The following is a summary of 2012 NYSTRS-related legislation that has been signed into law.
New Pension Tier
Chapter 18 of the Laws of 2012
Signed into law March 16, 2012
Chapter 18 amends portions of the Retirement and Social Security Law, Education Law and the Administrative Code of the City of New York that affect the contributions and benefits of members who join a New York State public retirement system on or after April 1, 2012. As it relates to new members of NYSTRS, the bill generally:
- Requires 3.5% contributions regardless of salary prior to April 1, 2013; thereafter, the contribution rate in a given school year is based upon regular compensation earned in the school year two years previously, as follows:
- Wages of $45,000 or less: 3%
- More than $45,000 to $55,000: 3.5%
- More than $55,000 to $75,000: 4.5%
- More than $75,000 to $100,000: 5.75%
- More than $100,000 to $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.
- 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 salary allowable in a FAS calculation at the New York State governor's salary (currently $179,000). Also, limits pensionable salaries to regular compensation from only two employers during a school year.
- Changes the pension multiplier for years of service as follows:
- Less than 20 years of service: 1.67%
- 20 years of service: 1.75%
- Years exceeding 20 years: 2%
- Requires 10 years of service credit to vest.
- Requires a 6% contribution to purchase military and prior service.
- Allows non-unionized employees earning $75,000 or more hired after June 30, 2013 the option of joining the SUNY ORP (a defined contribution plan) rather than the NYSTRS defined benefit plan. For these employees, employers will contribute 8% of salary to the SUNY ORP. Employees will contribute at the same sliding-scale rates noted in the first bullet.
Retirement Age Note: Retirement and Social Security Law Article 24 added by Chapter 18 allows NYSUT to petition the governor for an unreduced benefit at age 57 with 30 or more years of service for NYSTRS members who are in collective bargaining units represented by NYSUT affiliates. If approved by the governor, any additional actuarial costs would be borne by eligible members.
Read the full bill signed into law by Governor Cuomo.