Category Archives: General News

Planning for an Unplanned Retirement

Retirement comes too soon for some people. Poor health, an injury, family situations, layoffs and other unforeseen circumstances could force you into an unplanned retirement.

unplanned retirement

You may already have a plan based on the date you would like to retire, but do you have a backup plan if that date comes a few years earlier than expected?

Know Your Benefits

As a NYSLRS member, you’re entitled to benefits that may help. Most vested members can begin collecting a lifetime pension as early as age 55, though your benefit may be permanently reduced if you retire before full retirement age. (Full retirement age for NYSLRS members is either 62 or 63, depending on your tier. Full retirement age for Social Security benefits depends on your year of birth.)

If you can no longer do your job because of a physical and mental condition, you may be eligible for a Social Security Disability, or a NYSLRS disability benefit if your disability is permanent.

You may also want to look into Workers’ Compensation if you are injured on the job or Unemployment Insurance if you have been laid off from a position.

Other Ways to Plan for the Unexpected

Doing your homework is important. The more you understand the potential benefits available to you, the better you can estimate your income if you are forced to retire early. Unfortunately, the numbers you come up with may not be enough when dealing with an unplanned retirement.

But one potential source of income can make a big difference: retirement savings. Your savings could help you get by until you are eligible to collect your NYSLRS pension or another retirement benefit. If you are not saving for retirement, consider starting now. And if you are saving, consider increasing your savings. It could become a lifeline if the unexpected happens.

New York State employees and some municipal employees can also save for retirement through the New York State Deferred Compensation Plan. Ask your employer if you are eligible.

For more information about the benefits offered by your NYSLRS retirement plan, visit our website to read your plan publication.

Protecting Your Identity Online: Tips for Secure Passwords

Secure Passwords

The rules for password creation have changed in recent years, so you may have to unlearn some of the things you’ve been taught in the past about secure passwords.

The National Institute of Standards and Technology (NIST), the federal agency that created the original password guidelines, recently revised those guidelines. Its current recommendations are based on research on both the habits of users and the techniques of hackers. Here are some of their findings:

  • Length is a major factor in a password’s strength, so the longer the password, the better.
  • Complex passwords, with a mix of character types, are hard for people to remember, and do little to deter hackers.
  • Strong passwords can be created from short phrases that are easy for you to remember, but would be meaningless to anyone else.
  • Passwords may be used indefinitely as long as they’re strong and have not been compromised. Obviously, if you have an account with a company that just had a data breach, you’ll want to change that password.

Other Ideas on Secure Passwords

Changing passwords every 30, 60 or 90 days was recommended for thwarting hackers, but some security experts now question that tactic. Changing passwords on a regular schedule may have little security value and can lead to bad habits. Research has shown that people tend to make only minor changes when updating their passwords or create weak passwords that are easier for them to memorize. You’re better off creating a strong password, memorizing it and holding on to it.

While NIST has changed some of its guidelines, some of the old ones still apply. Don’t share your secure passwords with anyone, or leave them on sticky notes by your computer. Create unique passwords for important accounts, such as your bank account and your email, and avoid bad passwords such as “password,” “12345678,” “qwerty” and “iloveyou.”

Retirement Online is Back

Earlier this month, NYSLRS finished a series of computer system upgrades to improve the services available to our customers. Retirement Online was unavailable during the upgrade period, but it is now once again available to NYSLRS members, retirees and beneficiaries.

Retirement Online is Back

Using Retirement Online

Register and sign in to Retirement Online to:

  • View benefit information. You don’t need to rely on your annual statement or call our Contact Center. With Retirement Online, you can review up-to-date information about your account when it’s convenient for you.
  • Update contact information. Change your address, phone number or email address online instead of calling or emailing. If you submitted an address change form during the upgrade, we are processing those now.
  • View or update beneficiaries. It’s a good idea to keep your beneficiary designations up to date. View your selections and submit changes instantly. If you submitted a paper beneficiary designation form during the upgrade, your beneficiary change is effective as of the date we received it, however, updates may not appear in your Retirement Online account until your form is processed.
  • Apply for a loan. You may be eligible to take out a loan against your NYSLRS contributions. Do it safely and conveniently with Retirement Online. If you submitted a loan application during the upgrade, we are processing those now.
  • Generate an income verification letter. Sometimes a business or government agency requires you to verify your pension income. Generate and print an official income verification letter any time you need one.

