On March 16, 2012, Chapter 18 of the laws of 2012 was enacted into law, and amends portions of the Retirement and Social Security Law, Education Law and the Administrative Code of the City of New York.
This Legislation authorized the creation of a new Tier VI pension plan that included a Voluntary Defined Contribution Program (VDCP).
The SUNY Optional Retirement Plan (ORP) was selected as the model for the defined contribution component of the plan, permitting eligible non-SUNY and CUNY employees to enroll in the VDCP with SUNY acting as the plan administrator and TIAA-CREF acting as the Third Party Administrator.
This bulletin is to notify agencies of the new retirement option available to eligible employees and the required steps for enrollment in the payroll system.
New York State employees who join the workforce on or after July 1, 2013, and who are deemed non-unionized (non-represented or exempt), with an annual salary of $75,000 or greater are eligible for this new voluntary retirement plan
July 1, 2013
Prior to July 1, 2013 only SUNY 28XXX, Education 11XXX and CUNY 7XXXX agencies routinely enrolled employees into Retirement Plan 7Z, TIAA-CREF. However, based on the Tier VI legislation, all agencies will now be able to enroll eligible employees into plan 7Z if the employee chooses this new plan as their retirement selection.
TIAA–CREF currently serves as the Third Party Plan Administrator for the Optional Retirement Program providing operational support and other fiduciary services.
The VDCP is a defined contribution plan, which is a retirement savings vehicle that provides retirement benefits “defined” by employer and employee contributions. All contributions and investment earnings are credited to individual accounts for each plan participant.
Participants bear responsibility for managing the investments in their accounts throughout their careers, thus each participant needs to select available choices from the authorized investment providers and maintain an appropriate asset allocation to suit their individual preferences from among the investment options available within their plan.
These employee elections are NOT maintained in the Payroll System. However, to finalize the enrollment process and to initiate retirement contributions from employee paychecks, PayServ data entry must be completed by the agency.
An employer contribution of 8% of compensable salary will be made to participants’ accounts while enrolled in this plan.
The VDCP includes a 366 day vesting period, after which a participant has full and immediate vesting in all retirement benefits provided by the annuities purchased through the employee and employer contributions.
Employer and employee contributions are not deposited into accounts until completion of the 366 day vesting period. Until that time, the funds are held in escrow by OSC. A participant who does not complete the vesting period is entitled to a refund of contributions, plus interest, upon request.
At this time, OSC will not waive the 366 day vesting period as the guidelines for approving any waiver based on previous employment have not yet been established. Once established, a follow up bulletin will be issued on this topic.
The legislation requires the employee contribution rate to be based on the employees’ annual wage.
The employee contribution rates are:
|Annual Wage||Contribution Rate|
|$45,000 or less||3%|
|$45,000.01 to $55,000||3.5%|
|$55,000.01 to $75,000||4.5%|
|$75,000.01 to $100,000||5.75%|
|More than $100,000||6%|
For the first three years of membership, the employee contribution rate is based on the reported annual wage. This annual wage, as previously stated, must be $75,000 or greater to enroll the employee in the VDCP. After this three-year period, the future contribution rate will be based on what the employee actually earned two years prior. A future payroll bulletin will provide additional information about the future contribution rate based on the “look back” period.
New Retirement benefit plans within the TIAA Retirement System (7Z) have been established in PayServ to assist agencies’ with entering and enrolling employees in the new Retirement Plan.
Contributions will be withheld from employee paychecks based on the benefit plan chosen and updated by the agency in the employees’ retirement record.
The following benefit plans were created for the new Retirement Program and must be used in the enrollment process:
|T6V030||TIAA VDC 3PCT|
|T6V035||TIAA VDC 3.5PCT|
|T6V045||TIAA VDC 4.5PCT|
|T6V575||TIAA VDC 5.75PCT|
|T6V060||TIAA VDC 6PCT|
To initiate enrollment into PayServ, the following steps are required.
- Verify that the employee’s date of birth appears on the Biographical Details tab of Modify a Person. Complete the field and Save if blank. (Home>Workforce Administration> Personal Information>Modify a Person)
- Open the Retirement Plans page. (Home>Benefits>Enroll In Benefits>Retirement Plans).
- Enter employee's Empl ID in search box.
- Click Search.
- Select the correct Empl Rcd # for the corresponding Job Record (if multiple records exist).
- Enter “7Z” (TIAA/CREF) in the plan type field.
- Enter the payroll period begin date in the Deduction Begin Date field.
- Select “Elect” as the Participation Election.
- Enter the employee’s Date of Membership in the “Election Date” field.
- Select the appropriate Benefit Plan dependent upon the employees’ annual salary. For most employees the benefit plan to be entered will be either T6V575 (salary $75000.01 to $100,000) or T6V060 (for employees salary greater than $100,000).
- Enter “6” in the Tier field.
- Save the transaction.
These actions are to be taken only AFTER the employee enrollment process defined by SUNY and TIAA-CREF has been completed on the SUNY website. Questions concerning the required employee and agency actions to accomplish these steps can be directed to Dave Morrell at SUNY. His contact information is provided in the Questions section below.
Note: The current enrollment process for TIAA Retirement Plan 7Z for eligible teaching title employees working in SUNY 28XXX, CUNY 70XXX and Education 11XXX remains unchanged. The appropriate benefit plans for employees to be enrolled in the existing ORP by SUNY, Education and CUNY are identified in Payroll Bulletin No. 1243.
For questions regarding eligibility guidelines, enrollment process, enrollment forms and specific agency instructions, please contact David Morrell at SUNY (518) 320-1430 or [email protected].
Questions regarding PayServ data entry can be directed to the Deduction mailbox.