Tag Archives: retirement

Vested: Qualifying for a Retirement Benefit

Becoming vested is a crucial milestone for NYSLRS members. It means you have earned enough service to qualify for a retirement benefit once you meet the age or service requirements established by your retirement plan. Vesting is automatic — you don’t have to fill out any paperwork to become vested.

Vested: Qualifying for a Retirement Benefit

Years of Service Credit to Become Vested

NYSLRS members in Tiers 2 – 6 need five years of service credit to be vested.  

If you work part-time, or if you have an unpaid leave of absence, it will take longer to become vested. For example, if you work half-time, you earn six months of credit toward vesting for each year on the job.

Sign in to your Retirement Online account to check your total estimated service credit and whether you are vested.

If you work for a school district, read our How School Employees Earn NYSLRS Service Credit blog post for information about how your service credit is determined. 

Note: Previously, Tier 5 and 6 members needed ten years of service to be eligible for a service retirement benefit. However, as of April 9, 2022, these members only need five years of service credit to be vested. The new law did not change benefit rules such as how long members must contribute, pension benefit calculations, the full retirement age, reductions to retire early or the cost to purchase previous service.

Applying for Retirement

Vesting is automatic, but you will need to apply for retirement to receive your pension — NYSLRS will not pay out your pension benefit unless you apply for it.

Pension eligibility requirements and benefit calculations depend on your tier and retirement plan. To find your tier and retirement plan, sign in to your Retirement Online account and go to the ‘My Account Summary’ section. Once you know your tier and retirement plan, you can find your retirement plan publication for comprehensive information about your benefits and filing instructions.

And when you’re ready, you can apply for a service retirement benefit quickly and easily using Retirement Online.

If you leave public employment, read about the age requirements for filing for a vested retirement benefit as well as other important information that you should know about your NYSLRS membership and benefits.

Transferring Your Membership to NYSLRS

transferring membership

A lot can change in our lives, and sometimes people switch jobs or professions during their career. Perhaps you were a teacher, and you recently began working for New York State. Or maybe you had a job with New York City, and you took a position with a municipality outside of the city. If you are an active member of more than one public retirement system in New York State, you may have the option of transferring that membership to NYSLRS and receiving credit for that service.

Considering Service Credit

Service credit is a factor in calculating a NYSLRS pension benefit, so increasing your service credit will generally increase your pension benefit.

In some cases, transferring membership may not be beneficial. For example, if you are in a retirement plan that allows for retirement after 20 or 25 years of service (regardless of age), your service usually must be in specific job titles to be creditable toward your pension benefit. If you are in one of these plans, find your retirement plan publication to learn what service is creditable.

If you have questions, contact a customer service representative before you apply to transfer a membership. You can message them using our secure contact form.

Transferring Membership

Members who are transferring membership to NYSLRS must:

  • Be on the payroll in a job that is covered by NYSLRS;
  • No longer work in the job that was covered by the other retirement system; and
  • Still be an active member of the other system (off payroll for that job, but your membership in the other system has not been terminated or withdrawn).

To transfer a membership to NYSLRS, you first must submit a transfer request to your other retirement system. When we receive your membership information from the other retirement system, we will compare your date of membership in NYSLRS with your date of membership in the other system. When the transfer is complete, your date of membership will be the earlier of the two dates. If applicable, your tier will change.

If You Need to Transfer to Another System

You can submit an online request to NYSLRS to transfer your membership from NYSLRS to another New York State public retirement system:

  • Sign in to Retirement Online.
  • In the ‘My Account Summary’ section of your Account Homepage, under ‘I want to…,’ click the “Transfer My Membership” button.

Whether you are transferring in or out of NYSLRS, the transfer is effective when we receive your application, and it may be permanent.

You can find more information about transferring membership on our website.

A Look Inside NYSLRS

The New York State and Local Retirement System (NYSLRS) administers two distinct systems. They are:

  • The Employees’ Retirement System (ERS) with 659,750 members; and
  • The Police and Fire Retirement System (PFRS) with 35,754 members.

