The Tier 6 pension reforms included provisions that would allow some non-represented state and local government employees to opt into a defined contribution retirement program rather than the current defined benefit pension program. Beginning July 1, 2013, the New York State Voluntary Defined Contribution plan option will be made available to all nonunion employees of NYS public employers who are paid at a rate of $75,00 or more on an annual basis, as an alternative to the ERS defined benefit system.
SUNY has been operating a similar retirement option model for nearly 50 years and they will provide the vehicle to manage the new option. The SUNY optional retirement program is the largest defined contribution public retirement program in the country, with over 50,000 participants and more than $15 billion in assets under management.
The new voluntary retirement option provides for vesting after one-year, whereas, the ERS system provides vesting after ten years of service. Employers will be responsible for a flat 8 percent of the employee’s salary contribution, and the employee will be responsible for a mandatory contribution ranging from 4.5 percent to 6 percent depending on their salary range.
NYS public employers with employees eligible for the new voluntary defined contribution program will be required to take certain actions:
- Identify and provide contact information for designated liaisons to work with SUNY on the implementation of this program (SUNY has already sent out contact letters);
- Work with SUNY and TIAA-CREF (third party administrator of the program) to make necessary system changes to facilitate online enrollment, data exchange and contribution remittance; and
- Notify, educate and assist eligible participants with plan enrollment.
For more details about his new retirement option for eligible county employees, visit www.suny.edu/benefits/VDC.cfm. (Dave Lucas)