tax filers to adjust their withholding by electing a specific number of allowances. To comply with the IRS’ requirements, NYSLRS updated our tax withholding form. You do not need to submit a new W-4P to NYSLRS unless you want to change the amount of your tax withholding.

Updating Your Withholding

Retirement Online provides an online form that collects the same information as the paper W-4P form, and your updates will be made more quickly if you submit them online.

  • Sign in to Retirement Online.
  • From your Account Homepage, click the green “Update My W-4P Tax Information” button.
  • Follow the steps to update your withholding.

Basic Withholding

Step 1. Select your filing status. If you want your federal withholding to be based only on the benefit amount you receive from NYSLRS, with no adjustments, you can skip steps 2 – 4.

Adjustments to Withholding (Dependents, Tax Credits)

Complete Steps 2 – 4 ONLY if they apply to you.

Step 2. If you have income from a job or more than one pension/annuity, in addition to your NYSLRS pension, or if you’re married filing jointly and your spouse receives income from a job or pension/annuity, you can enter that in Step 2.

Click the ‘View Instructions’ link or see page 2 of the current IRS Form W-4P for examples that may help you with this step.

Step 3. If you need to claim dependents, you can enter that information in Step 3.

Step 4. If you have other adjustments to make — other income, deductions or extra withholding — you can complete Step 4.

Click the ‘View Instructions’ link or see page 3 of the current IRS Form W-4P for instructions and a worksheet that may help you with this step.

If you update your federal withholding online by the middle of the month, your changes will generally be applied that month. We’ll notify you by mail or email (depending on your contact preference) when the update has been completed.

If You Need Help

Our Taxes and Your Pension page has additional information about federal withholding, including what to do if you receive more than one benefit payment from NYSLRS, 1099-R tax form information and more.

If you need assistance completing the form, visit the IRS’ website and read the current revision of the IRS Form W-4P (detailed instructions start on page 2). You can also find phone numbers and online resources on the IRS’ Let Us Help You page.

If you’re not sure whether you need to adjust your federal withholding or if you have other tax questions, you may want to check with a tax preparer.

Working After Retirement: Retiree Earnings Limit

As a NYSLRS retiree, you can work and still receive your pension, but you should be aware there may be a limit on how much you can earn each year without affecting your NYSLRS pension.

Working After Retirement: Retiree Earnings Limit

Working While Receiving a Service Retirement Benefit

An earnings limit of $35,000 generally applies to NYSLRS retirees who:

  • Are under age 65;
  • Receive a service retirement benefit (see disability benefit rules below); and
  • Return to work for a public employer (including contract or consultant work, if you joined NYSLRS on or after May 31, 1973).

2024 Update Regarding the Earnings Limit

The earnings limit for retirees employed by school districts and Boards of Cooperative Educational Services (BOCES) is suspended through June 30, 2025 (April 2024 legislation extended the date from 2024 to 2025). The earnings limit suspension for school employees does not apply to retirees who work for a college, university or charter school.

For most other retirees under the age of 65, the $35,000 limit is in effect and applies to the entire calendar year in 2024.

There is no earnings limit if you are self-employed or if you work for:

  • The federal government;
  • A state or local government in another state; or
  • A private employer.

Also, beginning in the calendar year you turn 65, the earnings limit no longer applies.

Note: Special rules apply to elected officials.

Working While Receiving a Disability Retirement Benefit

Almost all earnings for retirees who are working while receiving a disability retirement benefit are limited whether they work for a public or private employer. The limit is specific to each retiree. To find out your earnings limit, please contact us.

How the Limit Applies

The limit applies to all earnings for the calendar year, including money earned in the calendar year, but paid in a different calendar year (for example earned in December but paid in January).

The limit does not apply to:

  • Payments received after you retire from your employer, such as for vacation or sick time you earned when you were still working; and/or
  • A retroactive payment for a new union contract, if the earnings are for employment before you retired.

Reporting Your Earnings

It is your responsibility to notify NYSLRS if you earn more than the limit. If you know you are going to exceed the limit, contact us at least a month before you do.

You can message us using the secure contact form, or you can fax a letter to 518-402-2498. Be sure to include the name of your employer, the approximate date you expect to exceed the limit and a daytime phone number in case we have questions.

If You Exceed the Earnings Limit

If you earn more than the limit, you must:

  • Pay back NYSLRS for the pension payments you received after the date you reached the limit. If you continue to work, your pension will be suspended for the remainder of the calendar year and resume the following January.

