For those who are employed in service associated with New York State, there is a Tier 6 NYS Retirement system.
If you joined the Employees Retirement System after April 1, 2012, you are enrolled as a member for Tier 6 benefits.
However, there are additional eligibility criteria to receive these retirement benefits. Below are the details regarding Tier 6 NYS Retirement.
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Eligibility Criteria for Tier 6 NYS Retirement
Let’s first understand who is eligible for Tier 6 New York State Retirement. Generally, those who are full-time permanent or twelve-month-based employees in New York are automatically enrolled for Tier 6 retirement benefits.
On the other hand, part-time employees must consult with their employer to gain membership for these benefits.
However, if you joined the Employment Retirement System after April 1, 2012, you will receive Tier 6 benefits. To receive Tier 6 NYS retirement benefits, you must provide at least 10 years of service.
Contribution Requirements For Tier 6 Retirement Benefits
Now, let’s understand the contribution requirements for receiving Tier 6 NYS Retirement benefits.
Your contributions depend on your annual wage and are required for all years of public service.
Contribution rates during the first three years are based on your annual wage at enrollment:
- Up to $45,000: 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%
- Over $100,000: 6%
After three years, rates are based on your actual earnings from two years prior.
Tier 6 Pension Calculation
Your pension benefits are calculated based on your Final Average Earnings (FAE), years of service credit, and age at retirement.
To calculate the New York State (NYS) pension under Tier 6, follow these steps: First, determine your Final Average Salary (FAS), which is the average of your highest five consecutive years of earnings, excluding overtime and certain other payments.
Next, determine your Credited Service, which is the total number of years you have worked and contributed to the NYS Retirement System.
Then, calculate the Pension Factor: for the first 20 years of service, it’s 1.75% per year, and for each year beyond 20 years, it’s 2.0% per year.
Finally, apply the Pension Factor to your FAS by multiplying your total years of service by the appropriate percentage (1.75% for the first 20 years and 2.0% for any additional years), and then multiply this result by your FAS.
Let’s assume the following details for an employee under Tier 6:
- Final Average Salary (FAS): $60,000
- Years of Credited Service: 25 years
Steps:
Calculate Pension Factor:
- For the first 20 years: 20 years * 1.75% = 35%
- For the next 5 years: 5 years * 2.0% = 10%
- Total Pension Factor: 35% + 10% = 45%
Apply Pension Factor to FAS:
- Pension = FAS * Pension Factor
- Pension = $60,000 * 45%
- Pension = $60,000 * 0.45
- Pension = $27,000 per year
Therefore, in this example, the annual pension would be $27,000.
NYS Tier 6 Retirement Age and Options
Now, let’s understand at what age you can retire under Tier 6 NYS Retirement. To receive Tier 6 retirement benefits, you must provide at least 10 years of service.
However, in some jobs, benefits are provided even after 5 years of service, but the benefits are reduced in such cases.
Generally, the retirement age is considered to be 63 years. When you turn 63, you will be eligible for retirement benefits. However, early retirement is possible at the age of 55, but in such cases, benefits are reduced.
Additionally, based on age, contribution, and job type, various benefits such as security, hospital treatment assistance, etc., are provided.
Tier 6 Disability and Death Benefits
Now, let’s understand some important information regarding disability and death benefits under Tier 6 NYS Retirement.
Disability Retirement
If you experience any physical or mental disability while providing service, you will receive disability retirement.
Generally, 10 years of service credit is required for Tier 6 benefits. However, if someone becomes disabled due to an accident while working, no service credit is required.
Death Benefits
If someone dies before receiving retirement benefits while providing service, the person’s beneficiaries or family members will receive Tier 6 death benefits.
If death occurs while working, no service credit is required for receiving benefits. In other cases, one year of service credit is required for death benefits.
In addition to death benefits, post-retirement death benefits may also be provided.
Cost-of-Living Adjustments (COLA)
Cost-of-Living Adjustments (COLA) are periodic increases in retirement benefits that help retirees maintain their purchasing power in the face of inflation.
Here is a short and easy discussion about it.
Eligibility
- Generally, retirees must be at least 62 years old and have been retired for at least 5 years to qualify for COLA.
- Alternatively, retirees who are 55 years old and have been retired for at least 10 years may also be eligible.
Calculation
- The COLA is typically calculated based on a percentage of the first $18,000 of the retiree’s annual benefit.
- The percentage increase is determined by the rate of inflation, capped at a certain maximum (e.g., 3% per year).
Implementation
- COLA adjustments are usually applied annually to the eligible retirees’ benefits.
Example
If a retiree’s annual pension benefit is $20,000, and the COLA for the year is 2%, the adjustment would be applied as follows:
- Eligible amount for COLA: $18,000 (the cap amount)
- COLA increase: 2% of $18,000 = $360
- New annual benefit: $20,360
FAQs
- What happens if I leave public employment before retirement age?
Ans: If you have at least five years of credited service, you are vested and will still receive a retirement benefit when you reach retirement age.
- Can I borrow from my retirement contributions?
Ans: Yes, you can apply for a loan through Retirement Online.
- How do I apply for retirement benefits?
Ans: File the appropriate application with the Office of the State Comptroller. Benefits are not paid automatically.