During the State fiscal year that ended on March 31, NYSLRS provided pension benefits to nearly 515,000 retirees and beneficiaries. Altogether, that’s more than 1.2 million participants, making NYSLRS one of the largest public retirement systems in the nation.

A Look Inside NYSLRS

New York State Common Retirement Fund

NYSLRS benefits are provided by the New York State Common Retirement Fund. State Comptroller Thomas P. DiNapoli is administrative head of NYSLRS and trustee of the Fund, which is widely recognized as one of the best-managed and best-funded public retirement funds in the nation. It’s also exceptionally enduring; 2021 marked the 100-year anniversary of the Retirement System.

NYSLRS Members                                                          

But NYSLRS is more than just the pension fund. Here are some facts about NYSLRS members as of March 31:

  • 514,150 active members (that is, members still on the public payroll) work for 2,979 public employers statewide.
  • About one-third of those active members work for New York State. The rest work for counties, cities, towns, villages, school districts and public authorities.
  • Nearly 94 percent of total active members are in ERS. PFRS accounts for 6 percent of total active membership.
  • Almost 60 percent of all members are in Tier 6.
  • In ERS, 58.8 percent of members are in Tier 6, while 36.7 percent are in Tiers 3 and 4.
  • In PFRS, 51.1 percent of members are in Tier 6, while 43.4 percent are in Tier 2.

NYSLRS Retirees and Beneficiaries

The average pension for an ERS retiree was $27,227 as of March 31, 2023; the average for a PFRS retiree was $60,592. But these pension payments don’t just benefit retirees and beneficiaries. About 78 percent of retirees and beneficiaries stay in New York State and generate billions of dollars in economic activity. Their spending supports local businesses, contributes to local taxes and creates jobs in our communities.

Learn More About NYSLRS

Detailed information about our members and retirees, the Fund and Fund investments can be found in the 2023 Annual Comprehensive Financial Report.

National Retirement Security Month

October is National Retirement Security Month, a time to learn more about the importance of saving and your potential sources of income in retirement. Even if your own retirement seems far off in the future, it’s never too early to start developing your plans for retirement.

Retirement Security

NYSLRS and Retirement Security

Check out these blog posts to learn more about how your NYSLRS pension and other sources of retirement income can provide retirement security.

  • What is a Defined Benefit Plan?
    Your NYSLRS pension is a defined benefit retirement plan. When you retire, you’ll receive a guaranteed lifetime benefit based on your earnings and years of service. It will be calculated using a preset formula rather than being limited to your accumulated contributions and your investment returns, as it would be in a 401(k)-style plan.  
  • The 3-Legged Stool: An Approach to Retirement Confidence
    Think of your retirement security as a three-legged stool — each leg represents a different income source that supports you in retirement. The first leg of the stool is your NYSLRS pension, and the second leg is your Social Security benefit. The third leg is your own personal savings, which can give you more flexibility during retirement, helping to ensure that you’ll be able to do the things you want to do.
  • Compounding: A Great Way for Your Money to Grow
    The sooner you can start saving, the better — especially if you have a retirement savings account with compounding interest. When your money is compounded, it increases in value by earning interest on both the principal and accumulated interest. But for your money to make more money, it needs time to grow.
  • Deferred Compensation: Another Source of Retirement Income
    Deferred compensation plans are voluntary retirement savings plans. Your contributions will be automatically deducted from your paycheck, and you can contribute as little as 1 percent of your earnings. It’s a savings vehicle to consider if you want to start saving extra for retirement but aren’t sure where to start.
  • Give Your Retirement Savings a Boost
    Once you’re on your way and saving for retirement, you may want to look at ways to increase how much you save. Even the smallest increase can make a big difference over time, while having a minimal impact on your take-home pay.

Remember, retirement security doesn’t just happen — it takes planning. Visit our Retirement Planning page for more information about your NYSLRS pension, including an overview of how it’s calculated, estimating your amount and how to find a description of the benefits provided by your specific retirement plan.

