Advice on Advance Payments

After you retire, we start calculating the amount of your final retirement benefit. This means you won’t receive your full pension payment right away. It often takes time for your former employer to provide us the specific information we need to determine your final retirement benefit, such as your employer’s certification of your unused vacation and sick leave credits. So, for the first few months of your retirement, your first payments will be advance payments.

What Are Advance Payments?

Advance payments are based on your most recent NYSLRS retirement estimate. They provide up to 95 percent of the retirement option you elected. You’ll continue to receive advance payments until we finalize your benefit. Currently, our pension calculations can take up to five months to complete, though every case is different; if we requested more information from you or your employer, it may lengthen the amount of time it takes to complete your retirement case.

Advance payments are always paid via check and are mailed to the address we have on file for you. Make sure we have the correct address for you when you retire.

When Can I Expect My First Advance Payment?

The month you retire determines when advance payments would start. The table below shows the schedule of mailing days for a new retiree’s first advance payment.

Date of Retirement Date First Advance Payment is Mailed
January 1-31 1st business day of March
February 1-28 (29) 1st business day of April
March 1-31 1st business day of May
April 1-30 1st business day of June
May 1-31 1st business day of July
June 1-30 1st business day of August
July 1-31 1st business day of September
August 1-31 1st business day of October
September 1-30 1st business day of November
October 1-31 1st business day of December
November 1-30 1st business day of January
December 1-31 1st business day of February

What Happens Once My Pension is Finalized?

Once your monthly pension is finalized, we’ll send you a retroactive payment to make up the difference between the advance payments you’ve received and the amount actually due (minus federal withholding). You’ll also receive a letter explaining how we calculated your final retirement benefit, and what your final monthly benefit will be for life.

Once you receive your retroactive payment, you’re officially part of the regular pension disbursement schedule. If you signed up for direct deposit, your monthly pension payment will be deposited directly into your bank account on the last business day of the month. If you didn’t sign up for direct deposit, you’ll receive a pension check, which is mailed out on the second-to-last business day of the month.

If you have questions about what to expect once you retire, check out our Life Changes: A Guide for Retirees publication, or contact us.

Rejoining NYSLRS After Retirement

It’s a scenario you probably haven’t thought of – if you retire from public employment and later decide to go back to work in the public sector in New York, you actually have the option of rejoining the New York State & Local Retirement System (NYSLRS). However, the Retirement and Social Security Law (RSSL) regulates post-retirement employment for NYSLRS members, which could affect your pension benefits.

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Note: This post applies only to service retirees of the Employees’ Retirement System (ERS) or the Police and Fire Retirement System (PFRS) who are rejoining the same System. Different information applies to:

  • Retirees of other retirement systems
  • Persons joining a different retirement system than the one they retired from
  • Disability retirees

Rejoining NYSLRS

First, it’s important to know that you don’t have to rejoin NYSLRS. But if you do, Tier 3, 4, 5 and 6 retirees may rejoin immediately and return to their former tiers. As for Tier 1 and Tier 2 retirees, they must have one year of service after re-entering employment to be eligible for an active member death benefit. Deferring joining the retirement system for one year can protect you until you are eligible for the active member death benefit, meaning you would still be covered by any post-retirement death benefit and option under which you retired while in deferment. There could be a cost associated with the deferment.

Retiring Again

When you retire again, a new retirement date will be established. However, a new retirement date can:

In addition, if you have previously retired under an early retirement incentive plan enacted by the Legislature and your pension is recalculated, you would lose any incentive service included in the calculation of your original benefit.

If you’re a member of Tier 2, 3, 4, 5 or 6 and earn less than two years of service credit in your new membership, your original pension will be reinstated along with your option election and date of retirement. You won’t receive an additional benefit for the service credit earned after your return to membership. If you’re a Tier 1 member, your original pension will be reinstated and you’ll receive an additional benefit based on your service after the return to membership.

Once you earn two or more years of service credit in your new membership, you’ll have the option to receive a recalculated pension that takes into account your original service credit, the additional service credit you earned, and any increase in salary. You may also select a new option for benefit payments, if you wish.

But in order to receive a recalculated benefit that includes your additional service, you’ll have to repay, at the Single Life Allowance (Option 0) rate, the entire amount of the pension that you received when you first retired. The amount, plus interest compounded, must be repaid in either a lump sum or through installments after you have two years of service credit in the new membership and before you retire again. Interest continues to accrue compounded until the balance is paid in full. Alternatively, you could request a permanent reduction of the new pension to account for any benefits previously received. If you choose the permanent reduction, it must be done at retirement and will include interest compounded from the date you received the monies in the first retirement until your second date of retirement.

