Bill
A 10939
The bill reduces Tier 6 employee retirement contributions by using a simple three-tier base-wage structure and adds an employer-offset starting in 2026.
Purpose and intent
- This bill seeks to adjust employee contribution rates for Tier 6 members across NYSLRS (New York State and Local Retirement System) and related New York City retirement systems, as well as replace or modify wage calculations used to determine those contributions.
- The overarching aim appears to be to reduce employee contribution rates for higher earners within Tier 6, while aligning the calculation of annual wages (base wages) used to determine those rates and preserving certain administrative and funding mechanisms.
Key provisions and changes
1) New York State and Local Employees’ Retirement System (NYSLERS), Police, and Fire
- Section 1 (retirement law, §517(a)):
- Current baseline: members contribute 3% of annual wages, with tiered brackets for higher wages and caps on years of contributions.
- For members who first join on/after April 1, 2012, contribution rates for current plan years would be tied to wages in the second plan year preceding the current plan year, with a detailed bracket schedule (existing bracket logic replaced in several parts with a simpler base-wage scheme).
- New simplified tier (base wages):
- 3% for base wages ≤ $75,000
- 4% for base wages > $75,000 and ≤ $100,000
- 5% for base wages > $100,000
- In the first three plan years of membership, rates can be based on employer-projected annual wages.
- For certain year ranges (April 2022–April 2028 adjustments for those who joined after 2012), rates are determined by the second plan year wages, with base wages defined as regular pay, shift differential, location pay, and any increased hiring rate pay (overtime and extracurricular/pensionable pay excluded).
- Special note: Provisions apply to NYSLERS and NYSL PFRS in parallel.
2) New York City public retirement systems
- Section 2 (NYCERS, NYCTRS, NYC BOE, §613(a)):
- Similar tiered structure for NYC employees, with the same base-wage approach (three brackets: ≤$75k; >$75k–$100k; >$100k).
- Three-year front-loaded projection period for plan years with employer-projected wages.
- For employees who joined after 2012, rates for plan years between 2022–2028 determined by second plan year wages.
- Overtime and extracurricular/pensionable earnings excluded from base wages as defined.
- Regulations for deductions and administration to be issued by retirement system heads.
3) Education employees and programs (Education Law provisions)
- Section 3 (Education Law §613, f, g):
- Tier 6 employee contributions: aligns similar three-bracket base-wage approach as above, with 3% for ≤$75k, 4% for >$75k–$100k, 5% for >$100k.
- For uniformed court/peace officers and other specialized groups, similar phased-rate mechanism beginning April 2026, with bracketed rates and employer-projected wage mechanisms for the first three plan years.
- Teachers’ Retirement System (TRS) and State University of NY Optional Programs: same transition logic with percentage-based contributions and three-year projected-wage window.
- Education-wide inclusion of base wages vs. overtime, extracurricular compensation exclusions, and agency/district-level administration rules.
4) Member contributions and special provisions
- Section 4 (RSSL §1204): mirrors Section 1’s changes for NYSLRS, with specific reference to base wages and formatting for three brackets; also clarifies exclusions of overtime/extracurricular pay for base wage calculations and administrative rules for deductions.
- Section 5–7: Align changes for Education Law provisions (Sections 182, 392, 6252) to reflect reduced contribution rates for Tier 6 in schools and higher education, plus employer-side funding offsets starting April 2026:
- Education employee contributions: simplified base-wage brackets with 3%, 4%, and 5% rates.
- In three-year initial periods for electing employees in optional retirement programs, employer-provided wage projections apply.
- On/after April 1, 2026, the state shall contribute an additional 1% of the employee contribution on behalf of the employee for selected programs, effectively increasing the employer’s offset.
5) Effective date and retroactivity
- Section 8: Provisions are not subject to RSSL section 25.
- Section 9: Effective immediately; "deemed in full force and effect on and after April 1, 2026."
Fiscal and administrative impact (as per the bill’s fiscal note)
- Reduces required employee contributions for Tier 6 across NYSLRS and NYC retirement systems, with a three-tier base-wage framework.
- Excludes overtime from annual wage calculations for contribution purposes (permanent exclusion for Tier 6).
- Estimated cost impact on employers:
- NYSLRS: Net annual increase in employer billing rates (approx. 0.8% of billable salary; state impact ~ $107 million, local impact ~ $160 million).
- NYSLPFRS: Net increase in employer billing rates (approximately 0.7% of billable salary; state ~ $6 million, local ~ $25 million).
- NYCERS/TRS/BERS (City systems): Detailed, long-term projections show substantial increases in employer contributions over 25 years; early-year increases around $184 million total (split between NYC and other obligors) with escalating annual costs thereafter.
- Administrative costs expected for implementing changes.
Who would be affected
- Tier 6 members of NYSLRS, NYSLPFRS, NYCERS, TRS, BERS, and related NYC/education retirement programs.
- Employers (state, city, and local participating employers) who fund the retirement systems.
- Education employees enrolled in state/education retirement programs and optional retirement plans.
Timeline and procedural notes
- Effective date: Immediate effect, with full implementation deemed to be April 1, 2026.
- Transitional provisions allow use of employer-projected wages for the first three plan years in determining contribution rates.
- Regulations to be issued by heads of each retirement system to implement deductions and fund maintenance.
Overall assessment
- The bill shifts toward reducing employee contribution rates for Tier 6, particularly for higher base-wage earners, while expanding the use of employer projections and base-wage calculations to determine rates. It also introduces an employer contribution offset starting in 2026 to partially fund these changes. The fiscal note indicates meaningful medium- and long-term rising costs to both state and local employers across multiple retirement systems.
Compiled from official sources — confirm details with the bill’s official record.
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