Most members of the New York State and Local Employees’ Retirement System (ERS) and many members of the New York State and Local Police and Fire Retirement System (PFRS) are required to contribute a percentage of their earnings toward their retirement.
NYSLRS pensions are defined benefit plans. How much a member contributes over the course of their career is not used to determine the amount of a member’s pension at retirement. However, member contributions support the benefits earned by current and future retirees and are an important asset of the Common Retirement Fund.
Your contribution balance determines the amount you would be eligible to borrow if you decided to take a NYSLRS loan. Also, if you were to die in service, the balance would be paid to your beneficiary, in addition to any death benefit your beneficiary is eligible for.
ERS Tier 3, 4, 5 and 6 and PFRS Tier 3 (Article 14) member contributions earn 5 percent annual interest.
Tier 1 and 2, PFRS Tier 3 (Article 11) and PFRS Tier 5 and 6 member contributions earn up to 5 percent interest — 3 percent guaranteed, plus up to an additional 2 percent based on the earnings of the Common Retirement Fund, which holds and invests the money used to pay NYSLRS benefits. The interest rate on these contributions has been 5 percent since 1976.
Tier 6 ERS and PFRS
Note: Legislation enacted in 2022 temporarily changes how Tier 6 contribution rates will be calculated for certain Tier 6 members. See New Law Temporarily Excludes Overtime Earnings From Contribution Rates below.
Most Tier 6 members contribute a specific percentage of their earnings (see chart below) for all of their years of public service after their date of membership. If you are a Tier 6 member, during the first three years of membership, your contribution rate is based on your annual wage, as provided by your employer at the time you were enrolled in NYSLRS. For part-time employees, your contribution rate is based on an annualized wage, also provided by your employer, but your contribution amount is determined by applying your rate to your actual earnings. After three years, your contribution rate is based on what you actually earned in all public employment two years prior. Contribution rates are set at the beginning of each fiscal year on April 1.
|
Annual Wage |
Contribution Rate |
|
$45,000 or less |
3% |
|
$45,000.01 to $55,000 |
3.5% |
|
$55,000.01 to $75,000 |
4.5% |
|
$75,000.01 to $100,000 |
5.75% |
|
More than $100,000 |
6% |
Exceptions for ERS:
- New York State Correction Officers’ contributions are limited to 30 years of service.
Exceptions for PFRS:
- Tier 6 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 requires an employer to offer a noncontributory 20- or 25-year plan, any new employees who join while that agreement was in place do not have to contribute.
New Law Temporarily Excludes Overtime Earnings From Contribution Rates for Some Tier 6 Members
Legislation enacted in 2022 temporarily changes how Tier 6 contribution rates will be calculated.
Tier 6 contribution rates are usually calculated using a member’s base pay, which includes regular earnings, holiday pay and longevity pay. Overtime pay (up to a certain limit) is also included in the calculation of the contribution rate.
This legislation removes overtime earned from April 1, 2020 through March 31, 2022 from the Tier 6 contribution rate calculation. The earnings for this time period determine the contribution rates that Tier 6 members who make contributions will pay from April 1, 2022 through March 31, 2024.
Although overtime pay will be excluded from Tier 6 contribution percentage rates for those years, Tier 6 members are required to make contributions on all pensionable earnings including overtime earnings (pensionable earnings are earnings that can be included in the calculation of a NYSLRS pension). Overtime pay up to a certain limit is considered pensionable, so while it may not be part of the rate calculation during this time, it is still considered pensionable earnings.
We are working with NYSLRS employers to review past earnings to determine whether their employee’s rates should be lowered.
Once information for all Tier 6 members is received and processed, if your rate is lowered, it will be retroactive to April 1, 2022. If you are entitled to a credit of overpaid contributions, you will be notified, and your refund will be paid to you by your employer.
The rate decrease will not apply to:
- Members who are already paying the minimum rate of 3 percent;
- Members who did not earn overtime from April 1, 2020 through March 31, 2022; and
- Members who joined NYSLRS on or after April 1, 2020. Your rates are based on an estimated wage provided by your employer when you were enrolled into NYSLRS rather than your actual earnings.
Tier 5 ERS
You must contribute 3 percent of your gross reportable earnings for all your years of public service.
Exceptions:
- New York State Correction Officers’ contributions are limited to 30 years of service.
- 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.
Tier 5 PFRS
You must contribute 3 percent of your gross reportable earnings for all your years of public service.
Exceptions:
- 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 requires 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.
Tiers 3 & 4 ERS
You must contribute 3 percent of your gross reportable earnings toward your retirement benefits until you have been a member of the Retirement System for ten years, or have ten years of credited service, whichever occurs first.
Tier 3 (Article 14) PFRS
You must contribute 3 percent of your gross reportable earnings for 25 years or until retirement, whichever occurs first.
Tiers 1 & 2 ERS and PFRS Members, and Tier 3 (Article 11) PFRS
You are not required to contribute if your employer offers a non-contributory plan.
If you are covered by a non-contributory retirement plan and have made voluntary contributions under Section 21(l) or 321(l), you may apply for a refund of those excess contributions plus interest. You may receive one refund of your excess contributions in a 12-month period. Withdrawing voluntary contributions does not terminate your Retirement System membership.
If you transfer your membership from another New York State or New York City public retirement system into NYSLRS, you may also have excess contributions. You should contact us at the time of transfer to find out the status of your contributions.
To apply for a refund of excess contributions, complete an Application for Refund of Excess Contributions (RS5195).
Contributions made under a contributory retirement plan or for the purchase of military service cannot be refunded as excess.
Rev. 10/22