Members with two or more years of service credit who do not wish to repay previous benefits and receive a recalculated pension will have their original pension reinstated and will receive an additional benefit based on their service after the return to membership.

Where Can I Learn More About Post-Retirement Employment?

If you are seriously considering rejoining the Retirement System, we strongly urge you to contact us to discuss the matter more fully and to obtain additional information.

Since rejoining the Retirement System after returning to work may prove financially prohibitive, you might want to consult a financial advisor before making any decision. Please read our publication, Life Changes: What If I Work After Retirement?, for more information. You can also find information about Section 211 and Section 212, laws that can also affect your return to public employment.

What Unused Sick Leave at Retirement Might Mean For You

Members of the New York State and Local Retirement System (NYSLRS) may receive additional service credit for their unused, unpaid sick leave at retirement. If you’re a New York State employee, or if your employer has adopted Section 41(j) for the Employees’ Retirement System (ERS) or 341(j) for the Police and Fire Retirement System (PFRS) of the Retirement and Social Security Law, you may be eligible for this credit.

How It Works*

Your unused, unpaid sick leave may add up to 165 days (7½ months) to your service credit. The credit is calculated on a 260 annual workday basis—165 days divided by 260 days equals 7½ months—so you may receive an added credit of .63 of a year.

The additional credit for most ERS members can’t exceed 165 days. Most Tier 6 ERS members can receive up to 100 days (.38 of a year) of additional credit. For State employees in certain negotiating units, up to 200 days of unused, unpaid sick leave (.77 of a year) may be credited.

Also, depending on your employer, your unused sick leave may be used to cover some of the costs of your health insurance premiums during your retirement. (Please check with your employer for more information.)

*This section was revised on 12/5/14.

Calculation Example

If you have 130 unused, unpaid sick leave days when you retire, we would divide 130 by 260 and you would get .50 of a year, or 6 months, additional service credit.

Restrictions

While you may receive additional service credit for your sick leave under Sections 41(j) or 341(j), there are some restrictions. Credit for unused sick leave at retirement can’t be used to:

  • Qualify for vesting. For example, if you have nine years and ten months of service credit and you need ten years to be vested, your sick leave credit cannot be used to reach the ten years.
  • Qualify for a better retirement benefit calculation. For example, if you have 19¾ years of service credit, but your pension will improve substantially if you have 20 years, your sick leave credit cannot be used to reach the 20 years.
  • Increase your pension beyond the maximum amount payable under your retirement plan.
  • Meet the service credit requirement to retire under a special 20- or 25-year plan.

Check your retirement plan booklet for more information about this benefit. You can also check page 4 of your Member Annual Statement to see if this optional benefit is available to you.

Contributing Towards Your Retirement

What are Member Contributions?

Most New York State and Local Retirement System (NYSLRS) members contribute a percentage of their gross earnings to the New York State Common Retirement Fund (Fund). These member contributions, in addition to employer contributions and investment earnings, help make sure the Fund stays well-funded to support the retirement benefits earned by members and retirees.

Types of Member Contributions

Membership-Contributions_TimelineYour tier and retirement plan determine if you must contribute and what percentage of your earnings you contribute. At NYSLRS, there are two types of member contributions: required and voluntary. If you belong to a retirement plan with required contributions, you must make member contributions for the length of time stated in your retirement plan. If you make voluntary contributions, you belong to a retirement plan where you don’t have to make contributions, but you can volunteer to make contributions.

To help you understand how much you are supposed to be contributing, here is some useful information regarding contributions, broken down by what system you are in:

Employees Retirement System (ERS)

  • Most ERS Tier 1 and 2 members are not required to contribute, but may contribute voluntarily. ERS Tier 1 and 2 members receive an annuity based on their voluntary contribution balance in addition to their pension at retirement.
  • All ERS Tier 3 and 4 members are required to contribute 3 percent of their gross earnings until they’ve been NYSLRS members for ten years, or have ten years of service credit (whichever comes first).
  • ERS Tier 5 members are required to contribute 3 percent of their gross earnings for their entire career.
  • ERS Tier 6 members are required to contribute for their entire career a specific percentage of their earnings based on their salary.

