What is a Defined Benefit Plan?

As a NYSLRS member, you are enrolled in a defined benefit plan, also known as a traditional pension plan.

How a Defined Benefit Plan Works

Defined benefit pension plans provide a specified payment amount at retirement. If you are vested and retire from NYSLRS, you will receive a monthly pension payment for the rest of your life. Your pension will be calculated using a preset formula based on your earnings and years of service. Your individual contributions to NYSLRS will not affect the pension you receive when you retire.

Defined benefit plans are supported by contributions from both members and employers. With defined benefit plans, retirement assets are pooled and the investment risk is shared. These plans are usually administered by professional managers, whose long-term investment strategies help to reduce the impact of market turmoil. NYSLRS employs an experienced group of investment managers.

The biggest contributor to your pension plan is the New York State Common Retirement Fund. Over the past 20 years, the Fund’s investment returns have covered 75 percent of the cost of pensions.

understand your defined benefit plan

Defined Contribution Plans — And Their Risks

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

With a defined contribution plan, the employee, the employer or both make contributions to an individual retirement account for the employee, and the money in the account is invested. In most cases, the employee decides how and where the money is invested (or the plan may offer pre-packaged investment options). At retirement, the employee will be able to draw from the accumulated value of contributions and investment returns, minus any fees.

The amount of money the employee has at retirement depends on the investment returns of the individual account. So, market downturns, especially near retirement, can negatively affect the value of the benefit. Employees depending on defined contribution plans run the risk of outliving their savings.

NYSLRS’ Defined Benefit Plans

NYSLRS administers more than 300 retirement plan combinations, but all of them are defined benefit plans and share certain features. NYSLRS plans:

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

We strongly encourage you to review your retirement plan publication for a complete description of your benefits. To find your retirement plan publication, visit our Find Your NYSLRS Retirement Plan Publication page and follow the steps listed.

Advantages of Defined Benefit Plans

Defined benefit plans provide important advantages for state and local government employers. For one, offering these plans makes it easier to recruit and retain qualified employees, particularly police officers, fire fighters and teachers. Employers can also reduce the risk of employee turnover, which could help cut training costs and improve productivity.

Defined benefit plans also help support state and local economies, because they provide a steady, reliable stream of retirement income for many retirees across New York and the nation.

Read more about the advantages of defined benefit plans.

28 thoughts on “What is a Defined Benefit Plan?

  1. Carolyn Brown

    I was married to a CO who retired and named me as beneficiary on his pension, I believe he took a Pop-up plan, once these plans are in placed can they be changed?, if so how can I find out.

    1. NYSLRS

      Under most pension payment options, including Pop Up Joint Allowance options, changes must be made within 30 days after the pension benefit becomes payable. After the 30-day window is over, the retiree cannot change the payment option or beneficiary. Please note, a beneficiary of a Pop-Up Joint Allowance will not receive any payments until after the retiree’s death.

    1. NYSLRS Post author

      Most NYSLRS retirees are eligible for a post-retirement death benefit if they retire directly from payroll or within one year of leaving covered employment. The post-retirement benefit is a percentage of the benefit that was available during your working years.

      Death benefits vary by tier and retirement plan. You can find general information about death benefits on our website.

      For account-specific information about your death benefits, please contact our customer service representatives using our secure email form. Filling out the secure form allows them to safely contact you about your personal account information.

      Please note that NYSLRS death benefits are not the same as life insurance. The first $50,000 of a death benefit is paid as group term life insurance, which is currently not taxable. Any death benefit payment over $50,000 is reportable for federal income tax purposes.

    1. NYSLRS

      You can sign in to Retirement Online to review the information we have on file for you, such as your estimated total service credit, and use the online benefit calculator to estimate your pension.

      If you still have questions about your account or need help with Retirement Online, please call our customer service representatives at 1-866-805-0990, press 2, then follow the prompts.

      You can also send your question using the secure contact form on our website. Filling out the secure form allows our customer service representatives to safely contact you about your personal account information.

  2. Nancy

    I’m retiring in 10 months. I would like to come in person to the Albany location to meet with someone instead of retiring by phone/email.

    Can I make an appointment to come in person to the Albany retirement location a few months before I plan to retire?

