Tag Archives: retirement plan

Knowing Your Retirement Plan is the Key to Retirement Planning

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Information is the key to being fully prepared for your retirement years. The single most important thing you can do to achieve this goal is to know what NYSLRS retirement plan you’re in. Once you know that, the next thing you must do is understand the benefits your plan provides.

Your retirement plan booklet covers things like how long you’ll need to work in order to receive a pension, how your pension amount is determined, and what kind of death and disability benefits may be available to you. You can find a copy of your plan booklet on our Publications page.

But here’s the challenge: NYSLRS manages 335 retirement plan combinations, which are described in 51 plan booklets. How do you figure out which is yours?  The information below should help.

Two Key Questions

To get started, you need to answer two questions.

Question One: Which retirement system are you in? NYSLRS is made up of two different systems:

  • The Employees’ Retirement System (ERS), which is for public employees in non-teaching positions. It also includes some law enforcement personnel, such as correction officers, sheriffs and sheriffs’ deputies.
  • The Police and Fire Retirement System (PFRS), which is for paid firefighters and police officers, including SUNY police, State Park police, Encon officers and State Forest Rangers

Question Two: Which tier are you in? There are six tiers in ERS and five tiers in PFRS. Your tier, based on when you joined NYSLRS, determines such things as when you become eligible for benefits and how much you contribute. You can find your Tier on page 2 of your Member Annual Statement (MAS) or you can check the NYSLRS website.

For many members, knowing your retirement system and tier are enough. But for other members, especially those in law enforcement, it may help to have your retirement plan number as well. The plan number indicates the section of Retirement and Social Security Law the plan is based on. For example, Plan A15 indicates that you are covered by Article 15. You can find your plan number on page 4 of your MAS, in the Salary Information section.
Member Annual Statement example

Roughly three-quarters of all ERS members are covered by Article 15; they just need to know their tier to find the correct booklet.

State police , SUNY police , State Encon Officers , State Park Police and Forest Rangers each have their own plan booklet, which can be found in the PFRS section of the Publications page. That’s also where you’ll find the Special 20- and 25-Year Plans , which cover officers in most municipal police departments. (Members in these special plans should see 384, 384-d or 384-e listed in the plan information in their MAS.)

If you are still unsure which retirement plan booklet covers your benefits, you can send us an email using our secure contact form , or you can ask your employer.

Retirement Plan Booklet

Take the Time to Understand Your Retirement Plan

It cannot be stated enough how important it is to read your plan publication to learn all you can about your benefits. It is the key to solid retirement planning. Remember, no one has a more vested stake in your retirement than you do.

Your Checklist to Apply for Retirement

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After months of planning and preparation, you’re ready to apply for retirement. To get your NYSLRS  pension benefit, you need to send in an application. Let’s look at what you should include with the form to help make the retirement process go more smoothly.

Filling Out the Retirement Application

Unless you’re filing for a disability retirement, you’ll need to fill out the Application for Service Retirement (RS6037). As you fill out the form, make sure you:

  • Know your registration number. You can find it on your most recent Member Annual Statement or retirement estimate.
  • Know your past employment. To help ensure you receive the proper credit for your public service, please list your public employment history. Include any military service and memberships in other New York public retirement systems.
  • Include your beneficiary’s information. You won’t make an official beneficiary designation with this form, but including these details will help us give you specific amounts for the pension payment options  that offer a lifetime benefit for a beneficiary.
  • See a notary. The form must be filled out completely and signed by a notary public.

Proof of Birth

Make sure we have proof of your birth date. You can send it with your retirement application or before or after, but we cannot pay pension benefits without it. We accept photocopies of the following as proof:

Other Forms

Option Election

You’ll need to choose your pension payment option, or how you want your pension paid. Option election forms are available on our website, but we will also send you a form after we process your application. If you choose an option that provides your beneficiary a lifetime pension benefit when you die, you must provide proof of your beneficiary’s birth date.

Federal Income Tax Withholding

Your NYSLRS pension isn’t subject to New York State income tax, but it is subject to federal tax. You can fill out a W-4P form  any time to tell us how much to withhold from your monthly benefit. We don’t withhold income tax for other states. Visit the Retired Public Employees Association’s website to see whether your benefit will be taxed in another state.

