Service credit purchase (SCP) payments for mandatory member contributions (called deficiencies) are usually incurred for service after a member’s date of membership for which no (or insufficient) contributions were made. If the member is in a contributory plan, they must purchase this service credit to avoid a reduction in their retirement benefit. Mandatory contribution deductions are taken before tax for federal income tax purposes because they are covered under Section 414(h) of the Internal Revenue Code. Mandatory purchases of ERS service on or after July 1, 1989, and PFRS service on or after October 1, 2013, are covered under Section 414(h).

When a member owes mandatory member contributions, you will receive a notification letting you know that their service credit purchase (SCP) deduction has changed.

The notification will provide a link to the Loan/SCP Deduction page in Retirement Online, which will list the member’s pre-tax deduction amount. The page also provides their remaining balance once there are six or fewer outstanding payments left.

To access the Loan/SCP Deduction page and view mandatory contributions (deficiencies) for your employees:

• Sign in to Retirement Online.
• From your Account Homepage, click the “Access Reporting Dashboard” button.
• Choose your location code.
• Click the “Loan/SCP Deduction Notification” link.
• Then, on the Loan/SCP Deduction page, click the “Deficiency (SCP)” tab.

When taking payments for mandatory contributions, you will still report the full gross reportable earnings to NYSLRS. However, you must reduce the amount of the member’s earnings you report to the Internal Revenue Service for federal income tax by the amount of each deduction taken. For Social Security and State and local income taxes, use the full earnings before the deductions are taken.

Rev. 11/23