Elimination of the Mandatory Employee Contribution for Members of the ORP

The Governor signed a bill into law that will phase out the required 3% employee contribution for members of the SUNY Optional Retirement Program (ORP). This retirement program enhancement will effect employees who participate in the SUNY Optional Retirement Program (with TIAA-CREF, ING, MetLife and/or VALIC), who currently have mandatory 3% employee contributions via payroll deduction. Therefore, this bill will ONLY effect active employees who joined the SUNY ORP on or after July 27, 1976. The following are details of the enhancement and its impact on eligible employees.


ELIGIBILITY

Eligibility for the elimination of the 3% employee contribution is based on one's initial SUNY ORP membership date, regardless of actual length of SUNY service. Therefore, if your initial SUNY ORP membership date was more than 10 years ago, you will qualify for the elimination of the 3% employee contribution regardless of actual length of service or any breaks-in-service. Additionally, as your employee contribution is eliminated, the State will increase their contribution to your ORP account.


TIMELINE

Employees with a SUNY ORP membership date that was at least 10 years ago, who are paying mandatory employee contributions, will have had 1% of the employee contribution eliminated effective April 1, 2008; 2% eliminated effective April 1, 2009; and 3% eliminated effective April 14, 2010. Employees reaching 10 years of ORP membership on or after April 14, 2010, will have the full 3% employee contribution eliminated when they reach 10 years of service.
 

CONTRIBUTION RATES

The summary below illustrates the various "tiers" and employee/employer contribution rates for employees who have 10 or more years of membership as of April 2010:

Tier 3 Membership (7/27/76 - 8/31/83):  Employee contribution = 0%; SUNY contribution = 12% of the 1^st $16,500, and 15% above $16,500.

Tier 4 Membership (9/1/83 - 7/16/92):  Employee contribution = 0%; SUNY contribution = 12% of the1^st $16,500, and 15% above $16,500.

Tier 4A Membership (7/17/92 and thereafter):  Employee contribution = 0%; SUNY contribution = 13%.


QUESTIONS & ANSWERS

1. What if I had previous membership/service credit with the New York State Teachers' Retirement System (NYSTRS) or the New York State Employees' Retirement System (NYSERS) prior to enrolling in the Optional Retirement Program? Can that membership date be used for the start of the 10 year clock?


No. However, time in NYSTRS or NYSERS can be used to expedite the 366 day vesting period for new Optional Retirement Program members.


2. I am currently a member of the NYSTRS or NYSERS and not currently a member of the ORP. How does this retirement enhancement effect me?


This new bill has no effect on NYSTRS or NYSERS members.  However, NYSTRS and NYSERS (Tier 3 and Tier 4) members already have a similar 10 year/3% employee contribution law in effect.


3. I joined the ORP prior to July 27, 1976. How does this retirement enhancement effect me?


Your ORP account will not be effected. You have never had mandatory employee contributions, and your employer contributions remain equal to or greater than for someone who joined the ORP on or after July 27, 1976.


4. Before coming to Buffalo State, I previously participated in a TIAA-CREF Optional Retirement Program with a private college in New York State. Additionally, I previously participated in an ORP with a State College, but it was not a New York State college. Can I use either of those ORP membership dates?


No. Only your SUNY ORP membership date may be used. However, your initial ORP contract could have been initiated at any SUNY campus; it did not have to originate from Buffalo State.


5. What are some options available to me as a result of my anticipated increase in net pay?


You can elect to begin (or increase) tax-deferred 403(b) or 457 accounts. Current maximums for each plan are $16,500 for 2010, with catch-up provisions available. Employees wanting to start or increase deductions to these supplemental retirement plans should contact Human Resources for details.  You may also want to start (or increase) deductions to New York's 529 College Savings Program. Visit www.nysaves.org/emp for details and on-line enrollment.

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