    OR

  • Rejoin NYSLRS, in which case your pension will be suspended until you retire again at some future date. (You’d need to reapply.)

Earnings Limit Waiver

Under Section 211 of the Retirement and Social Security Law, the earnings limit can be waived if your prospective employer gets approval before hiring you. Approval is not automatic; it is based on the employer’s needs and your qualifications. In most cases, the New York State Department of Civil Service would be the approving agency. A Section 211 waiver covers a fixed period, normally up to two years.

For More Information

Before you decide to return to work, please read our publication What If I Work After Retirement? It includes information such as how earnings limits are calculated for retirees receiving a disability retirement benefit, consequences to consider before returning to NYSLRS membership and more. If you have questions, please contact us.

Estimate Your Pension in Retirement Online

Here is an important retirement planning tip — most members can create their own pension estimate in minutes using Retirement Online. Your estimate will be 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.

Estimate Your Pension in Retirement Online

How to Create a Pension Estimate

To get started:

  • Sign in to Retirement Online.
  • Click the ‘Estimate my Pension Benefit’ button to access the pension calculator.
  • Enter the date (or age) you plan to retire.

You can fine tune your estimate by entering your annual earnings and expected pay increases. You can also include any service credit you plan to purchase. If you add the birthdate for a beneficiary, you’ll see the estimated monthly payment amounts under the pension payment options that provide a benefit for a survivor.

Remember, the pension amounts you’ll see are just an estimate; it is not a guarantee of what you’ll receive when you retire.

Most Tier 2 through 6 members (more than 90 percent of all NYSLRS members) can use the Retirement Online pension calculator. However, some members may not be able to because of their circumstances — for example, members who recently transferred to NYSLRS, some PFRS members, or Tier 6 members with between five and ten years of service. The system will notify you if your estimate cannot be completed using the Retirement Online pension calculator. Please contact us to request a pension estimate if you receive this notification.

Do More With Retirement Online

In Retirement Online, you can view your date of membership, tier, retirement plan, estimated total service credit and more. Purchase previous service credit well before retirement and save on interest costs. Check out what else members can do in Retirement Online.

If you don’t already have an account, learn more and register for one today. If you need help with Retirement Online, read our Retirement Online Tools and Tips blog post.

Overtime Limits for Tier 5 and 6 Members

Tier 5 and 6 members are subject to limits on the amount of overtime that can be included in their pension. You can earn overtime pay beyond the overtime limit, but it won’t be factored into your pension calculation. And you don’t pay member contributions on overtime pay that is above the limit.

Overtime Limits for Tier 5 and 6 Members

Tier 5 Overtime Limits

The overtime limit for Tier 5 Employees’ Retirement System (ERS) members increases each calendar year by 3 percent. In 2024, the limit for Tier 5 ERS members is $22,688.85.

For Tier 5 Police and Fire Retirement System (PFRS) members, the overtime limit is 15 percent of your regular earnings each calendar year.

For more information, visit our Overtime Limits for Tier 5 page.

Tier 6 Overtime Limits

The overtime limit for Tier 6 ERS members increases each calendar year based on the annual increase of the Consumer Price Index (CPI). In 2024, the limit for Tier 6 ERS members is $20,459.

For Tier 6 PFRS members, the overtime limit is 15 percent of your regular earnings each calendar year.

For more information, visit our Overtime and Earnings Limits for Tier 6 page.

Your Pension Benefit Calculation

Your NYSLRS pension will be based on your service credit and final average earnings (FAE). Your FAE is the average annual earnings you receive during the period when your earnings are highest (36 consecutive months for Tier 5 and 60 consecutive months for Tier 6). Your FAE will include overtime pay you earned up to each annual limit.

Your FAE may be limited in other ways. For example, for most members, if your earnings increase significantly in the years used for your FAE, some of those earnings might not count toward your pension. The specific limits depend on your tier. Visit our Final Average Earnings page for more information about this limit.

For Tier 6 members, the earnings that can be used toward your pension are also limited to the Governor’s salary.

Read Your Plan Publication

Your retirement plan publication provides specific information about the earnings that will be used to calculate your pension. Visit our website to Find Your NYSLRS Retirement Plan Publication.

Estimate Your Pension in Retirement Online

Most members can create their own pension estimate in minutes using Retirement Online. You can enter different retirement dates to see how those choices would affect your benefit. Sign in to Retirement Online and click the “Estimate my Pension Benefit” button to try it.