Direct Deposit

Direct deposit is the fastest and most secure way to receive your pension benefits. You can enroll in our direct deposit program when you file for retirement. Just fill out a Direct Deposit Enrollment Application (RS6370), and return it to us.

Domestic Relations Order

If an ex-spouse is entitled to part of your pension, you should send us a copy of your domestic relations order (DRO) as soon as possible. The DRO gives us specific instructions on how to divide your benefits. We cannot finalize your pension until we review it and calculate the court-mandated distribution of your benefit. For more detailed information, please read our Guide to Domestic Relations Orders.

Questions

If you have other questions about applying for retirement, read our publication, Life Changes: How Do I Prepare to Retire? or contact us.

How Full-Time and Part-Time Service Credit Works

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Service credit plays a vital part in your pension calculation and your eligibility for other NYSLRS benefits. As a NYSLRS member, you earn service credit by working for an employer who participates in the Retirement System. All your paid public employment is creditable. You would not, however, earn credit for any period when you are not receiving a salary, such as an unpaid leave of absence. If you work full-time or part-time, you’re earning service credit, just at different rates.

Earning Service Credit When You Work Full-Time

When you work on a full-time, continuous basis throughout your career, we’ll calculate your total service credit from your date of employment up until the date you leave paid employment. Most full-time workers earn a year of service credit for working 260 work days in a year. For a full-time 12-month employee, 260 work days constitutes a full year. For our members who work for school districts, a full-time 10-month academic year can be 180 work days. (If you work in an educational setting, we covered that in an earlier blog post.)

Earning Service Credit When You Work Part-Time

Your service credit is prorated if you work part-time. Part-time employment is credited as the lesser of:

the number of days worked ÷ 260 days

or

your reported annual salary ÷ (the State’s hourly minimum wage × 2,000)

You can think of it like this: let’s say you work 130 days in a year. If a year’s worth of service credit is earned for working 260 days full-time, you’d earn half a year (0.5) of service credit for your part-time work.

Check Your Member Annual Statement

From May to July, we’ll send out this year’s Member Annual Statements. For most members, your statement will show how much service credit you’ve earned over the past fiscal year (April 1, 2017 – March 31, 2018). It will also show your total service credit as of March 31, 2018. Make sure to look it over to see how much service credit you’ve earned over your career.

For more detailed information about service credit, please refer to your specific retirement plan publication.

Dig into the NYSLRS Summer Reading List

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Looking for some perfect summer beach reading? Why not check out these page-turners from NYSLRS? They’re light on colorful characters and exotic settings. But, what they lack in plot intrigue, they make up for in important retirement information.

summer reading

1.  Service Credit for Tiers 2 through 6

Service credit is one of the main components that determine your NYSLRS pension. Whether you’re a new member or well into your career, it’s important to understand what it is, its role in your pension calculation and the various types of service for which Tier 2, 3, 4, 5 and 6 members can receive credit. ( Read it now. )

2.  Retirement Plan for ERS Tier 3 and 4 Members (Articles 14 and 15)

Nearly 300,000 Tier 3 and 4 members of the Employee’s Retirement System (ERS) are covered by this plan. The publication explains some of the benefits and the services available to you, including a service retirement, a vested retirement, a disability retirement, death benefits and more. ( Read it now. )

3.  Membership in a Nutshell

NYSLRS membership can be overwhelming when you first join. There’s new terminology: What’s a tier or service credit or a final average salary? There are services like loans and benefit projections as well as new responsibilities like keeping your account information up to date. This guide will help you navigate NYSLRS and your new retirement plan. ( Read it now. )

4.  Retirement Plan for ERS Tier 6 Members (Article 15)

More than 130,000 Tier 6 ERS members are covered by this Plan. The publication explains some of the benefits and the services available to you, including a service retirement, a vested retirement, a disability retirement, death benefits and more. ( Read it now. )

5.  Life Changes: A Guide for Retirees

Already retired? As a NYSLRS retiree, you know that you will receive a monthly retirement benefit for life. However there may be other benefits available to you, as well as services that we provide retirees. This guide will answer many of the questions you may have and explain your responsibilities as a retiree. ( Read it now. )

Not covered by the retirement plans above? Maybe you’re a police officer, a firefighter, a sheriff or a correctional officer. Find your plan as well as publications covering other general topics of interest on our Publications page. They’re great reading any time of year.

