Rates for each retirement plan (Employees’ Retirement System [ERS] and the Police and Fire Retirement System [PFRS]), are determined based on actuarial assumptions recommended by NYSLRS’ Actuary in the Annual Report to the Comptroller on Actuarial Assumptions.
Normal Annual Contribution
The normal contribution is an employer’s total bill, excluding payments for deficiencies, group life insurance, previous amortizations, incentive costs and prior year’s adjustments.
System’s Average Rates
Average rates (including group life insurance) for the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS) are determined by the System’s Actuary. For fiscal year 2021, the average rate is 14.6 percent of payroll in ERS and 24.4 percent of payroll in PFRS. For fiscal year 2022, the average rate will be 16.2 percent of payroll in ERS and 28.3 percent of payroll in PFRS.
Employer’s Average Rate
Average rate for a particular employer is determined by dividing an employer’s normal contribution by that employer’s projected salaries.
Graded rates for the Employees’ Retirement System (ERS) and Police and Fire Retirement System (PFRS) are determined following the procedures established by the Contribution Stabilization Program. For the annual contribution payment due February 1, 2021, the System graded rate is 14.1 percent for ERS and 24.4 percent in PFRS.
Each year, the System graded rate will increase or decrease by up to 1 percent depending on the gap between the increase or decrease in the System’s average rate and the previous graded rate. For the annual contribution payment due February 1, 2022, the System graded rate will be 15.1 percent for ERS and 25.4 percent for PFRS. Graded rates exclude any employer group life insurance owed that fiscal year.
The annual contribution to the Retirement System is based on the graded rates established by the Contribution Stabilization Program, which are tailored to the tier and plan demographics of each employer.
Maximum Amortization Amount
The maximum amortization amount is the difference between an employer’s normal annual contribution and the employer’s graded contribution. Employers that elect to participate in the Contribution Stabilization Program can choose to amortize the maximum amount or a lesser portion. Amortizations are paid over a ten-year period at an interest rate comparable to taxable fixed income investments of a similar duration.
The interest rate on the amortized amount in a particular rate year will be fixed for the duration of the ten-year repayment period. If an employer chooses to amortize in the next rate year, the interest rate on that amortized amount will be the rate set for that year, and may be different from the previous rate year.
The interest rate for amounts amortized in fiscal year 2022 is 1.76 percent.1