New York State Pension Reform

This legislation will apply to ERS, TRS, and the ORP, and introduces a new voluntary defined contribution plan component for unrepresented employees earning more than $75,000 from any adopting public employer within New York State.

The following is a brief summary of the Tier VI benefit changes, along with a few references for additional information:

New York State Pension Reform (Tier VI) - Effective April 1, 2012

ERS/TRS

• Effective for all employees joining a NYS public retirement system on or after April 1, 2012.
• Vesting requires 10 years of service credit.
• Requires 3% (ERS) and 3.5% (TRS) employee contribution, regardless of salary, until April 1, 2013; thereafter, the contribution rate in a given year is based upon regular compensation, as follows:
• Wages of $45,000 or less...................................................3%
• Wages between $45,000 and $55,000...............................3.5%
• Wages between $55,000 and $75,000....................?.......4.5%
• Wages between $75,000 and $100,000.............................5.75%
• Wages of more than $100,000 but less than $179,000......6%
• Increases the retirement age to 63 in order to retire with an unreduced benefit; members retiring between age 55 and age 63 are subject to a reduction of 6.5% for each year retirement precedes age 63. A provision is also included that allows NYSUT-affiliated bargaining units to petition the governor for an unreduced benefit at age 57 with 30 or more years of service, with any additional actuarial costs to be borne by eligible employees.
• Mandates a 5-year final average salary (FAS) calculation using regular compensation for determining retirement benefits.
• Excludes from the FAS calculation wages exceeding the average of the previous four years by more than 10%.
• Caps pensionable overtime at $15,000 plus inflation.
• Eliminates use of lump payments for unused vacation accruals in FAS calculations.
• Reduces by half the number of sick leave days from 200 to 100 eligible for service credit.
• Limits pensionable salaries to regular compensation from only two employers during a given year.
• Caps salary allowable in a FAS calculation at the New York State governor's salary (currently $179,000).
• Changes the pension multiplier for years of service as follows:
• Less than 20 years of service??????????....1.66% for each year of service
• 20 or more years of service (1^st 20 years) .....................1.75%
• Years exceeding 20 years??????????.........2%
• Requires a 6% contribution to purchase military and prior service.

SUNY ORP

• New employee/employer contribution rates will apply to all employees joining the SUNY ORP on or after April 1, 2012.
• Vesting period remains unchanged at 366 days or immediate for employees with vested employer-funded retirement contracts through approved vendors from previous employment.
• Employee contributions will now be required of all participants for the duration of their employment, and will no longer be picked up by the employer after ten years, as they are today.
• All participants will be required to make employee contributions at the current rate of 3% until April 1, 2013. Thereafter, employee contribution rates in a given calendar year will be based upon their earnings in the second calendar year preceding the current calendar year, as follows:
• Wages of $45,000 or less..................................................3%
• Wages between $45,000 and $55,000...............................3.5%
• Wages between $55,000 and $75,000....................?.......4.5%
• Wages between $75,000 and $100,000.............................5.75%
• Wages of $100,000 or more ????????..??.....6%
  
  
• Employer contribution will remain 8% of compensable salary for the first 7 years of employment, and 10% thereafter.
  
  
• Allowable contribution limits will continue to follow the definitions contained within 390 of Education Law, 131 of Retirement and Social Security Law, and 415 and 401(a)(17) IRS annual contribution limits; and will not be subject to the newly imposed caps and limitations applicable to Tier VI ERS/TRS members.

Voluntary DC Plan

• A voluntary defined contribution plan option will be made available to all unrepresented employees of adopting NYS public employers who earn more than $75,000 annually as of July 1, 2013.
• The SUNY ORP was selected as the ideal vehicle to accomplish this, and Education Law was modified accordingly to permit this newly eligible class of non-SUNY public employees. Vesting, vendors, and plan rules will follow existing SUNY Plan Document and policies.
• Transferring State employees whose immediately preceding employment was with another department, division, of agency of the State shall not be eligible for the DC option and must remain with their current retirement system.
• Employee contribution rates in a given calendar year will be based upon their earnings in the second calendar year preceding the current calendar year, as follows:
• Wages of $45,000 or less..................................................3%
• Wages between $45,000 and $55,000...............................3.5%
• Wages between $55,000 and $75,000....................?.......4.5%
• Wages between $75,000 and $100,000.............................5.75%
• Wages of $100,000 or more ??????????.....6%
  
  
• A fixed employer contribution of 8% of compensable salary will be made to participants? accounts for the duration of their employment, and will not increase to 10% after 7 years, as for SUNY employees.
• Allowable contribution limits will follow the definitions contained within 390 of Education Law, 131 of Retirement and Social Security Law, and 415 and 401(a)(17) IRS annual contribution limits; and will not be subject to the newly imposed caps and limitations applicable to Tier VI ERS/TRS members.