Your Contributions Work for You!

NYSTRS is a defined benefit pension plan that provides retirees with a guaranteed monthly benefit.  

In a defined benefit pension plan, retirees receive a benefit based on earnings and service credit history. This is different than a defined contribution plan, such as a 401(k), in which retirement benefits are calculated based on contributions and investment performance. 

As a NYSTRS member, you contribute a percentage of your salary. Your employer adds money as well. NYSTRS then invests those member and employer contributions using a prudent investment strategy designed to maximize returns while also limiting risk. 

If you become vested and remain a NYSTRS member, these investments will ultimately help fund your pension. If you leave service and withdraw your membership, the contributions you made (plus 5% interest) are refunded to you. The money from your employer remains in the System.  

See the Active Members’ Handbook to read more about contributions and credit. 

 What’s my contribution rate?  

NYSTRS members are required by law to contribute a percentage of salary. Contributions vary based on a member’s tier. 

• Tier 3 and 4 members were required to contribute 3% of their salary until they had either 10 years of membership or were credited with 10 years of service, whichever occurred first. 
• Tier 5 members are required by law to contribute 3.5% of their salary throughout their active membership. 
• Tier 6 members are required to contribute a variable contribution rate, between 3% to 6% of their salary, throughout their active membership. 

Rates vary for Tier 6 members 

Members who joined NYSTRS on or after April 1, 2012 are in Tier 6. For the first three years of membership, a Tier 6 member’s contribution rate is determined by their projected reportable earnings, provided to NYSTRS by their employer. Beginning in the fourth year, the contribution rate is based on the pensionable earnings the member received two years prior. 

• Members earning $45,000 and less contribute 3.0%. 
• Members earning more than $45,000 to $55,000 contribute 3.5%. 
• Members earning more than $55,000 to $75,000 contribute 4.5%. 
• Members earning more than $75,000 to $100,000 contribute 5.75%. 
• Members earning more than $100,000 contribute 6.0% on earnings up to the pensionable salary limit. Pensionable earnings may not exceed the salary of the NYS governor in any one year. Reported wages exceeding this pensionable salary limit will not be included in pension contribution or benefit calculations. See the Contribution Rate Information for Tier 6 Members for the current pensionable salary limit. 

Pensionable earnings are used when calculating pension benefit and member contributions (the actual contributions a member makes over the course of a year). 

How recent legislation affects rate calculations 

Recent legislation permits a member’s contribution rate to be determined using only their annual base wages for school years ending June 30, 2025, and June 30, 2026. This means any pensionable earnings made in addition to annual base wages will not be used in determining a member’s contribution rate. 

Take, for example, Eddie Educator.  

Eddie has been teaching for six years. In the 2022-2023 school year, their base salary was $54,000. 

In fall 2022, Eddie’s colleague, Allison Athlete, was on maternity leave. Eddie coached the cross country team in Allison’s place and earned another $2,000 in addition to the $54,000 base salary, making Eddie’s total pensionable earnings $56,000 for the 2022-2023 school year.  

Since Eddie is a Tier 6 member with four or more years of service, their contribution rate for the 2024-2025 school year is 3.5%, based on their 2022-2023 base salary of $54,000. If their contribution rate were based on their total pensionable earnings of $56,000, it would be 4.5%. 

Read Contribution Rate Information for Tier 6 Members to learn more about how the rate is determined.