Contribution Stabilization Program


Contribution Stabilization Program

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. Once an employer elects to participate in the CSP, their contributions are based on the graded rate system regardless of whether they choose to amortize in any year.

The program was designed to help the State and municipalities manage and smooth pension contribution costs when rates jumped substantially after the Great Recession. The program limits the increases or decreases in contribution rates from year to year. This means employers may be able to amortize a portion of their invoice as rates increase or they may have to make an additional graded payment as rates decrease.

Participation in the program does lead to higher costs over the long-term for employers who elect to participate since interest is charged on the amounts amortized.

As contribution rates become less volatile from year to year, fewer municipalities are finding it necessary to utilize the program and fewer employers are eligible to amortize.


Participating in the Program

If eligible and 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).

Once you elect to participate and amortize, you cannot withdraw from the CSP. You are not required to amortize every year and you can choose to amortize less than the maximum amount allowed.

Payment for your annual invoice (which is provided to you in November) must be received by February 1. You can pay a discounted prepayment amount of your annual invoice contribution if you pay by December 15. However, if you owe a graded payment, it cannot be discounted for paying early. If you are required to make a graded payment, it must be paid in full. You can prepay prior amortized amounts to reduce your outstanding deferral and accrued interest. There is no prepayment penalty.


How the Program Works

  1. We determine an employer’s annual contribution using the rates established according to our usual rate-establishing procedures. The CSP does not change these procedures or the method for determining annual contribution rates. For purposes of the CSP, the normal annual contribution is the employer’s total invoice, excluding payments for group term life insurance, deficiencies, previous amortizations, incentive costs and prior years’ adjustments.
  2. We establish graded rates using the methods established by the law enacting the CSP.
  3. We determine what an employer’s contribution would be using the graded rate.
  4. We compare the employer’s normal annual contribution to the graded contribution to determine if the employer is eligible to amortize or required to make a graded payment. If the normal contribution exceeds the graded contribution, the employer is eligible to amortize. If the normal contribution is less than the graded contribution, the employer is required to make a graded payment.
  5. If an employer is eligible to amortize, the employer chooses the amount to amortize. The maximum amount an employer can amortize is the difference between the employer’s normal annual contribution and the employer’s graded contribution. Employers may choose to amortize less than the maximum amount.
  6. If an employer is required to make a graded payment, the additional contribution must be paid in full. The amount to be paid is the difference between the employer’s graded contribution and the employer’s normal annual contribution.


Employers can see the maximum amount to amortize in their estimated invoice (available in Retirement Online every summer) and the annual invoice (issued in Retirement Online in November). The projected invoice, which is available 17 months in advance of the invoice due date, will show an estimated maximum amortization amount for the next fiscal year’s contribution.

Employers will pay interest on their amortized amounts which is comparable to taxable fixed income investments of a similar duration. The interest rate is set annually by the Comptroller. The interest rate for amounts amortized on the invoice provided in November 2021 (for payment due by February 1, 2022), was 1.76 percent. The interest rate for amounts amortized on the invoice that will be provided in November 2022 (for payment due by February 1, 2023), will be 3.61 percent.

The interest rate applied to an amount amortized in a given year will be the interest rate for that year and for the duration of that ten-year payment period. Amounts amortized in other years will be at the interest rate set for the year of the amortization.

Graded Payments and Reserve Accounts

Graded payments will first be used to pay off existing amortizations.

If all amortizations have been paid, NYSLRS will set up a reserve account for the employer and any excess will be deposited into that account.

Reserve account funds will earn interest based on fixed rate securities of appropriate duration held by the New York State Common Retirement Fund (Fund). That rate of return will vary annually and interest attributable to each account will be computed and credited at the close of each fiscal year.

Additionally, the funds in the reserve account can be used toward a portion of an invoice once two conditions are met:

  1. The System average rate must exceed a specific percentage in the previous fiscal year.
    • For the Employees’ Retirement System (ERS), the rate must exceed 9.5 percent.
    • For the Police and Fire Retirement System (PFRS), the rate must exceed 17.5 percent.
  2. The employer’s average rate must exceed the System graded rate.


The Fund

For employers who participate in the CSP, interest on their amortizations 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 holds 20.82 percent of its assets in fixed income as of fiscal year end 2021. 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 NYSLRS pensions. CSP Reserve Fund assets and CSP Reserve Fund liabilities, reported in NYSLRS financial statements, offset each other, resulting in a “net zero” impact in the annual valuation.

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 Retirement System’s funded ratio are not affected.


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 and select “Employer Billing” from the dropdown.

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.
  • 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.


For More Information

If you have questions or need additional information, you can use our help desk form (select “Employer Billing” from the dropdown) or call 866-805-0990 and press 1, then 6.


Rev. 8/22