December 2013/January 2014
December 13, 2013

ERS: Know the facts before you borrow

Source: NYSUT United

State Comptroller Thomas P. DiNapoliMany state Employees' Retirement System (ERS) members are eligible to take out a loan against their retirement contributions. Just remember that any loan balance left outstanding at the time of your retirement will permanently reduce your pension benefit. Since you may not repay any loan balance after your date of retirement, it's important to pay off your loan before you retire.

Q: How much will my service retirement benefit be reduced if I have an outstanding loan when I retire?

A: The reduction is based on your tier, age at retirement and outstanding loan balance. For example, the annual pension reduction for a Tier 3, 4, 5 or 6 member retiring at age 55 during calendar year 2013 will be $54.57 for every $1,000 still owed. If this member still owes $3,000 on a loan, the annual pension benefit would be permanently reduced by $163.71.

A word of caution — the reduction will continue as long as you receive your pension. It will not stop when your total reduction equals the loan balance.

The following table shows the approximate annual reduction in benefits for Tier 3, 4, 5 and 6 members at various ages of retirement for every $1,000 still owed. The reduction amount changes annually:

Age at retirement

Annual pension reduction for each $1,000 of outstanding loan balance at retirement

55 — $54.57
60 — $60.73
62 — $63.73
65 — $68.97
70 — $80.51

Q: How can I pay off my loan before I retire?

A: Since loans are repaid through payroll deductions, you can increase the amount of your deduction by sending us a letter. Include your registration number and the amount currently being deducted for your loan as well as the new amount you want deducted. We will adjust your loan account information and notify your employer to change the deduction.

Alternatively, you can make extra payments or pay your loan in full at any time. There's no penalty for prepayment of your loan. Write a check or money order payable to the "New York State and Local Employees' Retirement System" and send it to the attention of our Member & Employer Services Bureau's Loan Unit at 110 State St., Albany, NY 12244. Remember to include your registration number on your check or money order, and mark "loan payment" on the memo line.

Q: How can I get more information?

A: See our Web presentation, "Loans: Getting One and Paying It Back," at www.osc.state.ny.us/retire/members/loans.php. You may also contact our Call Center toll-free at 866-805-0990 or 518-474-7736 in the Albany area.

Every month state Comptroller Thomas P. DiNapoli, sole trustee of the New York State and Local Employees' Retirement System, provides information on the system, which delivers retirement benefits to many NYSUT School-Related Professionals and other support staff. If you are an ERS member with a question of general interest, email united@nysutmail.org.

For immediate assistance, contact the ERS Call Center toll-free at 866-805-0990, or 518-474-7736 in the Capital District area. Learn more by calling 800-626-8101or visitingmemberbenefits.nysut.org. For information about contractual endorsement arrangements with providers of endorsed programs, please contact NYSUT Member Benefits. Agency fee payers to NYSUT are eligible to participate in NYSUT Member Benefits-endorsed programs. Save on discounted ski tickets with NYSUT Member Benefits!