New York City Board of Education Retirement System

Age 55 Retirement Program

Frequently Asked Questions and Answers

·        What is the Age 55 Retirement Program and what are its benefits?

The Normal Retirement Age for Service Retirement under Tier 2 and Tier 4 at which members are entitled to receive a full, unreduced retirement benefit is age 62.  Although members in both tiers can currently retire as early as age 55, there is an age reduction factor of up to 27% which would be applied to the retirement benefits.

The Age 55 Retirement Program allows certain Tier 2 and Tier 4 members to retire for service as early as age 55 with full, unreduced retirement benefits.

·        What is the difference between the Age 55 Retirement Program and my current retirement plan?

Under the Age 55 Retirement Program, you would be eligible to retire as early as age 55 with an unreduced retirement benefit.  Under you current plan, you would receive a reduced retirement benefit if you chose to retire prior to age 62.

The Age 55 Retirement Program requires an additional 1.85% contribution to be paid above your current plan’s regular contribution.

Under the Age 55 Retirement Program, Tier 2 and Tier 4 Twenty-five-year Participants must have 25 years of credited service and Tier 4 Twenty-seven-year Participants must have 27 years of credited service in order to retire under the program.  Under your current plan, even if you have 25 or 27 years of credited service, you will receive a reduced benefit if you retire before the Normal Retirement Age of 62.

Note:  There is a significant difference between the time and age that you become eligible for unreduced retirement benefits under Age 55 Retirement Program and your current plan.

·        What happens if I do not elect the Age 55 Retirement Program?

If you choose not to participate in the Age 55 Retirement Program, any current regular contributions you are making would continue as applicable, but you would not make the additional 1.85% contributions.  If you retire for service under the current provisions of your membership tier before age 62, an age-reduction factor would be applied to your retirement benefit. 

·        What age-reduction factor is applied to my pension if I do not elect the Age 55 Retirement Program and I retire before age 62?

Assuming that you have made all the required contributions for your current plan and do not have an outstanding loan at retirement, the following table shows the age-reduction factors applied to your retirement allowance at various ages should you retire for service before age 62.  

·        Are the Age 55 Retirement Program benefits payable at age 55?

Participants in the program may retire as early as age 55 but they must meet the requirement of 25 years of credited of service for Tier 2 and Tier 4 Twenty-five-year participants and 27 years of credited service for Tier 4 Twenty-seven-year participants.

·        Who qualifies for the Age 55 Retirement Program?

The following BERS members who are in eligible positions qualify for this program:

Tier 2 and Tier 4 members, who were employed in active service on February 27, 2008, including members on leave of absence with pay and on suspension with pay.

Tier 2 and 4 members, who on February 27, 2008 were members and later become members in active service in eligible positions.

Tier 2 and 4 members, who on February 27, 2008 were discontinued members with vested rights and later become members in active service in eligible positions.

Tier 2 and 4 members, who on February 27, 2008 were on leave of absence without pay and later become members in active service in eligible positions.

Tier 2 and 4 members, who on February 27, 2008 were on suspension without pay and later become members in active service in eligible positions.

New Tier 4 members, who first join BERS after February 27, 2008 when they become employed as members in active service in an eligible position.  These members are mandated to join the program.

·        What are the eligible positions for the Age 55 Retirement Program?

An eligible position is any position in active service, being paid on the payroll, held by a member of BERS with the Department of Education (DOE) or the Schools Construction Authority (SCA) as:

·        May I participate in the Age 55 Retirement Program if I am on a leave of absence or on suspension without pay?

If you are on a leave of absence without pay from an eligible position on February 27, 2008, you may not participate in the Age 55 Retirement Program at this time.  However, if you return to service on the active payroll of the DOE or SCA in an eligible position, you may be eligible for the Program; at that time, you should contact BERS to obtain the Age 55 Retirement Program election form.  Upon your return to service, you would have a 180-day window period to elect the program.

You should be aware that the length of your leave of absence may affect which provisions of the Age 55 Retirement Program apply to you.  If you are a Tier 4 member on leave of absence without pay and your leave was five years or longer, electing the Age 55 Retirement Program when you return to active service would provide you with unreduced benefits at age 55 after you have attained 27 (not 25) years of credited service. 

If you are on suspension without pay from an eligible position on February 27, 2008 and you are later reinstated to active service in an eligible position, you may elect to participate in the program.  Upon your return to service, you would have a 180-day window period to elect the program.

·        I am retired.  Can I participate in the Age 55 Retirement Program and have my retirement allowance recalculated?

No.  This program is not available to members whose date of retirement was before February 27, 2008.

·        Do any contributions have to be paid under the Age 55 Retirement Program and for how long?

Yes, if you choose to elect this program, you will be required to contribute 1.85% of your gross compensation to BERS beginning on the first full payroll period following February 27, 2008 or from your date of membership, whichever is later.  These contributions would be in addition to your current regular contributions.

