Date: December 31, 2009

Bulletin Number: 960



New Tier 5 Benefit Structure in the New York State Employees’ Retirement System (ERS)


To provide agencies with procedures to populate retirement records in PayServ for employees who enroll in ERS.

Affected Employees

Employees who first join ERS on or after January 1, 2010.

Effective Date(s)

January 1, 2010


On December 10, 2009, the Governor signed into law pension reform legislation (Assembly Bill No. A40026 and Senate Bill No. S66026) that creates a new Tier 5 that, in accordance with constitutional requirements, only applies to new members of ERS who first join on or after January 1, 2010.

Some of the significant changes impacting Tier 5 members include, but are not limited to:

  1. Employee contributions of 3% of pay for all years of service with an exception for State correction officers which are limited to 30 years of service.
  1. Employee contributions of 4% of pay for all years of service for uniformed court officers/peace officers employed by the Unified Court System

  2. Ten year credited service vesting requirement

  3. Overtime compensation in excess of an annual ceiling is not considered pensionable earnings and is not included in the base to calculate employee contributions.  The overtime ceiling is $15,000 in calendar year 2010 and will increase by 3% each year thereafter.

Overtime compensation as defined in the legislation is “compensation paid under any law or policy under which employees are paid at a rate greater than their standard rate for additional hours worked beyond those required.”  A review of the overtime earn codes impacted by the legislation is currently in progress.


Due to the complexity of this legislation and the limited time frame between passage of the legislation and its effective date, the process will be implemented in stages.  The legislation limits the amount of overtime that is considered pensionable and included in the base for calculating contributions.

As a first step, OSC has revised the Retirement Plan Table in PayServ for Plan Type “7Y” (ERS) to include Tier 5 as an option  with a Benefit Plan of “ERSBT5” and contribution rates of 3% and 4%.  Any employee designated as tier 5 by the Employees Retirement System must  have this Benefit Plan selected

Initially contributions will be calculated based on the definition of wages currently in effect for tiers 1 through 4.  Until an employee exceeds the overtime ceiling of $15,000, there will be no difference in the calculation of the contribution using this approach.

A second step in this effort is to change the calculation base and methodology in PayServ.  This will be implemented at a later date and an additional bulletin will be issued.


OSC Actions

As indicated, the Retirement Plan Table in PayServ has been revised for Retirement Plan Type “7Y” (ERS).

Agencies now have the ability to select the Benefit Plan option of “ERSBT5” which must be used when setting up retirement records for tier 5 ERS members.

This new Benefit Plan requires agencies to select a Contribution Status of “Contributing” and an Election Option Code of “SEO” (Standard Election Option).

Although all agencies will have the ability to enter a contribution rate of either 3% or 4%, only Unified Court System agencies should use the 4% contribution rate when setting up retirement records for uniformed court officers or peace officers. These mandatory contributions are covered under Section 414-h of the Internal Revenue Code and therefore are exempt from Federal Withholding tax.

Agency Actions

Agencies will be able to identify affected employees based on the information provided by ERS upon the employee’s enrollment in the Retirement System.  Upon receipt of such information,, agencies must populate the employee’s retirement record as follows:

  1. Open the Retirement Plans page.
    (Path: Home>Compensate Employees>Administer Base Benefits>Use>Retirement Plans)
  2. Enter employee's EmplID in search box.
  3. Click Search.
  4. Select the correct Empl Rcd# for the corresponding Job Record (if multiple records exist).
  5. Enter “7Y” in the *Plan Type field.
  6. Enter the current payroll period begin date or Hire Date, whichever is later in the *Deduction Begin Date field.
  7. Enter the employee’s Date of Membership per the information provided  in the *Election Date field.
  8. Enter the Benefit Plan of “ERSBT5” in the *Benefit Plan     field.
  9. Enter “5” in the *Tier field.
  10. Enter the employee’s Retirement Registration Number* as provided in the Reg Nbr: field.
  11. Enter “Contributing” in the *Contribution Status: field.
  12. Enter “SEO” in the Option Code field under “Election Options.”
  13. Enter the required contribution rate per the information provided  in the Percentage field
  14. Click Save.

 *Members who join ERS on or after January 1, 2010 will be assigned an 8 digit registration number beginning with 5 for easy identification.

Although the registration number as assigned by ERS will contain a hyphen, only the 8 digit numeric values should be entered in the Reg Nbr* field in PayServ in order to prevent reporting discrepancies.


Questions regarding this bulletin may be directed to the Payroll Deduction mailbox.