Start Saving for Retirement Now

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More than 40 percent of Millennials are not saving for retirement at all, according to one recent study.

If you’re in your 20s or 30s and have nothing saved for retirement, now is a good time to get started. Even if you can’t save much, starting early gives your money time to grow. And getting started is probably easier than you think.

A simple savings plan

Let’s say you put $10 per week into a retirement account. That’s just $2 per workday. Let’s also say you invest your savings in a stock fund, which yields an average annual return of 7 percent, compounded annually. (That’s actually pretty conservative based on past market performance.) After 30 years, you’d have $50,000. Not bad for a couple bucks a day.

Of course, you’ll want to save more over the course of your career, but the important thing is getting started early. That’s because your future investment returns will be based not just on the money you invest, but on the returns on those investments as well.

Deferred Compensation – an easy way to save

For public employees, New York State Deferred Compensation Plan is a good place to start.

Deferred Comp is a 457(b) retirement plan created for New York State employees and employees of participating agencies. (It is not affiliated with NYSLRS.) If you are a NYSLRS member but do not work for New York State, check with your employer to see if you are eligible.

Deferred Comp makes withdrawals directly from your paycheck, so once you sign up, you don’t even have to think about it. They also offer packaged investment plans, so you don’t have to be a financial wizard to participate, or you can create a customized investment plan.

The important thing is to get started. Then watch your money grow.

Know Your Benefits: Your NYSLRS Pension

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Generally, three main components determine your NYSLRS pension: your retirement plan, your final average salary (FAS) and your total service credit.

Your Retirement Plan

NYSLRS retirement plans are established by law. Your plan lays out the formula we’ll use to calculate your pension as well as eligibility requirements. It’s important to read your plan booklet, which you can find on our Publications page.  If you aren’t certain what retirement plan you’re in, check your Member Annual Statement or ask your employer.

NYSLRS Pension Chart

Final Average Salary

Your FAS is the average of your earnings during the set period of time when they were the highest. For ERS and PFRS members in Tiers 1 through 5, that period is three consecutive years; for Tier 6 members, it’s five consecutive years. Some PFRS members may be eligible for a one-year period, if their employer offers it. We will use your FAS, age at retirement, total service credit and the formula from your retirement plan to calculate your NYSLRS pension.

Generally, the earnings we can use for your FAS include regular salary, overtime and recurring longevity payments earned within the period. Some payments you receive won’t count toward your FAS, even when you receive them in the FAS period. The specifics vary by tier, and are listed in your retirement plan booklet.

In most cases, the law also limits how much your pensionable earnings can increase from year to year in the FAS period. Earnings above this cap will not count toward your pension.

Our Your Retirement Benefits publications, (ERS and PFRS), provide the limits for each tier and examples of how we’ll determine your FAS.

Service Credit

Service credit is credit for time spent working for a participating public employer. For most members who work full-time, 260 workdays equals one year of service credit. Members who work part-time or in educational settings can refer to their retirement plan publication for their service credit calculation.

Service credit is a factor in the calculation of your NYSLRS pension. Generally, the more credit you have, the higher your pension will be. Some special plans (usually for police officers, firefighters or correction officers) let you retire at any age once you’ve earned 20 or 25 years of service credit. In other plans, if you retire without enough service credit and don’t meet the age requirements of your retirement plan, your 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. You can sign in to Retirement Online or check your latest Member Annual Statement to see the total amount of service credit you’ve earned. You may also want to take a look at our budgeting worksheet or try our Benefit Projector Calculator as you plan for your retirement.

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

Can I Change My Beneficiary After I Retire?

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That depends. Some beneficiary decisions are irrevocable, while others can be changed at any time.

Some options, such as Five Year and Ten Year Certain, allow you to change your beneficiary after you retire. But if you choose an option that provides a lifetime benefit to a survivor, you cannot change your beneficiary even if your beneficiary dies before you do. For details, visit the Payment Option Descriptions page on our website.

But there are other possible death benefits for which NYSLRS retirees can name beneficiaries. Available death benefits and eligibility requirements vary by tier and retirement plan. You can find your retirement plan information on our Publications page.