For Tier 2 and Tier 4 Twenty-five-year participants, the 1.85% contributions would continue until you have attained 25 years of credited service, or until June 29, 2008, whichever is later.

For Tier 4 Twenty-seven-year participants, the 1.85% contributions would continue until you have attained 27 years of credited service.

·        If I participate in the Age 55 Retirement Program, would I have to pay an additional 1.85% to purchase any eligible prior service credit?

For Tier 2 and Tier 4 Twenty-five-year participants, the 1.85% contributions would be applied to compensation earned from March 2, 2008 only. There is no additional cost for prior service above your current contribution rate plus interest.

For Tier 4 Twenty-seven-year participants, the 1.85% contributions would be applied to compensation earned from all credited service rendered while a participant, and before becoming a participant, whether or not rendered in a eligible position before or after March 2, 2008.  If you purchase prior service credit, the cost will be 4.85% (3% regular and 1.85% additional) of the compensation you earned during the periods of prior service you are claiming, plus 5% annual compound interest.

·        I am already age 55 and have 25 years of credited service.  If I elect to participate in the Age 55 Retirement Program, would I have to contribute the additional 1.85%?

If you already have 25 years of credited service and you elect to participate in the program, you would become a Tier 2 or Tier 4 Twenty-five year Participant. The program requires that you make these contributions from February 27, 2008 until June 29, 2008.  

·        How do I elect to participate in the Age 55 Retirement Program?

If you are currently a member in active service in an eligible position, you may request an Age 55 Retirement Program election form from BERS.  Chapter 19 of the laws of 2008 established a 180-day window period from the date of enactment for you to elect to participate in the program.  If you elect to participate in the program, you must submit your election form to BERS before the end of the window period, that is, by 5:00p.m on August 25, 2008.

·        I will reach age 62 before I have 25 years of credited service.  Should I elect the Age 55 Retirement Program?

In general, if you are absolutely sure that you will reach age 62 before you attain 25 years of credited service (including any eligible prior service credit), you should not enroll because you would not be able to benefit from this program.  Since this is a very important decision, we recommend that you carefully review your employment records to confirm your belief that you will reach age 62 before accumulating 25 years of credited service.

Note:  While you can withdraw from the program within a year of election if you cannot possibly accumulate 25 years of credited service by age 62, you cannot elect to join the program after August 25, 2008 or your specified 180-day window period has passed.

·        What factors should I consider when deciding whether I should participate in the Age 55 Retirement Program?

Factors to consider include the following:

·        Your current age

·        Your current amount of credited service

·        Prior service that you may purchase

·        Your age when you attain 25 or 27 years of credited service

·        Number of years you plan to remain in active service

·        The age at which you would like to retire

BERS recommends that you carefully evaluate whether participating in this program would be beneficial for you, but we cannot advise you about this decision.  You may wish to consult an advisor with pension expertise.  

·        What is the earliest date I may retire under the Age 55 Retirement Program?

If you are enrolled in this program, the earliest retirement date that you may retire under the program with an unreduced benefit is June 30, 2008 provided you meet the required age and service requirement of your program. 

·        What is the deadline for electing in the Age 55 Retirement Program?

Eligible members in active service, being paid on the payroll, you must elect to participate in this program by August 25, 2008.

For members who are currently on a leave of absence without pay, on suspension without pay, discontinued members with vested benefits, and members in ineligible positions, if you would like to participate in the program, you must elect to do so within 180 days of becoming a member in an eligible position in active service.

For members who first join BERS after February 27, 2008 you are mandated into the program on becoming employed in an eligible position in active service and are not required to complete a separate election form.

·        If I do not elect to participate within the window period, would I be eligible to enroll at a later time?

No.  Unless on February 27, 2008, you were not eligible to participate because you were on leave of absence without pay, or on suspension without pay or a discontinued member with vested benefits and you later return to active service in an eligible position.  These members will have a 180-day period to elect to participate in the program after returning to service.

·        I am already age 55 and have 25 years of credited service. To be eligible for the provisions of the Age 55 Retirement Program, must I still elect to participate in the program?

You must submit the Age 55 Program election form to BERS if you wish to participate in this program.  Any person who fails to apply within the specified period will not thereafter be eligible for the program.

·        Should I notify BERS if I do not want to elect the Age 55 Retirement Program?

No.  If you do not want to participate in this program, you do not need to do anything. 

·        May I withdraw after I have elected the Age 55 Retirement Program?

Election of this program is irrevocable, except for Tier 2 and Tier 4 Twenty-five-year participants who cannot possibly accumulate 25 years of credited service by age 62.  Such members may withdraw within 365 days of their election date by filing an Age 55 Retirement Program Withdrawal Form with BERS.

·        Can a participant withdraw from the program and re-apply at a later date?

No.  The election to participate in the program is irrevocable.  However, participants who terminate service in eligible positions and later return in any of the eligible positions, are mandated into the same program.

·        If a member leaves an eligible position as Tier 4 Twenty-five-year Participant and later returns to an eligible position, is he/she mandated into become a Tier 4 twenty-seven-year Participant?

