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Tier 5 Benefit Information

Employers’ Frequently Asked Questions

If you have questions about reporting Tier 5 employees that are not covered here, please email Employer Services.

  1. What are the dates of membership for members who joined the Retirement System and are in Tier 5?

    • Members who joined the Employees’ Retirement System (ERS) January 1, 2010 through March 31, 2012, are in Tier 5.
    • Members who joined the Police and Fire Retirement System (PFRS) January 9, 2010 through March 31, 2012, are in Tier 5 (regardless of whether or not they are required to make contributions).
  2. How do I report Tier 5 members to the Retirement System?

    You should report Tier 5 members on your retirement report in the same manner that you report members of other tiers.

    Registration numbers for ERS Tier 5 members begin with “5.” These members make 3 percent contributions for their entire careers. Their contributions are treated like ERS Tier 3 and 4 members. However, members in Uniformed Court Officer and Unified Court Peace Officer job titles make 4 percent contributions for their entire careers.

    PFRS Tier 5 registration numbers begin with “0B5”. Some PFRS Tier 5 members contribute and some do not. You are responsible for letting us know whether a new PFRS employee will or will not contribute by completing the collective bargaining agreement section on the PFRS membership application.

  3. I understand there are limits to the amount of overtime that can be used in the calculation of a Tier 5 member’s Final Average Salary (FAS). Do I still report all overtime to the Retirement System?

    The total amount of allowable overtime is limited for ERS Tier 5 members (see the ERS Overtime Limits tables) and is subject to a 3 percent annual inflation factor each year. Though the member may earn as much overtime as the employer allows, do not report overtime payments or deduct retirement contributions on overtime payments in excess of the annual limit.

    For PFRS Tier 5 members, the total amount of allowable overtime is limited to 15 percent of salary. Though the member may earn as much overtime as the employer allows, do not deduct retirement contributions on overtime payments in excess of this limit and, effective April 1, 2012, do not report these excess overtime payments.

  4. What constitutes overtime?

    For compensation to be classified as “overtime,” it must meet both of the following requirements (see Retirement and Social Security Law Sections 501(24), 601(l) and 1203):

    • Compensation must have been paid according to a law or policy under which employees are paid at a rate greater than their standard rate, and
    • Compensation must have been paid for additional hours worked beyond those required.

    For example:

    • Overtime paid at time-and-a-half, double-time, or greater;
    • Recall overtime;
    • Holiday premium pay for holidays worked;
    • Pre-shift briefing pay.
  5. What is not considered overtime?

    • Stand-by pay;
    • Inconvenience pay;
    • Location pay;
    • Straight pay for holidays.
  6. How is overtime reported to the Retirement System for ERS members?

    Overtime should be reported to the Retirement System until the ERS member has reached the overtime cap amount in any calendar year. The maximum reportable overtime increases by 3 percent each calendar year. See the ERS Overtime Limits tables.

    Once the ERS member’s amount of overtime has reached the cap, any overtime paid to that individual for the remainder of the calendar year should not be reported to the Retirement System. If you report overtime payments that exceed the cap, you will be billed on them unless you adjust them out. It is important to note that contributions should not be collected on any overtime amounts greater than the overtime cap.

    Once the overtime cap is reached, the ERS member must still be reported to the Retirement System, however, overtime pay that exceeds the cap should not be reported, nor should contributions be taken on it. For example, an ERS member has earned $700 for a monthly period. This includes $200 in overtime. This member has reached the overtime cap therefore, only $500 should be reported to the Retirement System. Contributions should be taken only on the $500.

  7. How is overtime reported to the Retirement System for PFRS members?

    Overtime should be reported to the Retirement System until the member reaches his/her cap. Overtime that exceeds 15 percent of a PFRS member’s annual salary should not be reported to the Retirement System.

    Once the PFRS member’s amount of overtime has reached the cap, any overtime paid to that individual for the remainder of the calendar year should not be reported to the Retirement System. If you report overtime payments that exceed the cap, you will be billed on them unless you adjust them out. It is important to note that contributions should not be collected on any overtime amounts greater than the overtime cap.

  8. Do I deduct Tier 5 member contributions before or after taxes?

    For ERS Tier 5, you will deduct contributions from your members the same way you deduct contributions from your ERS Tier 3 or 4 members — before taxes. Contributions are tax-deferred under Internal Revenue Code 414(h).

    For PFRS Tier 5, effective October 1, 2013, mandatory contributions are also deducted before taxes.

  9. One of our Tier 5 police officers is out of work due to an injury sustained in the performance of duty. The officer is receiving full salary under Section 207-c of the General Municipal Law (GML). Should we deduct 3 percent contributions from this salary?

    Yes. Tier 5 PFRS members are required to contribute 3 percent of any salary they receive under Section 207-c GML.

(Rev. 3/15)

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