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On March 16, 2012, Governor Andrew Cuomo signed into law Chapter
18 of the Laws of 2012, which amends portions of the Retirement
and Social Security Law, Education Law and the Administrative
Code of the City of New York affecting the contributions and
benefits of employees who join a New York State public
retirement system on or after 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 (1st 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.
Resources for Additional Information
Additional information and resources pertaining to Tier VI and
NYS Pension Reform can be found at:
Empire Center Report: SUNY’s Personal Retirement Plan as a Model
for Pension Reform
Resource:
http://www.suny.edu/BENEFITS/TierVI.cfm |