ERS Exceptions

  • Though most ERS Tier 5 and Tier 6 members are required to contribute for all their years of service, the contributions of State Correction Officers in these tiers are limited to 30 years of service.
  • ERS Tier 5 Uniformed Court Officers and Peace Officers employed by the Unified Court System must contribute 4 percent of their salary for all their years of public service.

Police and Fire Retirement System (PFRS)

  • Most PFRS Tier 1 and Tier 2 members, as well as PFRS Tier 3 (Article 11) members, are not required to contribute, but may contribute voluntarily.
  • PFRS Tier 3 (Article 14) members must contribute 3 percent of their gross reportable earnings for 25 years or until retirement (whichever comes first).
  • PFRS Tier 6 members are required to contribute a specific percentage of their earnings based on their salary for their entire career.

PFRS Exceptions

  • Though most PFRS Tier 5 members must contribute 3 percent of their gross reportable earnings for all their years of public service, PFRS Tier 5 members enrolled in a retirement plan limiting the amount of creditable service they may accrue will not be required to contribute once they reach the maximum amount of service allowed by their plan.
  • If a union-negotiated collective bargaining agreement in effect on January 9, 2010 required an employer to offer a 20- or 25-year plan, any new employees who join while that agreement is in place will not have to contribute.

The Difference Between Defined Benefit Plans and Defined Contribution Plans: A NYSLRS Perspective

According to a report from the National Institute on Retirement Security (NIRS), when given the choice between a defined benefit or defined contribution plan, public employees overwhelmingly choose the defined benefit pension plan. As New York State & Local Retirement System (NYSLRS) member, you’re covered by a defined benefit plan.

Defined Benefit Plans

At a glance: Selected differences between defined benefit plans and defined contribution plans.

According to the Internal Revenue Service (IRS), defined benefit plans provide a fixed, pre-established benefit for employees at retirement. The defined benefit plans administered by NYSLRS:

Defined Contribution Plans

The IRS describes a 401(k)-style defined contribution plan as a retirement plan in which the employee can make contributions from his or her paycheck either before or after tax, depending on the options offered in the plan. The contributions go into a 401(k) account, with the employee often choosing the investments based on options provided under the plan. In some plans, the employer also makes contributions such as matching the employee’s contributions up to a certain percentage. The most common employer matching contribution is 50 cents for the first 6% saved by the employee.

If an employee changes jobs, he or she can choose what to do with account. The employee can:

  • Leave the 401(k) money where it is;
  • Roll it into an Individual Retirement Account or another 401(k); or
  • Cash out the account.

At retirement, the retiree is usually left to decide how to spend his or her retirement savings based on the balance in his or her account. Since the value of the account will fluctuate due to investment gains and losses, unlike a defined benefit plan, defined contribution plans may not provide a reliable monthly benefit at retirement.

In addition, defined contribution plans do not provide death and disability benefits to survivors. If they are provided, the employee may be required to make extra contributions to a structure outside the defined contribution plan.

Cost Effectiveness Comparison

Numerous studies have shown that defined benefit plans cost less in the long run than 401(k)-style defined contribution plans and perform better. In fact, according to the model in a recent NIRS report, defined benefit plans cost 46% less than individual 401(k)-type defined contribution plans for several reasons:

  • Defined benefit plans avoid longevity risks. An individual investor in a defined contribution plan needs to plan for a long life expectancy, and must save at a rate that ensures that their funds will last well into their nineties to avoid running out of money. Defined benefit plans save for average life expectancy. As a result of this longevity risk pooling, defined benefit plans achieve a 15% cost savings over defined contribution plans.
  • Defined benefit plans can maintain an optimal asset allocation. Financial advisors urge individual investors to make higher risk investments with higher returns when they are younger, and shift to lower risk investments with lower returns as they age so their funds will last through their retirement. But because defined benefit plans do not age, unlike the individuals in them, they are able to take advantage of the enhanced investment returns that come from a balanced portfolio over long periods of time.
  • Defined benefit plans achieve higher investment returns. Professional management and lower fees result in a 1% annual increase in investment returns over an individual’s career. That amounts to a 26% cost savings for defined benefit plans over defined contribution plans.

By administering a reliable, cost efficient and sustainable defined benefit plan, NYSLRS provides its members with the means to help ensure their financial security in retirement. To find out the specifics about your retirement benefits, please read your retirement plan publication.

