How Your Member Contributions Pay Off

As a NYSTRS member, you contribute a percentage of your salary to the System. But do you know how your rate is determined or how it supports your future retirement benefit? Simply put, if you become vested and remain a NYSTRS member, your contributions will ultimately help fund your pension.

Pension funding is a shared responsibility. You contribute a certain amount as required by law.  Your employer also contributes a certain amount (i.e., the employer contribution rate) based on their member payroll. NYSTRS then invests those member and employer contributions using a prudent investment strategy designed to maximize returns while also limiting risk. 

The end result: 85 cents of every pension dollar you will receive in the future will come from investment income. Employer contributions account for 13 cents while member contributions like yours account for 2 cents of every pension dollar. So, you can rest assured that your contributions will be invested wisely and will help fund your future benefit.  

In a defined benefit pension plan like NYSTRS, retirees receive a guaranteed benefit based on their earnings and service credit history over the course of their career. This is different than a defined contribution plan, such as a 401(k), in which retirement benefits are calculated based on contributions and investment performance.

Your member contributions do not provide you with a separate annuity or a separate retirement benefit.

If you leave service and withdraw your membership, the contributions you made (plus 5% interest) are refunded to you. The money from your employer remains in the System.  

What’s My Contribution Rate?

By law, NYSTRS members contribute a percentage of their salary. Contribution rates vary based on a member’s tier. 

• Tier 6 members are required to contribute a variable contribution rate, between 3% to 6% of their salary, throughout their active membership.
• Tier 5 members are required by law to contribute 3.5% of their salary throughout their active membership.
• Tier 3 and 4 members were required to contribute 3% of their salary until they had either 10 years of membership or were credited with 10 years of service, whichever occurred first.

You can see your contribution rate in your MyNYSTRS account and on your Benefit Profile.

Rates for Tier 6 members

For the first three years of membership, a Tier 6 member’s contribution rate is determined by their projected reportable earnings, provided to NYSTRS by their employer. Beginning in the fourth year, the contribution rate is based on the pensionable earnings the member received two years prior.

• Members earning $45,000 and less contribute 3.0%.
• Members earning more than $45,000 to $55,000 contribute 3.5%. 
• Members earning more than $55,000 to $75,000 contribute 4.5%.
• Members earning more than $75,000 to $100,000 contribute 5.75%.
• Members earning more than $100,000 contribute 6.0% on earnings up to the pensionable salary limit. Pensionable earnings may not exceed the salary of the NYS governor in any one year. Reported wages exceeding this pensionable salary limit will not be included in pension contribution or benefit calculations. See the Member Contributions page for the current pensionable salary limit. 

Pensionable earnings are used when calculating pension benefits and member contributions (the actual contributions a member makes over the course of a year). 

Recent Legislation Affects Rate Calculations

Recent legislation permits a member’s contribution rate to be determined using only their annual base wages for school years ending June 30, 2025 through June 30, 2028. This means any pensionable earnings made in addition to annual base wages will not be used in determining a member’s contribution rate. Although the contribution percentage rate for those years will be calculated only on annual base wages, Tier 6 members must pay the applicable contribution rate on all of their pensionable earnings in those years.

Take, for example, Mary Member:

In the 2024-2025 school year, Mary’s base salary was $74,000. In fall 2024, Mary coached the tennis team and earned another $2,000.

When added to their $74,000 base salary, Mary’s total pensionable earnings were $76,000 for the 2024-2025 school year.  

Since Mary is a Tier 6 member with four or more years of service, their contribution rate for the 2024-2025 school year is 3.5%, based on their 2024-2025 base salary of $74,000. The 3.5% rate is applied to Mary’s total pensionable earnings of $76,000. If their contribution rate were based on their total pensionable earnings of $76,000, it would be 4.5%.

Learn More

See the Active Members’ Handbook to read more about contributions and credit, and you can visit the Member Contributions page to learn more about how your contribution rate is determined.