2026-27 State Budget Measures Affecting NYSLRS

The recently approved 2026-27 New York State Budget includes new laws which affect the New York State and Local Retirement System (NYSLRS). The following information only pertains to members of the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS), which are administered by NYSLRS. It does not explain how the law affects benefits for members of other New York State public retirement systems, such as the New York State Teachers’ Retirement System (NYSTRS), New York City Teachers’ Retirement System (NYCTRS) or the New York City Employees’ Retirement System (NYCERS).

Benefit Improvements for Tier 5 and 6 Members

Reduced Contribution Rates for Tier 6 Members

For members of Tier 6, you are required to contribute a percentage of your earnings, and your contribution rate is determined by your annual earnings. However, the law reduced contribution rates, which means most Tier 6 members will pay less from their earnings toward contributions.

Effective October 1, 2026, Tier 6 member contribution rates are as follows:

Overtime Pay Temporarily Excluded from the Calculation of Tier 6 Contribution Rates

For members of Tier 6 with more than three years of service, your contribution rate (see chart above) is based on your earnings from all public employment two State fiscal years prior.* The types of earnings used to calculate your contribution rate include:

• Regular pay;
• Holiday pay;
• Longevity pay; and
• Overtime pay (up to a certain limit).

However, the law temporarily excluding overtime pay from the calculation of Tier 6 contribution rates has been extended, lowering the percentage some Tier 6 members are required to contribute from April 1, 2026 through March 31, 2028.

* For new members or Tier 6 members with less than three years of service, your contribution rate is based on a projected annualized wage provided by your employer, which is a projection of a full-time employee’s annual base pay. For new part-time employees or part-time Tier 6 members with less than three years of service, your contribution rate is also based on a projected annualized wage, which your employer calculates by using your part-time rate to determine what your annual wage would be if you worked full-time.

Increased Overtime Limits for Tier 5 and 6 Members

For members of Tiers 5 and 6, the law limits the amount of overtime pay included in the calculation of your final average earnings (FAE), which is used to determine your NYSLRS pension. Overtime pay above the limit is not factored into your pension. However, the law increased the annual overtime limits, allowing more overtime pay to be included in the calculation of your pension benefit.

Effective January 1, 2027:

• For ERS Tier 5 and 6 members, the overtime limit for 2027 is $30,000 (currently, the limit for 2026 is $24,070.60 for Tier 5 and $21,589 for Tier 6) and increases by 3% each calendar year thereafter.
• For PFRS Tier 5 and 6 members, the annual overtime limit is 25% of your pensionable, non-overtime earnings (currently, the annual limit is 15%).

Changes to Special Retirement Plans

Improved Death Benefits for Corrections Officers and Security Hospital Treatment Assistants

For members employed as correction officers and security hospital treatment assistants, the law amended your death benefits. If you die while in active service and you were eligible to retire at the time of your death, your beneficiary(ies) will receive an in-service death benefit equal to the value of the pension reserve as if you had retired on the date of your death. “Pension reserve” is an actuarial term for the value of your retirement benefit at the time of retirement.

Revised Contribution Rates and Creditable Service for Section 383-e and 383-f Plans

For Forest Rangers, Police Officers with the Department of Environmental Conservation, Regional State Park Police Officers and SUNY Police Officers covered under the Section 383-e and 383-f plans, the law revised contribution rates and creditable service as follows:

• Reduces member contribution rates to align with what other members of the same tier contribute.
  • Tier 6 members: see chart above
  • Tier 5 members: 3%
  • Tier 3 members: no longer required to contribute
  • Tier 2 members: no longer required to contribute
• Allows members to receive credit for additional years of service beyond 12. A maximum of 35 years of creditable service can now be used in the calculation of their pension.
• Allows members to receive credit for service as a New York State Trooper or a New York Waterfront Commission Police Officer toward the 20 or 25 years needed to be eligible to retire.

The law also extended the deadline to elect coverage in these plans:

• If you were in an eligible title as of July 1, 2025, the deadline to elect is December 31, 2026. 
• If you transferred or were promoted into an eligible title on or after July 1, 2025, the deadline to elect is December 31, 2026 or within one year of the start of your employment, whichever is later.