As a result of this spring’s upgrades, we expect to roll out even more features later this year. Members will be able to estimate their pension benefit, purchase service credit and apply for retirement; retirees will get to manage their direct deposit information and more. Stay connected to NY Retirement News for details.

Public Service Recognition Week

Public Service Recognition Week
This week we proudly celebrate the more than 600,000 members and 400,000 retirees of the New York State and Local Retirement System (NYSLRS) for their service to the people of New York State.

A Brief History of Public Service Recognition Week

Public Service Recognition Week was created in 1985 to honor the men and women who serve our nation as federal, state, county and local government employees. They dedicate their careers — and sometimes their lives — to keep others safe and provide for the common good. Their work makes life in our communities better.

This year, Public Service Recognition Week is being celebrated May 5 through May 11.

The Public Servants of NYSLRS

NYSLRS is full of stories about public servants finding value and meaning in the work they do, especially when they help other New Yorkers.

Whether they are protecting our communities, fighting fires, clearing our roads after snowstorms or simply helping government function better, NYSLRS members deliver the critical resources and services many New Yorkers depend on. Even outside of work, many NYSLRS members and retirees give back to our State by serving their communities as volunteers and supporters of charitable causes.

Comptroller DiNapoli’s Faith in Public Service

New York State Comptroller Thomas P. DiNapoli is the administrator of NYSLRS and trustee of the Common Retirement Fund. His public service career began when he was elected as a trustee to the Mineola Board of Education at the age of 18, making him the first 18-year-old in New York State to hold public office. Comptroller DiNapoli is understandably proud about the career path he has chosen, and he often speaks about the contributions that New York’s public employees make, not just as engaged citizens, but as individuals who bring value to the communities where they live.

Computer System Upgrades Begin Now

Today through mid-May 2019, NYSLRS is conducting a series of computer system upgrades to improve the services available to our customers.

Retirement Online will be unavailable throughout the upgrade period. However, you will still be able to conduct business with NYSLRS by email, mail and phone.
computer system upgrades

Please note:

  • If you need to apply for a loan during the upgrade period, you can fill out a loan application and mail it to our office. Visit our Loans page for links to the applications and more information.
  • If you need to update your beneficiaries, fill out the Designation of Beneficiary form (RS5127). If you mail it to us “Certified Mail — Return Receipt Requested,” we will consider it as filed on the date it was mailed. Your beneficiaries will be updated in our system shortly after the upgrade is completed.
  • If you need to change your address, you can submit the new address by phone, email or mail. Your address will be updated in our system after the upgrade is completed.
  • We will continue to process requests for income verification letters by email using our secure contact form or by fax at 518-473-5590. Tell us what information you need, and be sure to include your retirement or registration number, current address and daytime phone number (in case our customer service representatives have a question).
  • Your monthly pension payments will not be affected. However, we will not be able to process any direct deposit changes during the upgrade. We expect to complete direct deposit change requests received in April in time for the end-of-June deposit and those received in May for the end-of-July deposit.

For the latest information about the upgrade, please visit our Contact Us page. If you have any questions, please contact our Call Center at 1-866-805-0990 (518-474-7736 in the Albany, NY area), or email them using our secure contact form.

Deferred Compensation:
Another Source of Retirement Income

deferred compensation
Many financial experts believe that you will need 70 to 80 percent of your pre-retirement income to maintain your standard of living once you retire. For NYSLRS members, a financial plan in retirement is likely to include your NYSLRS pension and Social Security benefits. To supplement your plan, it makes sense to add personal savings to the mix. Contributing to a deferred compensation plan to provide another source of retirement income is an option you should consider.

What is Deferred Compensation?