Crunching the Numbers: A Short Guide to Retirement Calculators

A good estimate of your post-retirement income is essential for effective retirement planning. But gauging your income can be tricky when it comes from multiple sources. Fortunately, there are a variety of online calculators that can help you get started.

online calculators for retirement planning

NYSLRS Benefit Calculator

Most NYSLRS members can quickly create a pension estimate using Retirement Online. Your estimate will be based on the most up-to-date account information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit and adjust your earnings or service credit if you anticipate a raise or plan to purchase past service.

Social Security Calculators

The Social Security Administration (SSA) hosts several calculators that you may find helpful. Their Quick Calculator uses information you enter to provide a rough Social Security benefit estimate. Their Retirement Estimator calculates your benefit based on your actual earnings. You’ll need to enter your Social Security number and other personal information to create an SSA account. 

You can also look up when you will be eligible for full Social Security benefits and estimate your life expectancy.

Savings Calculators

If you are saving for retirement, a simple savings calculator can give you an idea of how your money can grow over the years. However, simple calculators like this assume a fixed amount of savings each month. Most people increase their retirement savings as their income grows.

If you have a 457(b) plan like those offered by the New York State Deferred Compensation Plan, you can use their interactive retirement planner to project a hypothetical view of what your retirement may look like based on information you provide

Savings Withdrawal Calculators

Savings withdrawal calculators are designed to help determine how much savings remains after a series of withdrawals. These are especially helpful tools to use when trying to determine how long your retirement savings will last, based on a starting amount, how much you expect to withdraw, how often and some other factors.

How Much Do You Need?

Now that you’ve estimated your potential sources of retirement income, it’s important to understand your anticipated expenses in retirement. Our Income and Expenses Worksheet can help you create a post-retirement budget.

Think of retirement security as a three-legged stool, with your NYSLRS pension, social security benefit and retirement savings working together to provide financial stability. Your NYSLRS pension is a defined benefit, or traditional pension, that will provide you with a monthly payment for the rest of your life. Having a retirement savings account can give you more flexibility to do the things you want to do, or provide a source of cash in case of an emergency. Start saving for retirement if you haven’t already, or give your retirement savings a boost.

Know Your Benefits: What If I Leave Public Employment

It may not come up during your career, but if you leave public employment before you are eligible to retire, you should know what happens with your NYSLRS membership and benefits. Your options will depend on how many years of service you have. It’s also important to keep your account information up to date. If you remain a member of NYSLRS after you leave public employment, you can regularly review your account information and keep it up to date by using Retirement Online.

What Should I Do if I Leave Public Employment

Find Out If You Are Vested

NYSLRS members are vested when they have five years of service credit. Sign in to your Retirement Online account to see your total estimated service credit.

  • If you have 5 or more years of service when you leave public employment, and you leave public employment before you are eligible to retire, you can receive a vested retirement benefit when you become eligible.
  • If you leave with between five and ten years of service, you can either remain a member and receive a vested retirement benefit when you become eligible or terminate your membership and receive a refund of your contributions.
  • If you leave with more than ten years of service, you cannot withdraw your NYSLRS membership and you can receive a vested retirement benefit when you become eligible and apply.
  • If you leave with less than ten years of service, you can end your membership and receive a refund of your contributions.

Keep Your Contact Information Updated

It’s important to make sure we have your current mailing address, phone number and personal email address, and let us know about any future changes. That way, you won’t miss important information from us, such as your Member Annual Statement.

To update your contact information, sign in to Retirement Online. Go to ‘My Profile Information,’ find your address, phone number or email address under ‘My Profile Information’ and click “update.”

Keep Your Beneficiaries Updated

If you leave public employment, your beneficiaries may still be eligible for a death benefit, so you should review your beneficiary designations periodically. Sign in to Retirement Online, go to the ‘My Account Summary’ area of your Account Homepage and click “View and Update My Beneficiaries.” Your beneficiary changes will be considered filed on the day you submit them.

