The Contribution Stabilization Program (CSP) is an optional program that allows you to pay a portion of your annual pension contributions to the Fund when due and pay the remainder over time with interest. The CSP establishes a graded contribution rate system that, if you elect to participate, enables you to amortize a portion of your annual contribution over a ten-year period, leading to smoother, more predictable pension costs.
Participating in the Program
If you did not elect to participate in a previous fiscal year, you can opt into the program now or in the future by submitting a form (visit our How to Participate in the Program page for details). You will still have the option to prepay your annual contribution by December 15. (Please note: municipalities cannot issue bonds on their own to pay the State in one lump sum. The law enacting the CSP did not contain legislative authorization for employers to issue bonds. Specific statutory authority is required.)
Once you elect to participate and amortize, you cannot withdraw from the CSP. However, you do not have to amortize each year and you can choose to amortize less than the maximum amount allowed. You can prepay amortized amounts in order to reduce your outstanding deferral and accrued interest. There is no prepayment penalty.
Maximum Amortization Amounts
If you are eligible to amortize, your estimated invoice (available in Retirement Online every summer) and your annual invoice (issued in Retirement Online in November) will show the maximum amount you can amortize. Your projection, which is available 17 months in advance of the invoice due date, will show an estimated maximum amortization amount for your next fiscal year’s contribution.
Amortization Schedules and Payoffs
If you participate in the CSP, you can view the payment schedules of any outstanding amortizations in Retirement Online. Sign in to your Retirement Online account. From your Account Homepage, click the “Access Billing Dashboard” button. After choosing your location code and retirement system (ERS or PFRS), click the ‘Amortization Schedule Review’ link on the Billing Dashboard.
You will be able to search for a specific amortization or view a list of all amortizations. If you click on an amortization in the search results list, you will see details associated with that amortization, including the effective date, maturity date, interest rate, payment amount and payment schedule.
You can save on interest costs by paying off amortizations ahead of schedule. To calculate a payoff amount for any amortization based on a payoff date of your choice, from the Billing Dashboard, click the ‘Amortization Payoff Calculator’ link, then click the “Search” button. In the list of search results, click the amortization you want to pay off. Next, enter your preferred payoff date in the Payment Date field and click the “Calculate Payoff” button.
If you plan to pay off an amortization, please notify us in advance so we can identify your payment and post it to the proper amortization. You can use our help desk form or call 866-805-0990 (press 1, then 6) to contact our Employer Billing staff.
The CSP is only one type of amortization you can view in Retirement Online. Other types are:
- Alternate Contribution Stabilization Program: amortizations of annual contributions by employers who elected to participate in this program during the one-time election period during the 2013–2014 billing cycle.
- Deficiency: a 25-year amortization required of new participating employers. Deficiencies cover the cost of benefits for employees who were on the payroll before the employer participated.
- Incentives: amortizations of costs to participate in an incentive. Generally, employers can elect to participate in an incentive if one is offered and can choose to amortize the cost or pay the full amount. (Note: the 2021-2022 New York State budget included retirement incentives for some New York City retirement systems, but those incentives did not apply to NYSLRS members.)
- Past Service Costs: costs associated with adopting a new retirement plan or option. The employer can choose to pay the cost in a lump sum or amortize.
- Special Legislation: Generally, employers can choose to pay any cost in a lump sum or amortize. The legislation defines the amortization period, which is usually five or ten years.
If future contribution rates are less than the graded rate, employers who participate in the CSP will be required to pay the graded rate. The excess payments (the difference between the employer’s normal contribution and the employer’s graded rate) will first be applied to pay amortized amounts.
If all amortized amounts have been paid, any additional contributions will be deposited in a reserve fund and used to offset future rate increases. Payments into the reserve account continue until such time as the payments deposited in the fund equal the employer’s total salary base.
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 for amounts amortized in fiscal year end 2022 — the invoice provided in November 2021, for payment due by February 1, 2022 — is 1.76 percent.1
For employers who participate in the CSP, interest on their obligations is charged at a rate that approximates a market rate of return on taxable fixed rate securities of a comparable duration. The Fund has a diverse portfolio and currently holds 22 percent of its assets in fixed income. The Fund will receive a return on the amortization obligation similar to what it would have if the employer had made a normal, ungraded payment.
Under the CSP, no money is taken from the Fund and there is no impact on the funding of the pension system. Amortizations are recorded as an asset, like other fixed income investments of similar duration consistent with the Fund’s Asset Allocation Strategy. Employers participating in the CSP carry the amortized amounts as a liability on their financial statements.
In addition, the calculation of future employer contribution rates and the System’s funded ratio are not affected.
For More Information
If you have questions or need additional information, please call 866-805-0990 and press 1 then 6 or use our help desk form to send a question to our Employer Billing staff.