Deferred compensation plans are voluntary retirement savings plans like 401(k) or 403(b) plans, but designed and managed with public employees in mind. If you choose the traditional pre-tax option, the income you invest over the course of your career grows tax-deferred. That means you don’t pay State or federal tax on it until you begin collecting it in retirement.

The New York State Deferred Compensation Plan

The New York State Deferred Compensation Plan (NYSDCP) is the 457(b) plan created for New York State employees and employees of other participating public employers in New York.

When you participate in NYSDCP, your contributions are automatically deducted from each paycheck. NYSDCP offers both traditional pre-tax and Roth accounts, and you can create your own mix of these three investment options:

  1. Retirement-date fund. Mutual funds that automatically change investment strategies over time based on when you will turn 65.
  2. Do-it-yourself portfolio. Choose index mutual funds based on your investment strategy and tolerance for risk.
  3. Self-directed investment account. Transfer some of your plan balance to a brokerage account managed by an approved manager and pick and choose individual investments.

If you work for a local government employer, please check with your human resources office or benefit administrator to learn what plans are available.

What Does Deferred Compensation Mean For Me?

Deferring income from your take home pay may mean less money to spend in the short-term, but you’re planning ahead for your financial future.

You can enroll in a deferred compensation plan anytime — whether you’re approaching retirement or you just started working. Usually, the sooner you start saving, the better prepared you’ll be for retirement.

There are many ways to save for retirement. You may want to consult a financial planner, accountant or attorney for help developing a plan that best meets your needs.

What to Know About ERS Tier 6

Tier status is a major factor in determining your NYSLRS retirement benefits. Employees’ Retirement System (ERS) members who joined NYSLRS on or after April 1, 2012, are in Tier 6. They have plenty of company. There were 205,020 ERS Tier 6 members as of March 31, 2018, making up one-third of ERS membership.

ERS Tier 6 members contribute to the Retirement System based on their earnings, but the amount of their pensions will be determined by years of service and final average salary, not by the amount of their contributions.

ERS Tier 6 Membership Milestones

ERS Tier 6 members need ten years of service credit to become vested. Once vested, they’re eligible for a lifetime pension benefit as early as age 55, but if they retire before the full retirement age of 63, their benefit will be reduced. Tier 6 correction officers, however, can retire with 25 years of service, regardless of age, without penalty.

ERS Tier 6 Benefits

The Final Average Salary (FAS) Calculation

An ERS Tier 6 member’s final average salary is the average of their earnings in the five highest-paid consecutive years of employment. Earnings in any year included in the period cannot exceed the average earnings of the previous four years by more than 10 percent.

Tier 6 Service Retirement Benefit

Generally, if an ERS Tier 6 member retires with less than 20 years, the benefit is 1.66 percent of their final average salary for each year of service. If a member retires with exactly 20 years of service, the benefit is 1.75 percent of their final average salary for each year of service (35 percent of the member’s final average salary).

If a member retires with more than 20 years of service, they receive 35 percent for the first 20 years, plus 2 percent for each additional year. For example, a member with 35 years of service can retire at 63 with a pension worth 65 percent of their final average salary.

If you’re an ERS Tier 6 member, you can find out more about your benefits in one of these plan booklets:

Taxes After Retirement

Calculating post-retirement expenses is crucial to retirement planning. For instance, predicting how much you will pay in taxes can be difficult, because your tax bill depends on your individual circumstances. Most retirees spend less on taxes than they did when they were working, largely because their incomes have gone down. But there are other reasons you may have a lighter tax burden after retirement.

taxes after retirement

New York State Taxes

As a NYSLRS retiree, your pension will not be subject to New York State income tax. New York doesn’t tax Social Security benefits, either.

You may also get a tax break on any distributions from retirement savings, such as deferred compensation, and benefits from a private-sector pension. Find out more on the Department of Taxation and Finance website.

Be aware that you could lose these tax breaks if you move out of New York. Many states tax pensions, and some tax Social Security. For information on tax laws in other states, visit the website of the Retired Public Employees Association.

Federal Taxes

Unfortunately, most of your retirement income will be subject to federal taxes, but there are some bright spots here.