Repay Any NYSLRS Loans

If you leave public employment, you will no longer be able to pay off your NYSLRS loans by payroll deduction. If you have any outstanding NYSLRS loans, you must make payments directly to NYSLRS at least once every three months and repay your loan within five years of when it was issued, or you will default on the loan. Defaulting on a loan may carry considerable tax consequences: You’ll need to pay ordinary income tax and possibly an additional 10 percent penalty on the taxable portion of the loan. You can make loan payments to NYSLRS via Retirement Online.

You aren’t eligible to take a new NYSLRS loan once you are off the public payroll.

Receiving a Vested Retirement Benefit

If you are vested, once you reach retirement age, you can receive a lifetime pension based on your salary and service from when you were working in public employment. It’s your responsibility to apply for retirement — NYSLRS will not pay out your pension benefit unless you apply for it.

The earliest date you can receive your retirement benefit depends on your tier and retirement system.

  • Tier 1 and 2 members are eligible for a vested retirement benefit as early as the first of the month following your 55th birthday.
  • Tier 3, 4 and 5 members and Employees’ Retirement System (ERS) Tier 6 members are eligible for a vested retirement benefit as early as your 55th birthday.
  • Police and Fire Retirement System (PFRS) Tier 6 members are eligible for a vested retirement benefit on your 63rd birthday.

For most members, however, if you retire before your full retirement age, you would face a permanent early retirement benefit reduction. The full retirement age is 62 for Tier 1 – 5 members, and age 63 for ERS Tier 6 members and off-payroll PFRS Tier 6 members.

Most members can estimate your pension amount using the benefit calculator in Retirement Online. Sign in to your Retirement Online account, go to the ‘My Account Summary’ area of your Account Homepage and click the “Estimate my Pension Benefit” button. You can also apply for your retirement benefit using Retirement Online.

If You Leave Public Employment with Less than Ten Years of Service

With less than ten years of service credit, you can choose to end your membership and request a refund of your contributions. If you withdraw your contributions, however, you will no longer be eligible to receive a pension benefit. You can withdraw by signing in to Retirement Online, going to the ‘My Account Summary’ area of your Account Homepage, and clicking “Withdraw My Membership.”  

You cannot withdraw from NYSLRS once you have ten years of service credit.

(Note: Tier 1 and 2 members and PFRS Tier 3 (Article 11) members covered by a non-contributory retirement plan can make voluntary contributions. These members can withdraw their voluntary contributions without ending their membership. Contact us if you have questions.)

If you have less than five years of service credit (aren’t vested) and don’t withdraw your contributions, they will continue to earn 5 percent interest for seven years. After seven years off the public payroll, your membership ends automatically, and your contributions will be deposited into a non-interest-bearing account until you withdraw them.

For more information, including tax implications of withdrawing your membership, read Life Changes: What If I Leave Public Employment?.

Debt and Retirement

If you’re planning to retire soon, it’s a good idea to take inventory of any debt you owe. Paying down your debt can give you flexibility to enjoy the type of retirement you want.

NYSLRS Loan Debt

If you have an outstanding NYSLRS loan balance when you retire, it will reduce your pension. The amount of your reduction is based on:

  • Your retirement system — Employees’ Retirement System (ERS) or Police and Fire Retirement System (PFRS);
  • Your tier;
  • Your age at retirement; and
  • Whether you retire with a service retirement benefit or a disability retirement benefit.
Debt and Retirement - How a NYLSRS Loan Balance Could Affect Your Pension

The pension reduction does not go toward repaying the outstanding loan balance — it’s a permanent reduction. And, at least part of the loan balance at retirement will be subject to federal income taxes.

When you apply to retire using Retirement Online and have an outstanding NYSLRS loan balance, the pension reduction amounts are provided to you. They are also listed on the loan applications on our Forms page. If you are nearing retirement, be sure to check your loan balance. If you are not on track to repay your loan before you retire, you can increase your loan payments, make additional lump sum payments or both (see the Change Your Payroll Deductions or Make Lump Sum Payments section of our Loans page.)

Although ERS members may repay their loan after retiring, they would have to pay the full balance that was due at retirement in a single lump sum payment. Then, going forward, the pension would be increased to the amount it would have been without the loan reduction. However, it would not be increased retroactively back to the date of retirement.

