You’ve paid into NYSLRS for a career. When you file, the system will ask one question that matters more than almost any other: how do you want the pension paid?
The Single Life Allowance pays the most. Every other option pays you a bit less in exchange for protecting someone else. Thirty days after your retirement month ends, the choice is locked.
How your check is figured
For most Employees’ Retirement System members in Tiers 3 and 4, the pension is based on final average earnings: the average of your three highest consecutive years. Each year of service earns a percentage of it:
| Years of service | Each year is worth |
|---|---|
| Less than 20 | 1.66% of final average earnings |
| 20 to 30 | 2% of final average earnings |
| More than 30 | 2% for the first 30 years, plus 1.5% for each year beyond 30 |
So 30 years with $80,000 of final average earnings is about $48,000 a year before any reduction or option. Other tiers and special plans use different formulas. Your NYSLRS benefit projection is the number to trust.
What retiring early costs
Tier 3 and 4 members get full benefits at 62, or at 55 with at least 30 years of service.
Retire between 55 and 62 with less than 30 years and the reduction is permanent. It doesn’t go away at 62.
| Age at retirement | Permanent reduction |
|---|---|
| 55 | 27% |
| 56 | 24% |
| 57 | 21% |
| 58 | 18% |
| 59 | 15% |
| 60 | 12% |
| 61 | 6% |
| 62 | None |
Tier 6 members get full benefits at 63, and the reduction at 55 is 52%. If you’re close to 30 years or close to the full-benefit age, the difference between retiring this year and next can last the rest of your life.
- Pension factor
- 50%
- Early-retirement reduction
- 12%
- One more year adds
- +$3,660
The options, side by side
| Option | You receive | After you die | Worth considering when |
|---|---|---|---|
| Single Life Allowance | The maximum monthly pension | Nothing continues to a beneficiary | No one depends on your pension, or they’re provided for another way |
| Joint Allowance, Full or Half | A reduced pension for life | One beneficiary receives all or half of your reduced pension for life | A spouse or partner will rely on the income |
| Pop-Up/Joint Allowance, Full or Half | A slightly smaller pension than the matching joint option | Same as joint; if your beneficiary dies first, you rise to the Single Life amount | You want survivor protection without being stuck at the reduced amount |
| Five or Ten Year Certain | A reduced pension for life | If you die within 5 or 10 years of retiring, your beneficiaries receive your pension for the rest of the period | You want protection against dying early, possibly for several people |
Tier 1 and 2 members also have a Cash Refund option. Some members, mostly in special 20- and 25-year plans, can take a partial lump sum at retirement in exchange for a permanently smaller pension. NYSLRS sends the election form if you’re eligible.
The beneficiary on a joint or pop-up option can’t be changed. Even if your beneficiary dies before you, you can’t name someone new. With Five and Ten Year Certain, you can change beneficiaries during the period. If your spouse is your joint beneficiary, they’re eligible for half of your cost-of-living adjustment.
How to decide
Who would lose the income?
If a spouse would struggle without your pension, Single Life is a bet that you outlive them.
What would they have anyway?
Their own pension, Social Security survivor benefits, Deferred Comp, savings and life insurance.
Ages and health
A younger beneficiary makes joint options more expensive. Health on either side can change the answer.
Health insurance
Ask how NYSHIP or your employer’s retiree coverage works for a surviving spouse. It can matter as much as the pension.
Dollars, not percentages
Compare the monthly gap between Single Life and each joint option. That’s the price of the protection.
Taxes
NYSLRS pensions aren’t taxed by New York State or local governments but are federally taxable.
The 30-day window
You choose your option when you file, but you can change it until 30 days after the last day of the month you retire.
After that, you can’t change it for any reason. Use that window. Confirm the numbers on your final benefit calculation, and make sure your beneficiary’s date of birth is on file (NYSLRS requires it for joint and pop-up options).
Mistakes that are hard to undo
- Picking Single Life because it’s the biggest check, without a plan for your spouse
- Choosing Joint Allowance Full when Half would have done, or the reverse, without running both in dollars
- Buying life insurance to replace a survivor option without comparing the real premium to the real cost
- Retiring a few months before 30 years of service or before 62, locking in a permanent reduction
- Letting the 30-day window pass before anyone in the family has looked at the final numbers
How Morrowgate helps. Greg puts each NYSLRS option next to the rest of your picture: Social Security for both of you, Deferred Comp, savings, insurance and taxes. You see in dollars what each option pays you and what it leaves your beneficiary, and when retiring costs least. NYSLRS processes your election. Greg helps you make it.
Questions people ask
Can I change my NYSLRS option after I retire?
Yes, but only until 30 days after the last day of your retirement month. After that, you can’t change it for any reason.
Can I name more than one beneficiary?
Only with Five or Ten Year Certain. Joint and pop-up options allow one beneficiary, and that person can’t be changed after you retire.
What happens if I choose Single Life and then marry?
Your option doesn’t change. Your new spouse wouldn’t receive a continuing pension, though other death benefits may apply.
Is my NYSLRS pension taxed?
Not by New York State or local governments. It is subject to federal income tax.
Where this guidance stops
This article is general education on NYSLRS pension options: how the rules and the options generally work.
It is not tax, legal or investment advice, and nothing here is a recommendation for your situation. Rules change and outcomes turn on the facts, which is why a CPA and an attorney look at a family’s own numbers before anything is done.
Sources
- NYSLRS: Pension payment option descriptions
- NYSLRS: Coordinated Plan for ERS Tier 3 and 4, retiring before 62
- NYSLRS: Comparison of ERS benefits by tier
- NYSLRS: Death benefits
- NYSLRS: Partial lump sum payment at retirement
- New York Retirement News (NYSLRS): Can you change your beneficiary after you retire?