Countdown To Retirement: What to Do 1-3 Months Before Your Retirement Date

Countdown-to-Retirement_1_3-MonthsThere are important things you need to do in the final months leading up to your retirement date. Our Countdown to Retirement Series can help you remember what to do and when to do it.

Last time, we discussed what you should do when you’re 4 to 6 months away from retirement. This final post in our series talks about filing your retirement application and what else comes afterwards.

Filing for Retirement

Your Application for Service Retirement (RS6037) must be on file with us 15–90 days before your retirement date. You can get the form from our website, our Call Center, one of our consultation sites, or from your employer. Make sure to enter all requested information on the form and have it notarized.

If you mail it by Certified Mail – Return Receipt Requested, we will consider your application filed on the date it was mailed. Complete filing instructions are on the form. Please don’t give your application to your employer.

Next Steps

We’ll mail you a confirmation letter after we receive your application. You’ll also receive forms that you’ll need to complete and send back to us:

*If you haven’t received a NYSLRS retirement estimate in the last 18 months, we’ll send you an option election form and an estimate separately.

Choosing Your Option Election

Select a retirement option based on your most recent estimate – you can see what your pension benefit could be based on the different options available to you. All of the options provide you with a monthly benefit for life, and some provide for possible payment to a designated beneficiary upon your death. You must file this form by the last day of the month in which you retire (unless otherwise notified).

Make Sure You’re Prepared

As you near your retirement date, it’s important to have an understanding of what will happen once you send in your retirement application. Think about scheduling a retirement consultation at one of our offices before you file for retirement. You can also contact us if you have any other questions.

How Elected & Appointed Officials Report Time Worked

Regulation requires elected & appointed officials to keep track of their time

Source: Wikipedia Photo: UpstateNYer CC BY-SA 3.0

As an elected or appointed official, the time you work for your public employer gets reported to us as paid service, and we use that data to determine your service credit towards retirement. However, some elected and appointed officials usually don’t work a fixed schedule or have preset hours like other NYSLRS members, so determining the time they’ve worked is a little bit more involved. In recognition of Election Day and the new terms and appointments that will result of it, let’s take a look at the member responsibilities of our elected and appointed officials.

The Record of Activities

Elected and appointed officials have been required to record and submit a record of work-related activities (ROA) to their employers since 1976. The ROA is a daily detail of hours worked and duties performed by the official, including official duties performed outside normal business hours. Activities can include attending an employer-sponsored event, addressing constituent concerns and responding to an emergency. Activities that would not be considered work-related include time attending electoral and campaign events, time spent socializing after town board meetings, attendance at a candidates forum, and on-call time.

To help ensure that elected and appointed officials receive appropriate service credit, changes and additions to the process of reporting elected and appointed official went into effect in August 2009. Elected or appointed officials who do not participate in a time and attendance system that tracks or verifies their actual work hours now must prepare a record of their work-related activities for three consecutive months within 150 days of the start of a new term or appointment.

The old requirements stated that elected and appointed officials only had to prepare a one-month ROA of time worked, or that they were required to submit their ROAs to a legislative body. Now they’re specifically required to submit the ROA to the clerk of the legislative body and others for their review. The ROA enables their employer to provide us with accurate information about the days they’ve worked so that their retirement service credit will be correct.

For more detailed information about the reporting of elected and appointed officials, feel free to visit our website at http://www.osc.state.ny.us/retire/members/member_elected_appointed/index.php

Preparing for Retirement: Part Seven — Choosing Your Retirement Option

After many months of retirement planning, finally filing your retirement application is a major milestone. But your retirement process isn’t finished yet – you still need to choose your NYSLRS retirement option. When choosing your retirement option, it’s important to think about what your needs will be in retirement so you can pick how you’d like your monthly pension benefit paid to you.

Retirement Planning — Choosing Your NYSLRS Retirement Option

The Preparing for Retirement 7-part video series discusses the main aspects of retirement planning to help NYSLRS members nearing retirement make good, informed decisions for the future. In Part Seven – Choosing Your Retirement Option, you’ll go over what an option election is and how you can learn more about them before making your decision.

Important Links for Retirement Planning

Where to Find More Retirement Planning Information

If you are close to retirement and have more questions, consider scheduling an appointment to meet with an information representative at one of NYSLRS’ consultation sites in New York State. Even though the Preparing for Retirement video series is complete, you can always review previous retirement planning videos like:

When You’re Retired

Our website has many resources to help you prepare for retirement, but don’t forget to check back with us after you retire. Our Retiree home page can keep you informed about pension payments, tax information and other relevant retiree news. Make sure to check it out.