NYSLRS retirees may have up to three types of death benefits that could provide a benefit for a beneficiary: pension payment option, survivor's benefit, and post-retirement death benefit.

When you retire, you must choose a payment option for your NYSLRS pension. If your choice is Single Life Allowance, there is no pension beneficiary. But other payment options provide a reduced monthly benefit in exchange for a possible payment to a beneficiary after the retiree’s death.

If you were employed by New York State, you may be eligible for a survivor’s benefit of up to $3,000. You do not need to sign up for this benefit; you are automatically enrolled if you are eligible. If you choose a pension payment option with a beneficiary, that person will also be the beneficiary for your survivor’s benefit. If your beneficiary dies before you do, you may select someone else as beneficiary for the survivor’s benefit. If you choose the Single Life Allowance option, you must name a beneficiary for your survivor’s benefit, and you may change this designation at any time.

What about after Retirement?

You may also be eligible for a post-retirement death benefit, which would be a percentage of the death benefit that was payable at retirement. (This benefit is generally not available to Tier 1 members or members in special retirement plans that allow for retirement after 20 or 25 years of service, regardless of age.) The beneficiary of your post-retirement death benefit does not have to be the same as your pension payment-option beneficiary. And you can change the beneficiary designation for your death benefit at any time.

The easiest way to check and update your beneficiary information for the post-retirement death benefit is with Retirement Online. You can also change your beneficiary by submitting a Designation of Beneficiary (RS5127) form.

Divorced? Some things to consider

Please note: If you are divorced, you may be required to choose a retirement option that provides continuing benefits to your ex-spouse after your death. Also, the beneficiary designation for certain benefits, including the survivor’s benefit, can be revoked when a divorce becomes final. For more information, please read the publication Divorce and Your Benefits on our website.

Top Five Pre-Retirement Goals for NYSLRS Members in 2018

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January is a great time to set goals for the coming year. And setting pre-retirement goals is crucial in planning for a successful retirement. Here are five goals to consider for 2018:

Plan ahead for retirement

1. Choose a sensible savings plan that works for you.There are several ways to save for retirement, including starting a deferred compensation plan like the New York State Deferred Compensation Plan. An important part of developing a savings plan is to start early. The sooner you start saving, the more time your money has to grow. Check out our Weekly Investment Plan chart to see how a weekly investment can grow by age 65.

2. Track your expenses and income. Tracking your current expenses for a month or two will give you a better idea of how much you’re likely to spend in retirement and how much you’ll need to supplement your pension. Use the expense and income worksheets on our website to create a retirement budget. Be sure to include periodic expenses, such as car insurance and property taxes.

3. Request a pension estimate. If you’re within 18 months of your anticipated retirement date, it’s a good idea to request an estimate of what your retirement benefit will be. You can do this by sending us an email using our secure contact form or by calling 1-866-805-0990 (518-474-7736 in the Albany, NY area). If you are not certain that you’ve received credit for all your public service in New York State, you can submit a Request for Estimate form (RS6030) and be sure to provide detailed information about your public employment in section eight of the form. If your planned retirement date is farther away, you may want to use our online Benefit Calculator. This estimates your pension based on information you provide, so have your Member Annual Statement handy before you start, or sign in to your Retirement Online account to check your current service credit.

4. Pay off any NYSLRS loans. An outstanding loan balance at retirement will permanently reduce your NYSLRS retirement benefit. You cannot make loan payments after you retire, and the pension reduction does not go away after we recover the balance of the loan. Visit the Loans page on our website for information about making additional payments or increasing your loan payment amount.

5. Consider seeking the advice of a financial planner. Financial planners don’t manage your money, but can help you assess your present financial condition and develop a practical plan to meet your specific goals and needs. Also consider doing your own research by seeking Do-It-Yourself financial planning guides on the web.

If you ever have any retirement-related questions, please contact us.

After You Retire

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We’ve written a lot about preparing for retirement — how you should purchase any credit for past service, get a pension estimate, prepare a retirement budget, and more. But, what about after you retire? Are you finished with your NYSLRS To-Do List once you’re a retiree?

Not exactly.