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.

Your Retiree Annual Statement: Now Available Online

Your Retiree Annual Statement is now available in Retirement Online! Retirees who opted to go paperless already received an email notifying them that their Statement is available in their Retirement Online account.

If you did not change your delivery preference to email, your Statement will be mailed by the end of February.

Get Your Statement Online Now

Whether you chose email delivery or not, you can access your Statement in your Retirement Online account now. To view, save or print your Statement:

If you don’t have an account, you can find step-by-step instructions for registering in the Tools & Tips section of the Retirement Online page.

Your Retiree Annual Statement is now available in Retirement Online

Inside Your Retiree Annual Statement

Your Statement has a new look this year, but it still contains the same information you receive every year about your benefit amount, deductions and tax withholding. Your Retiree Annual Statement includes:

  • Your NYSLRS ID. To protect your privacy, use this number instead of your Social Security number when conducting business with NYSLRS.
  • The total amount of your annual benefit. (This is your base benefit, before taxes, deductions and credits.)
  • Your total net benefit for the year. (This is your benefit after taxes, deductions and credits.)
  • The total amount of any cost-of-living adjustment (COLA), if you are eligible.
  • Your total Medicare credits (if eligible).
  • Federal tax withholding (if applicable).
  • Other deductions taken from your pension, such as payments to an alternate payee or union dues.
  • Health insurance premiums. (NYSLRS doesn’t administer health insurance benefits, but we deduct retiree premiums at the request of your former employer.)

Next Year Don’t Wait for the Mail

Going forward, your Statement will be available online in early February each year.

Update your delivery preference now to receive an email as soon as next year’s Retiree Annual Statement is available online:

  • Sign in to Retirement Online.
  • From your Account Homepage, click the “update” link next to ‘Retiree Annual Statement by.’
  • Choose “Email” from the dropdown.

If you choose to receive your Statement by email, you will not receive a printed copy in the mail.

Use Retirement Online to Stay Informed

Your Statement is a snapshot of your NYSLRS account as of December 31, 2023. For the most up-to-date information year-round, sign in to Retirement OnlineIf you don’t already have an account, you can learn more or register today.

In Retirement Online, you can view pay stubs for your benefit payments. Check them if you have a question or to track year-to-date totals of your pension benefit as well as any deductions for health insurance, union dues, tax withholding or disbursements under a domestic relations order.

Your Statement is Not a Tax Document

While your Retiree Annual Statement does include information about your benefit payments and tax withholding, it is not a tax document. If your pension is taxable, you should have received a 1099-R tax form (either through your Retirement Online account or by mail, depending on your delivery preference) for filing your taxes.

Retirees: Your 1099-R is Available Online

Retirees: Your 1099-R is Available OnlineTax season is approaching, and with 1099-Rs available online, getting this key NYSLRS tax form is now faster and more convenient than ever.

Most NYSLRS pensions are subject to federal income tax (some disability benefits are not taxable). If you receive taxable income from NYSLRS, we provide a 1099-R tax form for filing your taxes. New this year, retirees who opted to go paperless received an email notifying them their 1099-R is available in their Retirement Online account. If you did not change your delivery preference to email, your 1099-R tax form will be mailed to you by January 31.

Understanding Your 1099-R

A 1099-R tax form is used to report the distribution of taxable retirement benefits. It shows:

  • The total benefit paid to you in a calendar year.
  • The taxable amount of your benefit.
  • The amount of taxes withheld from your benefit.

If you have questions about the information on the form, check our interactive 1099-R tutorial. It walks you through a sample 1099-R and offers a short explanation of each box on the form.

Get Your 1099-R Online Now

Whether you chose email delivery or not, you can access your 1099-R in your Retirement Online account now. To view, save or print your 1099-R:

  • Sign in to Retirement Online.
  • From your Account Homepage, click the “Manage My 1099-R Tax Forms” button.
  • Select “2023” from the dropdown.

If you don’t have an account, you can find step-by-step instructions for registering in the Tools & Tips section of the Retirement Online page.

Changing Your Federal Withholding

After you file your taxes, you may find that you need to adjust the federal taxes that are being withheld from your pension.

Retirement Online is the fast and convenient way to change your withholding information. You can also check your current withholding by signing in to Retirement Online and viewing your most recent pension pay stub. Visit our Taxes and Your Pension page for more information.

Note: New York State doesn’t tax your NYSLRS pension, and we can’t withhold income tax for other states.