Other Debt to Check

Credit Cards

Another priority is paying off credit cards. Credit card statements carry a minimum payment warning that tells you how long it will take, and how much it will cost, to pay off your balance making only minimum payments.

If you have more than one credit card balance, many financial advisors recommend you pay as much as you can on the card with the highest interest, while making at least the minimum payments on lower-interest cards. Once you’ve paid off the high-interest card, focus on the one with the next-highest rate, and so on. Other advisors say it might be better to pay off the card with the smallest balance first. The idea is to gain a sense of accomplishment, and make the process seem less daunting.

Mortgages

Should you try to pay off your mortgage before you retire? Advice varies on that question. It would eliminate a major expenditure and let you spend your retirement income on other things. On the other hand, if your mortgage interest rate is relatively low, you may want to focus on paying off other high-interest debt or boosting your retirement savings. What works best for you will depend on your situation.

NYSLRS – One Tier at a Time: PFRS Tier 2

When you join the New York State and Local Retirement System (NYSLRS), you’re assigned a tier based on the date of your membership. This post looks at Tier 2 members of the Police and Fire Retirement System (PFRS).

Your tier determines such things as your eligibility for benefits, the calculation of those benefits, death benefit coverage and whether you need to contribute toward your benefits.

PFRS has five tiers. Almost half of PFRS members are in Tier 2, which began on July 31, 1973, and ended on June 30, 2009. Most are in special retirement plans that allow for retirement after 20 or 25 years, regardless of age, without penalty.

The special plans that cover most police officers and firefighters fall under Sections 384, 384(f), 384-d, and 384-e of Retirement and Social Security Law. You can sign in to Retirement Online to find your benefit plan, which is listed under ‘My Account Summary.’

PFRS Tier 2

Where to Find PFRS Tier 2 Information

Whether you’re in one of the retirement plans described in this post or another retirement plan, we encourage you to visit our website to find your NYSLRS retirement plan publication. It’s a comprehensive description of the benefits you’re entitled to receive as a PFRS member.

You can check your service credit total and estimate your pension using Retirement Online. Most members can use our online pension calculator to create an estimate based on the salary and service information NYSLRS has on file for them. You can enter different retirement dates to see how your choices would affect your potential benefit.

Members may not be able to use the Retirement Online calculator in certain circumstances, for example, if they have recently transferred a membership to NYSLRS, if they are a Tier 6 member with between five and ten years of service, or if they have worked for multiple employers and were covered by different retirement plans. These members can contact us to request an estimate or use the “Quick Calculator” on our website. The Quick Calculator generates estimates based on information you provide.  

COLA Coming in September

Eligible NYSLRS retirees will see a cost-of-living adjustment (COLA) in their monthly pension payments at the end of September 2023. This is a permanent annual increase to your retirement benefit that is based on the cost-of-living index and a formula set by State law. For upcoming pension payment dates, check our pension payment calendar.

COLA Coming Soon

How the COLA is Determined

The COLA is based on the rate of inflation, as reflected in the consumer price index published by the U.S. Bureau of Labor Statistics. The law requires that COLA payments be calculated based on 50 percent of the annual rate of inflation, as measured at the end of the State fiscal year (March 31). Once you are eligible, your annual increase will be at least 1 percent, but no more than 3 percent.

The percentage is applied to the first $18,000 of your benefit as if you had chosen the Single Life Allowance pension payment option, even if you selected a different option at retirement. Using the Single Life Allowance gives you the highest COLA amount possible, since this option pays the highest benefit. Once your COLA payments begin, you will automatically receive an increase to your monthly benefit each September.

The September 2023 COLA is 2.5 percent, for a maximum annual increase of $450.00, or $37.50 per month before taxes.

COLA Eligibility

When Will You See the Increase?

Eligible retirees will see the annual 2023 COLA in their end-of-September pension payment, which will be available to those with direct deposit on September 29, 2023. If you receive a paper check, your COLA will be included in the check mailed on September 28, 2023.