National Save For Retirement Week: The Importance Of Saving For Retirement

Most People Do Not Have Enough Money Saved for Retirement

Although there are few things certain in life, it’s good to know your New York State & Local Retirement System (NYSLRS) pension is one of them. But your pension is only one part of a good financial plan. That’s why we advocate a well-rounded approach to saving for retirement by considering Social Security and personal savings as well.

Unfortunately, according to a recent Employee Benefit Research Institute survey, most Americans have very little savings set aside for retirement, and many don’t know how much they’ll need later in life. In fact, about 36 percent of workers have less than $1,000 in savings and investments that could be used for retirement. The survey also revealed that only 44 percent say they or their spouses have tried to calculate how much money they’ll need in order to live comfortably during retirement.

The findings underscore the fact that Americans need to start saving to avoid further retirement insecurity.

National Save for Retirement Week

This year’s National Save For Retirement Week is from October 19 – 25. It provides an opportunity for people to review their own personal financial situation and determine if they are on track to reach their retirement goals. National Save For Retirement Week has been held annually since 2006, when the United States Congress adopted a resolution specifically designed to elevate public knowledge about retirement savings.

Groups such as the International City Management Association (ICMA) offer educational retirement resources, including more participatory activities like today’s National Pack-a-Sack Lunch Day. According to the ICMA, you could save thousands of dollars over seven years just by bringing your own lunch to work. Check out ICMA’s Big Savings Calculator to see how you can take steps to save money for retirement just by making fewer everyday purchases.

There are several ways to save for retirement. One savings plan to consider is a deferred compensation plan.

Deferred Compensation Plans Work

A deferred compensation plan can be another source of retirement income to consider when saving for retirement. Deferred compensation is a type of plan where part of your earned income is paid back to you at a later date. The money you set aside is tax-deferred, which means you do not pay federal or State tax on it until you begin to collect it.The New York State Deferred Compensation Plan (NYSDCP) is a voluntary retirement savings plan created for New York State employees, and employees of participating employers. Participants in the NYSDCP have their contributions deducted automatically from each paycheck to their deferred compensation account. They can also choose from different investment options within the plan for their account.

If you work for a local government employer, please check with your human resources officer or benefit administrator to learn about deferred compensation plans.

Start Saving Now

The sooner you start saving, the more time your money has to grow. Check out our Weekly Investment Plan to see how making a weekly investment can grow by age 65. With just a little planning and added effort on your part, you’ll have added security for your retirement years.

New AARP Study Finds More Than 25% of New York Baby Boomers Aren’t Confident They’ll Ever Retire

According to the findings of a new American Association for Retired Persons (AARP) report, 27 percent of individuals who are 50 years-of-age or older and currently working in New York State are not confident they will ever be able to retire. More than half of those surveyed say their retirement will be delayed for financial reasons, and 26 percent said they do not have any access to a retirement savings plan through their employer. What’s most alarming is that out of those confident they will retire, 60 percent said they’d be likely to leave New York after retiring.

“Retirement security is eroding day by day,” said New York State Comptroller Thomas P. DiNapoli, one of the panelists at last month’s Boomer Flight Conference sponsored by AARP and City and State in Albany. “Failure to act now will only make the problem worse for the baby boomers and the generations to follow.”

Watch more of the Comptroller’s remarks from the Boomer Flight Conference.

Boomers Help Stimulate the New York Economy

AARP reported that baby boomers retired from New York’s workforce would deliver $179 billion a year to the state’s economy. According to research done by AARP and Oxford Economics, the total economic impact of New York’s 50 and older is nearly $600 billion, supporting 53 percent of the state’s jobs and 44 percent of the state taxes. But AARP also revealed that if 60% of working boomers headed out of state, they would carry with them over $105 billion annually.

New York may still have a chance at retaining the boomer population, if improvements are made. Out of those surveyed by AARP, the following said they’d be more likely to stay in New York as they age if the following areas were improved:

  • Health (77 percent)
  • Housing (70 percent)
  • Transportation (66 percent)
  • Jobs for older residents (61 percent)

“Without a long-term strategy on retirement security,” DiNapoli continued, “we risk condemning an increasing percentage of hardworking New Yorkers and Americans to poverty in their senior years.”

2014 State of the 50+ in New York State (Full report, PDF)