62-5 SPD:62/5 SPD.qxd - NYCERS

CONTRIBUTIONSThe retirement benefits payable from NYCERS are derived from three primary sources:The contributions made by the memberThe contributions made by the employerThe return on the investments of the assets of the retirement systemMembers are required to make Basic Member Contributions equal to 3% of gross wages, includingovertime. The Basic Member Contributions deducted from your paycheck are Federal taxdeferred,meaning you do not pay Federal taxes on the contributions, only New York State andlocal taxes. Contributions made by members while on Union Leave are not Federal tax-deferred.LR: Chapter 414 of the Laws of 1983SR: RSSL §613 subdivision a(1)SR: see RSSL §613 subdivision d for Federal tax-deferredNOTE: NYCERS' pension benefits are taxable on the Federal level but are not taxable on thestate and local level if you reside in New York City or New York State as a retiree. If you moveto another state, your pension may be subject to taxation by that particular state and possiblythe locality of the state in which you reside.MEMBER CONTRIBUTION ACCUMULATION FUNDYour Basic Member Contributions are deposited into an account called the Member ContributionAccumulation Fund (MCAF). The monies deposited into the MCAF earn interest. Since January 1,1977, the interest rate has been fixed by law at a rate of 5% per annum, compounded annually.LR: Chapter 890 of the Laws of 1976; Chapter 414 of the Laws of 1983SR: RSSL §517 subdivision b; RSSL §613 subdivision cNEW YORK CITY EMPLOYEES’ RETIREMENT SYSTEMThe accrual of interest on your contributions is of value in certain ways, but members should notview interest accrued in the MCAF as they would view interest accrued in a savings account.Remember, in a defined benefit retirement plan, a formula defined in law is used to calculateyour pension. Interest has more of a direct impact in areas such as loans and refunds; theamount you can borrow is based on 75% of your MCAF, which is constantly growing because ofinterest, and refunds include interest earned.PENSION ENHANCEMENT LAWIn October 2000, a new law known as the "Pension Enhancement Law" was enacted, which providesfor the cessation of Basic Member Contributions for members who have:Accumulated ten years of Credited Service; orReached their tenth anniversary of membership in NYCERS or in another public employeeretirement system in New York State, if membership in such system is transferred to NYCERS.CONTRIBUTIONS6The cessation of Basic Member Contributions is effective upon whichever occurs first - tenyears of Credited Service or the tenth anniversary of membership. Members who had morethan ten years of Credited Service at the time the law was enacted in October 2000 are notentitled to a refund of the contributions made for the years of service in excess of ten. The PensionEnhancement Law did not provide for a refund of such contributions.LR: Chapter 126 of the Laws of 2000, as amended by Chapter 110 of the Laws of 2000SR: RSSL §911 subdivision b