| |
| 1. What types of benefits
are provided by NYSTRS? |
|
NYSTRS provides three types of benefits:
|
1.
|
A retirement benefit, i.e., a monthly benefit payable for
the life of the member after the member has retired from teaching service.
The calculation of this benefit takes into account the New York public
service of the member credited with the System and the member’s salary
earned from such service. Most NYSTRS members retire for service and receive
a service retirement benefit. Some members retire for disability and receive
a disability retirement benefit.
|
| 2. |
A post-retirement survivor benefit, i.e., an annuity or
other form of optional benefit which is payable after the member dies in
retirement. In order for an optional post-retirement survivor benefit to be
payable, the member must have elected the form of benefit at the time of
retirement. The election of an optional form of benefit (an “option”)
reduces the size of the monthly retirement benefit payable to the member during
retirement. To provide context, it may be noted that only about 30% of recent
NYSTRS retirees elected some optional form of retirement benefit which provides a
post-retirement survivor benefit; in other words, a significant majority of
recent retirees did not elect any form of optional survivor protection when they
retired. |
| 3. |
A death benefit, i.e., a lump sum benefit payable upon the
member’s death. A potentially very significant active service death
benefit is payable if the member dies while in active service. A more modest
pre-retirement vested member death benefit is payable if the member dies
outside of active service and prior to retirement, provided the member had at
least 10 years of credited service at the time of death. An ordinarily very
modest post-retirement death benefit is payable upon the death of a
member in retirement, provided the member had a date of membership on or after
July 1, 1973 and was in active service at the time of retirement. |
Practice Pointer: NYSTRS’
Active Members’
Handbook describes the benefits provided by the System in lay terms. The
System has also prepared a Compilation of Laws
Covering NYSTRS containing the most relevant laws governing the System and
the benefits it pays. It includes a two-page preface to assist the reader. These
documents are available in the Library at www.nystrs.org.
|
|
| 2. How are member benefits
calculated? |
|
In a defined benefit plan like NYSTRS, member benefits are generally
not a function of the contributions made by, or on behalf of, the
member. Rather, NYSTRS benefits are determined using formulas which typically take
into account the member’s compensation and service credited in the System. For
example, a career teacher who is a member of the System and has 30 years of service
credited in the System will be entitled to retire on or after age 55 with a
retirement benefit equal to 60% (i.e., 2% X 30 years) of the member’s
“final average salary.” Generally, the more service credit the member has
accrued, the greater the member’s benefit. Similarly, the greater the
member’s regular salary, the greater the member’s benefit.
|
|
| 3. What are membership tiers and how do they affect the benefit
calculation? |
|
NYSTRS has a tiered benefit structure. In other words, the laws governing the
precise benefits a member will receive and their calculation will vary somewhat,
depending upon the member’s tier. Tier structure is based on these membership
dates:
|
Tier
|
Date of Membership
|
|
1
|
Before 7/1/73
|
|
2
|
7/1/73—7/26/76
|
|
3
|
7/27/76—8/31/83
|
|
4
|
After 8/31/83
|
Practice Pointer: Although Tier 3
members are entitled to a distinct Tier 3 benefit calculation, Tier 3 members are
also entitled to retire instead under the Tier 4 benefit calculation and, in the
System’s experience, usually do so. Tier 3 members typically prefer the Tier 4
benefit calculation because the Tier 3 calculation requires the retirement benefit to
be reduced commencing at age 62 when the retiree becomes eligible for Social
Security.
|
|
| 4.
What
entitlements do members and retirees have to contributions made to
NYSTRS? |
|
Employer contributions go into a single pool which is used to pay all benefits to
all members and retirees. No member or retiree has any specific right to any
contributions made by an employer on his or her behalf either at retirement or at any
other time.
Certain Tier 1 and 2 members may have made contributions to what is called the
Annuity Savings Fund (ASF) maintained by the System. If so, they are entitled to
receive an annuity at retirement based upon those contributions and the interest
which has accumulated on those contributions. Alternatively, they may withdraw their
accumulated contributions at retirement. Before retirement, they have the right to
obtain loans against their accumulated contributions.
Tier 3 and 4 members are required to make contributions to the System, although
that requirement has been significantly reduced by recent legislation. Tier 3 and 4
members who have fewer than 10 years of credited service may withdraw their
accumulated contributions if they cease teaching and wish to terminate their
membership. Unlike the Tier 1 and 2 member contributions to the Annuity Savings Fund,
the contributions of Tier 3 and 4 members help fund all the benefits provided by the
System and do not result in any distinct benefit payable to the members at
retirement. However, a Tier 3 or 4 member’s accumulated contributions will be
refunded in the event the member dies prior to retirement. Additionally, Tier 3 or 4
members have the right to borrow against his/her accumulated contributions.
|
| 5.
Why are
retirement benefits of significance in a divorce? |
|
New York courts have determined that a member’s retirement benefits are
marital assets which are subject to equitable distribution upon the member’s
divorce pursuant to Domestic Relations Law §236, to the extent those benefits were
acquired during the marriage. SeeMajauskas v. Majauskas,
61 NY2d 481 (1984). Accordingly, when a member is divorced, a court may determine
that the member’s spouse is entitled to share in the member’s
benefits.
|
| 6. Does a divorce automatically
nullify a member's designation of the former spouse as the beneficiary of his/her death
benefit? |
|
Prior to the enactment of Chapter 173 of the Laws of 2008, the answer to this question was “no.” Chapter 173 provides generally that a divorce, annulment or judicial separation of a marriage now revokes a member's prior designation of a former spouse as beneficiary of certain death benefits and retirement options, except as provided by the express terms of the judgment or decree, or a DRO. Under Chapter 173, the former spouse is treated as having predeceased the member.
In such cases, if a member wishes to retain the former spouse as beneficiary, the member must file a new Designation of Beneficiary form (NET 11.4) with the System following the divorce, annulment or judicial separation.
The designations impacted by Chapter 173 include both the pre-retirement and post-retirement death benefits, and any lump-sum retirement option under which the member is permitted to change the beneficiary. Chapter 173 does not apply to designations that are irrevocable by law, such as the beneficiary designation of a joint and survivor retirement option, or designations that are required under a certified DRO on file with the System.
For Chapter 173 to apply, the System must receive written notice of the divorce, annulment or judicial separation before it issues payment of the death benefit or option.
The System's Legal Department should be contacted for further information. |
| 7. When does the System disclose information in a
member's or retiree's file? |
|
The System is not permitted by law to provide information from a member or
retiree’s file except when the System has received a written authorization
signed by the member or retiree or when the disclosure is required by law.
An authorization must specifically reference NYSTRS and must be dated.
Authorizations executed more than 12 months prior to the date on which information is
sought are considered stale and will not be implemented by the System.
The System will also make available information pursuant to a subpoena duces
tecum. The System will comply with a valid subpoena in a matrimonial action by
sending the information requested to the court. Subpoenas must be directed to the
System’s Legal Department to assure timely processing.
Practice Pointer: While the System
can provide estimates of a particular member’s retirement benefit in specified
circumstances, the System does not have an unlimited ability to honor repeated or
multiple requests for estimates with respect to any given member. Thus, the System
makes every effort to accommodate reasonable requests but must reserve the right to
assign a very low priority to or deny requests made beyond the point judged
reasonable by the System.
|
|