Viewing Your Benefit Payment

You can view your benefit payment pay stubs, including your current COLA amount, in Retirement Online. At the end of September, if you are eligible for the increase, you’ll be able to view a breakdown of your September payment with your new COLA amount.

To view your pension payments, sign in to Retirement Online. From the top of your Account Homepage, in the ‘I want to’ section, click the “View Pension Check” link. Then select the date of the pension payment that you want to view. You’ll see a list of payments you received beginning with your January 2023 payment and going forward. If you have direct deposit, you will also receive a notification of the net change in your monthly payment amount at the end of September.

Federal Tax Withholding and Your Pension

If your last federal tax bill was larger than you expected, or if you received a hefty refund, it might be time to review how much federal tax withholding comes out of your NYSLRS pension. If you’re not sure whether you need to adjust your federal withholding, you may want to check with a tax preparer.

Remember, NYSLRS only withholds federal income tax. New York State doesn’t tax your NYSLRS pension, and we can’t withhold for income tax for other states.

federal tax withholding and your pension

New W-4P Federal Tax Withholding Form

The IRS released a new version of their W-4P federal income tax withholding form. For 2023, NYSLRS was required to update our tax withholding form as well.

The new form no longer allows tax filers to adjust their withholding by electing a specific number of withholding allowances. Instead, the W-4P form has fields for increasing or decreasing the amount of withholding, including fields for tax credits and deductions. 

You do not need to submit the new W-4P unless you want to change the amount of your tax withholding.

To Change Your Withholding

Retirement Online makes it fast and convenient to view your current federal withholding information and make changes using our online form that collects the same information as the paper form. You can check your current withholding by signing in to Retirement Online and viewing your most recent pension pay stub. To change your federal tax withholding, click the green “Update My W-4P Tax Information” button on your Account Homepage.

If you update your withholding online by the middle of the month, your changes will generally be applied that month. We’ll notify you by mail or email (depending on your contact preference) when the update has been completed.

Completing the Form

Basic Withholding

Step 1. Select your filing status. If you want your federal withholding to be based only on the benefit amount you receive from NYSLRS, with no adjustments, you can skip steps 2 – 4.

Adjustments to Withholding (Dependents, Tax Credits)

Complete Steps 2 – 4 ONLY if they apply to you.

Step 2. If you have income from a job or more than one pension/annuity, in addition to your NYSLRS pension, or if you’re married filing jointly and your spouse receives income from a job or pension/annuity, you can enter that in Step 2.

Click “View Instructions” or see page 2 of the paper W-4P form for examples that may help you with this step.

Step 3. If you need to claim dependents, you can enter that information in Step 3.

Step 4. If you have other adjustments to make — other income, deductions or extra withholding — you can complete Step 4.

Click “View Instructions” or see page 3 of the paper W-4P form for instructions and a worksheet that may help you with this step.

If you prefer to send in a paper form, you can print, complete and submit our W-4P Withholding Certificate for Pension or Annuity Payments form to update your withholding information, however paper forms take longer to process. Please be sure you are using the new form (revised 12/22), because NYSLRS will no longer accept previous versions of the W‑4P form.

If You Receive More Than One Benefit Payment from NYSLRS

NYSLRS administers two retirement systems — the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS). It is possible to receive more than one benefit from one or both systems — as a retiree, a beneficiary or an ex-spouse who is receiving a benefit under a domestic relations order.

Generally, your withholding is tied to the retirement system. So, if your benefits are from the same system, you only need to submit your withholding information once and your preferences will be applied to all benefit payments you receive from that system. However, if you receive a benefit from both ERS and PFRS, you’ll need to submit a W-4P form for each system.

Your benefit payment pay stub will list whether the payment is from ERS or PFRS.

For More Information

Our Taxes and Your Pension page has additional information about withholding, including 1099-R tax form information, how to submit a paper W-4P form, what to do if you receive more than one benefit payment from NYSLRS and more.

If you need help completing the W-4P form, you can find phone numbers and online resources on the IRS Let Us Help You page.

Please note: Effective January 1, 2023, NYSLRS does not withhold federal income tax from benefits that are not subject to tax reporting.