Sign Up for Retirement Online

We recently launched the new Retirement Online, a secure site that allows you to check important NYSLRS information, like the deductions from your latest payment and a summary of your benefits. You can also view or update beneficiaries and generate income verification letters right from your computer.

To access Retirement Online, visit the NYSLRS home page, then click “Register” or “Sign In.”

If You Move, Let Us Know

The United States Postal Service usually won’t forward pension checks to another address. (You may want to sign up for our direct deposit program.) But, pension payments aside, there are other things you’ll want from us once you retire. If we have your correct address on file, you’ll be sure to receive:

  • Your 1099-R form. Your pension isn’t taxed by New York State, but it is subject to federal income tax.
  • Your Retiree Annual Statement. It’s a helpful reference that spells out the benefits, credits and deductions you receive each year.
  • Any official notifications.
  • Your Retiree Notes

The fastest way to update your address is through Retirement Online. You can also mail a signed letter (with your name, old address, new address, date of change and retirement registration number) to:

NYSLRS
Attn: Pension Services
110 State Street
Albany, NY 12244-0001

Keep Your Beneficiaries Current

Reviewing your beneficiary designations periodically is important. By keeping them up to date, you ensure that any post-retirement death benefit will be distributed to your loved ones according to your wishes. You can use Retirement Online to change your death benefit beneficiaries at any time. Or, contact our Call Center, and we will send you the necessary form. If you aren’t retired yet, submit a Designation of Beneficiary form (RS5127).

Keep Your Loved Ones Informed

Your family or friends have to know to notify us when you die, so we can pay out any benefits to your designated beneficiaries. They can phone our Call Center or notify us by mail. Either way, we will also need a certified copy of your death certificate. You and your loved ones can find more information in our Getting Your Affairs in Order and a Guide for Survivors (VO1874) publication.

Life Changes: A Guide for Retirees (VO1705)

Check out this publication for information about other benefits you may be entitled to and the services we offer retirees.

Sunshine on the Retirement Savings Horizon

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Headlines in recent years offer a stormy retirement forecast: “Americans Get a Grade C in Retirement Readiness,” “More Than Four in Ten Households Wrong About Retirement Readiness,” “The Shockingly Small Amount Americans Have in Retirement Savings.”

Unfortunately, research and statistics tend to back up these dire warnings. According to the Pew Charitable Trusts, a significant portion of Americans — 42 percent — lack access to an employer-sponsored retirement plan such as a 401(k), 403(b) or 457(b). Among those whose employers do offer a plan, only 49 percent actually participate.

In fact, research from the Federal Reserve suggests that 28 percent of people who haven’t retired yet have no retirement savings whatsoever. So, it’s not surprising that a report from the Schwartz Center for Economic Policy Analysis predicts that the “number of 65-year-olds per year who are poor or near poor will increase by 146 percent between 2013 and 2022.”

The Good News

There is promising news about retirement, though, if you look for it. Americans — particularly Millennials (those born 1979 through 1996) — are starting to save for retirement much sooner than previous generations. According to the TransAmerica Center for Retirement Studies, Millennials begin to put away for retirement at a median age of 22. Generation X workers waited until 27, and Baby Boomers didn’t start until age 35.

Sunshine on the Retirement Savings Horizon

Perhaps this earlier focus on saving is responsible for other good news. For example, Fidelity Investments reports record 401(k) balances in 2016: $92,500 at the end of the fourth quarter, which is up $4,300 from 2015. And, earlier this year, the Employee Benefit Research Institute found that 55.4 percent of investors — more than ever before — are maxing out their individual retirement account (IRA) contributions.

That said …

Americans do have a retirement problem. New York State Comptroller Thomas P. DiNapoli speaks regularly about the need for policies at the state and federal levels of government to ensure retirement security for everyone, including workers in the private sector.

As individuals, the solution is simple: We need to save, and we need to start early. NYSLRS members have the rare advantage of a well-funded, defined-benefit pension. However, your pension and Social Security benefits are only part of a well-rounded financial plan. Consider contributing to a New York State Deferred Compensation Plan (NYSDCP) account. NYSDCP is a voluntary retirement savings plan — similar to private sector 401(k) or 403(b) plans — created for employees of New York State and other participating employers. If you work for a local government employer, please check with your human resources administrator to find out what savings plans are available to you.