Tier 2 and 3 (Article 11) Members
You don’t need to contribute toward your retirement. However, you can make voluntary annuity savings contributions, which will earn interest and provide an annuity above and beyond your regular pension benefit when you retire. You can contribute any whole percentage from 1 percent to 10 percent. Voluntary contributions are taken after taxes. At retirement, the annuity you receive would be treated as taxable income, however because you made post-tax contributions, a portion of your pension would be non-taxable. To begin making voluntary contributions, complete a Section 21(L) Election form (RS5379), and submit it to your payroll office.
If you withdraw these contributions before you retire, you may be taxed on more than just the interest portion of your refund, and you may also be subject to a tax penalty. Please read the election form carefully before submitting, and speak to a tax advisor if you have questions.
Tier 5 Members
You must contribute 3 percent of your reportable earnings toward your retirement benefits until you retire, unless your plan limits creditable service to 20, 25 or 32 years.* In that case, you won’t contribute after the maximum service credit allowed has been reached. These are mandatory contributions; they will not provide an additional annuity when you retire.
Tier 6 Members
You must contribute a percentage of your reportable earnings toward your retirement benefits (see chart below) until you retire, unless your plan limits creditable service to 20, 25 or 32 years.* In that case, you won’t contribute after the maximum service credit allowed has been reached.
For your first three years of membership, we use the annual wage provided to us by your employer (on your membership application) to determine your contribution rate. After three years, we base your contribution rate on what you actually earned in the last completed State fiscal year (April 1 to March 31). Part-time employee contribution rates are determined based on annualized wages. Contribution rates are set April 1 each year. These are mandatory contributions; they will not provide an additional annuity when you retire.
| Annual Wage | Contribution Rate |
|---|---|
| $45,000 or less | 3.00% |
| $45,000.01 to $55,000 | 3.50% |
| $55,000.01 to $75,000 | 4.50% |
| $75,000.01 to $100,000 | 5.75% |
| More than $100,000 | 6.00% |
*There may be some exceptions. For example, PFRS members covered by a collective bargaining agreement requiring the employer to offer a non-contributory plan that was in effect on January 9, 2010, and was still in effect on the date of employment, may not need to contribute. Any change in employment, however, could result in the employee being required to contribute.