No.  If a Tier 4 Twenty-five-year participant leaves active service in an eligible positions and later returns in any of the eligible positions, he/she is mandated into the same program.

·        What happens to my additional 1.85% contributions if I leave service before retirement?

If you retire earlier than age 62, the additional contributions will be used to provide your retirement benefits.  However, if your participation in the program ends for one of the following reasons, you or your beneficiary would be entitled to a refund of ½ of the additional contributions: 1) You are approved for a disability retirement; 2) you die before retiring; 3) you retire at or after age 62 and you were in active service for a total of at least six months out of each of the two 12-month periods immediately preceding your service retirement date; 4) you transfer to another New York City or State retirement system into a title that is not eligible for participation in the Age 55 Retirement Program; 5) you are eligible to and you discontinue participation in the first year; or 6) you are laid off for economic reasons.

·        I have already stopped making regular contributions.  If I elect to participate in the Age 55 Retirement Program, would I still have to make the additional 1.85% contributions?

Yes, Participation in the program requires an additional contribution of 1.85% above your current contribution rate.  Therefore if your current contribution rate is 0%, you are still required to make the additional 1.85% contributions.

·        Do members who joined BERS on or before February 27, 2008 have to pay additional member contributions for purchased service?

No, if your membership date is on or before February 27, 2008 you are a Tier 2 or Tier 4 Twenty-five-year participant and contribute from February 27, 2008.  Only participants in the Tier 4 Twenty-seven-year participants must pay the additional member contributions on all credited service (including "buy-back" service).

·        Why do any additional contributions need to be paid?

The law which created the program makes it mandatory that anyone who elects to participate must pay the additional member contributions.

If you want to receive the benefits of the program (retiring for service early without a reduction in your retirement benefits due to age), you must pay all the related additional costs.

·        If a member is ineligible to participate at this time, but later becomes eligible, can he/she buy-back the time when not in an eligible position?

Tier 2 and Tier 4 Twenty-five-year Participants will contribute an additional member contribution of 1.85% of their compensation earned from March 2, 2008.  However they are not required to pay the additional contributions on any other service bought back.  Tier 4 Twenty-seven-year Participants will contribute an additional 1.85% of their compensation, which will be applied to compensation earned from all credited service rendered while a participant, and before becoming a participant, whether or not rendered in an eligible position before or after March 2, 2008. 

·        Can these contributions be considered tax-deferred?

All additional contributions made from compensation earned from March 2, 2008 are deferred for Federal income tax purposes [IRC 414(h)], but not State and local tax purposes. 

·        Can additional contributions be paid in a lump sum?  If yes, when?

Any additional contributions previously refunded to a former participant who again becomes a participant may be paid in a lump sum, but the repayment will not be eligible for favorable tax treatment under IRC 414(h).

·        Can a participant in the program defer or vest service retirement?

In order to be eligible to retire, Tier 2 and Tier 4 Twenty-five-year Participants, under the program, must have 25 years of credited service and be at least age 55.  After completing 25 or more years, a participant who discontinues service will be entitled to receive an unreduced deferred vested benefit at age 55.

In order to be eligible to retire, Tier 4 Twenty-seven-year Participants, under the program, must have 27 years of credited service and be at least age 55.  After completing 27 or more years, a participant who discontinues service will be entitled to receive an unreduced deferred vested benefit at age 55.

·        What is the interest rate on the additional member contributions?

The interest that will be earned on the additional member contributions by a participant is the program is the same as they earn on the regular contributions.  Currently that is 8.25% for Tier 2 members and 5% for Tier 4 members.

·        Can a participant borrow the additional money that is paid in?

The additional contributions are deposited in a separate account from all the other system funds.  Upon payment of the additional contributions into the system, 50% of the additional contributions are employer contributions and 50% are employee contributions.  A participant may be eligible to borrow up to 75% of the employee portion of the additional contributions.  Program loans are subject to the same rules as Tier 4 loans.  This applies to both Tier 2 and Tier 4 Participants.

·        Are the additional contributions paid to a beneficiary?  All or just ½?

Only ½ of the additional member contributions plus interest, credited as the employee portion are paid to a member’s beneficiary at the time of death of the participant while a member in active service.

·        If a member retires under the program, does he/she have to be age 62 in order to get a refund of additional contributions?

If a participant retires under the program on or after age 62, a refund of only ½ of the additional member contributions with interest, credited as the employee portion will be paid.  However, the participant must retire with active service in at least 6 months in each of the previous two 12-month periods.

Refunds are also permitted in the event of death, disability retirement, discontinuance of participation in the first year, transfer to an ineligible position in another public employment retirement system or termination for economic reasons.    

·        Will the additional member contributions give the member a higher pension than normal?

Participation in the program and payment of the additional member contributions required, does not give a member a higher pension than they would otherwise be entitled.  The benefit derived from participation in the program is that upon meeting the service requirements of the program, a participant can retire as early as age 55 without any reduction in their benefit due to age.