    1. NYSLRS Post author

      Retirement consultation services are available by appointment. We are scheduling a limited number of in-person consultations in the Albany. To schedule a consultation, please call 866-805-0990 (or 518-474-7736 in the Albany, NY area), press 2, then follow the prompts.

  3. Anthony C

    i am 43, 3 years with the state ( and prior to transfer to state 7 years with the City of NY), when do vest ( i am tier 6) and am i able to retire at 55 ( and receive the traditional pension?) or wait til i get to 60, or 62 or 65?

    1. NYSLRS

      For information about your NYSLRS benefits, please email our customer service representatives using our secure email form. Filling out the secure form allows them to safely contact you about your personal account information.

    1. NYSLRS Post author

      NYSLRS does not administer health insurance programs. Please contact your employer’s health benefits administrator for questions about post-retirement coverage.

    2. Kevin Shearer

      No. Health Insurance is administered by CSEA./Health Benefits Administrator and any cost you pay for this coverage is deducted from your monthly pension amount prior to bank deposit.or so it was when I retired in 2013.

      1. Elio Giuliani

        Hi Kevin: That is NOT true for all retirees. Health insurance is contracted for retirees by Union Contracts (there are many unions for workers in NY municipalities) but not every municipality has Health Insurance administered by CSEA. Making a blanket statement like that is not productive to all who participate in these discussions. I am surprised that NYS LRS did not moderate that with a clarification. I am a huge advocate for CSEA but what you stated is not true for all retirees. Thanks


    what exactly it shows mandatory contribution on the retirement statement. I am tier 4 employee 30 plus years and contributed only during the first 10 years. Can you explain this?


    1. NYSLRS

      Your Member Annual Statement shows the contributions you have made to NYSLRS, plus interest.

      Most NYSLRS members contribute a percentage of their earnings to the Retirement System to help fund retirement benefits. Your pension will not be based on your individual contributions to the Retirement System. Your pension will be based on a preset formula that takes into account your earnings and years of service.

      The contribution balance determines the amount you would be eligible to borrow if you decided to take a NYSLRS loan. Also, if you were to die in service, the balance would be paid to your beneficiary, in addition to any death benefit you are eligible for.

  5. timothy p burpoe

    what are you looking for when you ask for:
    “EFT Details” and
    What are “acceptable Proof of Date of Birth”
    a little more of an explanation would be very helpful

    1. NYSLRS Post author

      EFT stands for electronic funds transfer (direct deposit). Acceptable proofs of date of birth include a birth certificate, a New York State driver’s license, a passport, a baptismal certificate and naturalization papers.

      If you are applying for retirement using Retirement Online, click “Help” on the top of the page to access a step-by-step guide. If you still need help, please email our customer service representatives using our secure email form. Filling out the secure form allows them to safely contact you about your personal account information.

  6. Valerie Franz

    5 yrs is a long time to wait …especiallt since we are expecting high inflation next year…since I retired mid summer 2020… I now hav to wait 4.8… .great…

    1. NYSLRS

      Once a retiree becomes eligible for COLA, they automatically receive an annual COLA increase each September.

      Eligible retirees received a 1.4 percent COLA increase for 2021 beginning with their September pension payments. Please read our blog post for information on COLA eligibility.

  7. elio giuliani

    Very, very, very thankful we have the GREAT NYS Defined Benefit Pension Plan now that we are all retired.
    Thank you, Tom DiNapoli and staff, for defending Strong Pensions and our type of plan.
    Smiling big here !

      1. Elio Giuliani

        By the way, I would never post my personal questions here on this blog when there are NYS Pension system workers ready to answer any questions at the 1-866-505 0990 phone line during working hours Mon – Friday.

        They have been very helpful in explaining all the NYS legislated rules and policies regarding our NYS Pension to me as a new retiree after working over 30 years.
        I write this after reading the dozens of questions on your COLA blog post from August 2021.
        Thank You all !

    1. Lois Schwarze

      Yes Elio, I agree!!!
      Very grateful. They invested our money wisely over the years.
      Also, since civil servants, (for most of us), worked hard for their pay and for pay that was far less than that of corporate, we deserve this pension….35 years plus now and counting down!

      1. Larry Muhammad

        Lois if you are over 55 years old my friend you are losing money sir! You worked very hard to give it all back. Retire soon as you can and congrats on serving 35 years!!


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