Tier 6 Benefits – A Closer Look

Tier 6 members (those who joined NYSLRS since April 1, 2012) are eligible for a lifetime pension benefit with 10 years of credited service. And that pension can replace a portion of your salary throughout your retirement.

Your NYSLRS pension will be based on your Final Average Salary (FAS) and the number of years you work in public service. FAS is the average of the five highest-paid consecutive years. For most members, those higher-paid years come at the end of their careers. Since retirement is still some years in the future for most of you, we won’t focus on the dollar amount of your FAS today. But we can look at what percentage of that salary would be replaced by your pension if you continue in the system until retirement age.

For Tier 6 members of the Employees’ Retirement System (ERS), the benefit is 1.66 percent of your FAS for each year you work, up to 20 years. (Benefit calculations for members of the Police and Fire Retirement System vary based on plan.) At 20 years, the benefit equals 1.75 percent per year (for a total of 35 percent). After 20 years, the benefit grows by 2 percent per year.

Financial advisers say you will need to replace between 70 to 80 percent of your salary to maintain your lifestyle during retirement. Let’s see how we can get there.
Tier 6 Salary Replacement
NYSLRS Pension: Say you begin your career at age 30 and work until your full retirement age of 63. That’s 33 years of Service Credit. You’ll get 35 percent of your FAS for the first 20 years, plus 26 percent for the last 13 years, for a total benefit that would replace 61 percent of your salary. If you started at age 25, and continue till 63, you’d get 71 percent of your FAS. If you didn’t start till age 35, you’d still get 51 percent at 63.

Social Security: You also should factor in Social Security. We know, you may have heard that Social Security might not be there for you, but the situation isn’t that dire. According to the Social Security Administration, under current law, payroll taxes will cover about 79 percent of benefits by 2034. Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. So even if benefits take a hit – and that’s a big IF – Social Security might still replace around 25 to 30 percent of a typical worker’s pay.

Savings: Retirement savings can also replace a portion of your income. How much, of course, depends on how much you save. The key is to start saving early so your money has time to grow. If you haven’t already looked into the New York State Deferred Compensation Program, please consider doing so now.

4 thoughts on “Tier 6 Benefits – A Closer Look

  1. Zach Marlow

    I know if you retire before 63, you get penalized so many percent per year. I was wondering if you could “retire” or stop working say at 60, live off of deferred comp, or another small job. Then start drawing at 63 from NYS to avoid getting penalized. If I work until I’m 60, I’ll have 32 years with the state.

    Reply
    1. NYSLRS

      Yes, you can leave public employment before age 63 and wait until age 63 to retire and begin collecting your NYSLRS pension in order to avoid a reduction.

      However, your eligibility for health and death benefits may be affected if you leave public employment before you begin collecting your pension.

      We recommend that you speak to your health benefits administrator to find out how your health benefits would be affected. We also recommend that you speak to a NYSLRS customer service representative to find out how your death benefits would be affected.

      To get the account-specific information you need, please email our customer service representatives using our secure email form (http://www.emailNYSLRS.com), and one of our representatives will review your account and respond to your questions. Filling out the secure form allows us to safely contact you about your personal account information.

      Reply
  2. Lysa J Petrsoric

    Hello. I started with NYC at 24, have almost 4 years of credited service and am planning on buying back ~2.5 years of time. If I work until 64, I’d have about 40 years of service, which according to my understanding of Tier 6 should be 75% of my FAS. However, some of my coworkers were saying that there is a cap on years of service for the benefit calculation. I cannot find that anywhere in the NYCERS literature or through this website- and I assume that would be a big disclaimer. Am I correct or are there?

    Reply
    1. NYSLRS

      We are the New York State and Local Retirement System (NYSLRS), the retirement system for New York State employees and employees of municipalities outside of New York City. You should contact the New York City Employees’ Retirement System (NYCERS) at http://www.nycers.org.

      Reply

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