Your Social Security benefits are likely to be taxed, but at most, you’ll only pay taxes on a portion of your benefits. You can find information about it on the Social Security Administration website. (If you’re already retired, use the Social Security Benefits Worksheet in the Form 1040 instructions to see if any of your benefits are taxable.)

Throughout your working years, you’ve paid payroll taxes for Social Security and Medicare. For most workers, that’s 6.2 percent (Social Security) and 1.45 percent (Medicare) out of every paycheck. But Social Security and Medicare taxes are only withheld from earned income, such as wages. Pensions, Social Security benefits and retirement savings distributions are exempt. Of course, if you get a paying job after retirement, then Social Security and Medicare taxes will be deducted from that pay check.

Once you turn 65, you may be able to claim a larger standard deduction on your federal tax return. For more information on the amounts of this deduction, please see the 2018 IRS Tax Map.

To better understand how your retirement income will be taxed, it may be helpful to speak with a tax adviser.

What is a Defined Benefit Plan?

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

Your pension is based on a preset formula that takes into account your salary and years of service. It will not be based on your individual contributions to the Retirement System.

If you retire with a NYSLRS pension, you will receive a monthly pension payment for the rest of your life.

Defined Contribution Plans

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

With a defined contribution plan, the employer, employee or both make contributions to an individual retirement account, and the money in the account is invested. In most cases, it is the responsibility of the employee to make investment decisions, or the plan may offer pre-packaged investment options. At retirement, the employee will have an account that includes the accumulated value of contributions and investment returns, minus any fees.

The amount of money the employee has at retirement is dependent on the investment returns of the individual account, so market downturns, especially near retirement, can affect the value of the benefit. The employee also can run the risk of outliving their savings.

defined benefit plan

NYSLRS’s Defined Benefit Plans

NYSLRS actually administers more than 300 retirement plans, but all are defined benefit plans and share certain features. NYSLRS plans:

  • Provide a guaranteed lifetime retirement benefit;
  • Offer a pension that is based on final average salary and years of service;
  • Provide a right to pension benefits (vesting) with five years of service credit (ten for Tier 5 and 6 members);
  • Build a cost-of-living adjustment (COLA) into pensions to help offset the effect of inflation; and
  • Include disability and death benefits.

To find out details about your own NYSLRS plan, check your retirement plan booklet. You can find a copy on the Publications page of our website.

Countdown to Retirement — Final Three Months

Once you decide to retire and begin preparing, the final months leading up to your retirement date go by quickly. Previously, we discussed the steps to take when you’re four to six months away from retirement. As we wrap up our Countdown to Retirement, let’s take a look at what you should be doing in the final three months.

Final Three Months: Filing for Retirement

You need to file an Application for Service Retirement (RS6037) with us 15–90 days before your retirement date. You can download the form from our website or pick up a physical copy at one of our consultation sites. Make sure to fill out the application completely and have it notarized.

If you send the form by “Certified Mail — Return Receipt Requested,” we will consider your application filed on the date it was mailed. Please don’t give your application to your employer; send it directly to NYSLRS.

Next Steps

Once we receive your application, we’ll mail you a confirmation letter. If you’ve received an estimate from us within the past 18 months, we will include three forms with the letter:

  • Use the W-4P form to decide how much you want withheld from your pension benefit for federal taxes.
  • Use the Direct Deposit Enrollment Application (RS6370) to receive your pension benefit payments electronically, right in your bank account.
  • Use the option election form to choose how you want your pension benefit paid and whether you would like to leave a lifetime pension to a beneficiary when you die.

If you haven’t received an estimate, we will just send you the W-4P and Direct Deposit Enrollment Application forms. We will begin processing your estimate, and once it’s complete, we will send it to you along with an option election form.

final three months

Choosing Your Pension Payment Option

Select a payment option based on your most recent estimate. All of the options provide a monthly benefit for life, and some provide payments to a designated beneficiary when you die. 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 your retirement date draws near, think about scheduling an appointment at one of our consultation sites. A consultation is not required, but our information representatives can answer any questions you have, help you complete the paperwork and notarize your retirement application. You can also contact us if you have questions.