June 13, 2023 — I have received the following information from Patrick McLaughlin, our Region 9 Retirees President, who approached me recently about this subject and we decided he would put together an article for the Communicator.
The following information from the Office of the State Comptroller is important for your retirement preparation and planning. I thank Chapter 9 Retiree President McLaughlin for his work on our behalf.
When you retire, the pension benefit you receive will be directly related to your retirement service credit. As a New York State and Local Retirement System (NYSLRS) member, you earn service credit for your paid public employment with a participating employer.
You may also be able to receive additional service credit for public employment before you became a NYSLRS member or for military service. There is usually a cost for additional service. Purchasing additional service credit is optional, but because service credit is a factor in calculating a NYSLRS pension benefit, purchasing service credit will generally increase your pension benefit.
There are several types of additional service:
- Previous Service — Service with a participating employer before you joined NYSLRS.
- Prior Service — Service with a participating employer before the employer elected to participate in NYSLRS.
- Military Service — Service in the United States Armed Forces; the amount of credit available and the cost vary depending upon which section of the law applies.
- Transferred Service — Service from an active membership credited in another New York public retirement system.
- Withdrawn Service — Service from a previously withdrawn membership in NYSLRS or another New York public retirement system.
Prior service credit may come with a cost.
- For Tier 2 and 3 members, there is no cost to obtain credit for this service.
- For Tier 4 and 5 members, the cost is 3% of gross earnings plus interest to the date of payment.
- For Tier 6 members, the cost is 6% of gross earnings plus interest to the date of payment.
Tier 4, 5 and 6 members can pay for prior service any time, however, you must have earned two years of service credit as a NYSLRS member before your prior service can be credited.
Previous service is also optional and there is usually a cost.
An example of previous service would be: You worked at the town library while going to school, and as a part-time employee, you chose not to join NYSLRS. When you graduated and took a full-time job at the Town Supervisor’s office, you were required to join. You can request credit for the part-time service at the library.
There may be a cost to obtain credit for your previous service. You can request and pay the cost for the previous service at any time; however, you must earn two years of service credit as an NYSLRS member before your purchased service can be credited.
How to request credit for previous, prior or military service
To request additional service credit for previous, prior or military service, sign into your Retirement Online account, scroll down to the My Account Summary area and click the “Manage my Service Credit Purchases” button. You can also apply by mail by submitting a Request to Purchase Service Credit (Including any Military Service) (RS5042), available on the Forms page.
Include as much information as you can about the period of employment for which you seek credit. If you are applying for military service credit, upload your Certificate of Release or Discharge from Active Duty (DD-214), or enclose a copy with your paper application.
Note that the service credit request must be received before your date of retirement.
Requesting credit for your previous, prior, or military service as early in your career as possible can be advantageous. Records needed to verify service will be more readily available; if there is a cost, it will be less expensive than waiting to purchase credit later; if your tier allows you to discontinue contributions after a defined period, you will stop paying contributions sooner; and your retirement benefit will be processed more quickly if your service credit request has been reviewed or processed before retirement.
Suppose you request previous, prior, or military service credit to establish eligibility for a vested retirement benefit. In that case, you must request this credit while you are on the payroll of a participating employer. If you receive a statement of the cost after you leave the payroll, you must make payment within 30 days of notification.
If your purchased service brings your total credited service to 10 or more years, you will no longer be eligible to withdraw your contributions and end your membership.
Verifying your service
When your request for additional service credit is received, the state must first verify your earnings and service dates. They will ask your employer for your monthly earnings and hourly pay rates to determine the amount of credit you can receive and the cost (if any) to purchase it.
In most instances, your employer can supply this information. However, if records are unavailable, documents such as W-2 forms from your tax returns or Social Security earnings records can be accepted.
Applicants may be asked for a “non-certified detailed (itemized) earnings statement” directly from the Social Security Administration (SSA) by completing form SSA-7050-F4. This form is available from your local SSA office, on the SSA website or by calling 1-800-772-1213.
Your detailed (itemized) earnings statement includes the names of your employers and your quarterly earnings for each year requested. We can usually get your pay rates from the State or the appropriate local civil service commission.
You can be credited only for employment with an employer participating in one of the retirement systems listed in the Withdrawn Service section or from military service. You cannot receive credit for service with a nonparticipating employer or service performed while not on the payroll, such as independent contractor service.
Should You Purchase Additional Service Credit?
Purchasing additional service credit is optional. Before you pay for additional service credit, you should know there are some situations where additional service credit may not benefit you. For example, your pension will not increase if:
- You are covered by a retirement plan that provides for a fixed retirement benefit after 20 or 25 years of service, and you are already eligible to retire.
- You are a Tier 2 member employed by New York State, covered by the New Career Plan (Section 75-h of the Retirement and Social Security Law), and have 37½ or more years of service credit.
- You are approved for a disability retirement where service credit is not used to calculate the benefit.
You are eligible for a change in your date of NYSLRS membership and perhaps a change in your tier if you withdrew your membership in one of the following public retirement systems in New York State before your current membership:
- New York State and Local Employees Retirement System (ERS);
- New York State and Local Police and Fire Retirement System (PFRS);
- New York State Teachers’ Retirement System;
- New York City Employees’ Retirement System;
- New York City Teachers’ Retirement System;
- New York City Police Pension Fund;
- New York City Fire Department Pension Fund; and
- New York City Board of Education Retirement System.
To return to an earlier tier or an earlier date of membership in your current tier, you must request a tier reinstatement by logging into your online account or by mail by submitting an Application to Reinstate a Former Membership (RS5506) available on the Forms page.
It is important to note that an earlier membership tier does not always result in a better benefit. You can review detailed information about the benefits provided by the different tiers in your online account.