Pension Education Toolkit

To learn more about NYSTRS’ investment strategy, stability and membership, visit the infographics page and read our annual financial reports. Additional data on pensions can be found from our Public Pension Partners.

Defined Benefit Pension Plans, Defined

NYSTRS is a defined benefit pension plan. What does that mean?

A defined benefit pension plan provides its members with a guaranteed, pre-established monthly benefit upon retirement. Defined benefit plans differ from defined contribution plans, such as 401(k)s, in which retirement benefits are calculated based on contributions and investment performance. The value of such plans can fluctuate with the financial markets.  

At NYSTRS, our members contribute a percentage of their salary, as do their employers. NYSTRS then invests those contributions using a prudent investment policy designed to maximize returns while also limiting risk. And it’s those returns that largely fund members’ pensions. 

After vesting and retiring, NYSTRS’ retirees receive a guaranteed pension for life – based on tier of membership, age, years of service and final average salary.

Pensions Boost Our Economy

The benefits that retirees receive support local, state and national economies.

According to a recent study by the National Institute on Retirement Security (NIRS), public sector defined benefit pensions, like the one provided from NYSTRS, have had a substantial positive impact on economic gains.

In New York state, expenditures stemming from state and local pensions pour billions into federal, state and local tax revenues. NYSTRS pays out more than $8 billion in benefits to members and beneficiaries each year. Almost 80% of those benefits are paid to New York state residents, across each of the state’s 62 counties.

Want to learn more? Check out the additional research and studies below.

Further Reading

What Do Americans Think About Pensions For Public Employees?
More than 80% of Americans regard public pensions as an effective recruitment and retention tool for qualified teachers and public safety employees, according to research by the National Institute on Retirement Security (NIRS), published in 2024.

Employee Contributions to Public Pension Plans
Contributions from employees are a key component of public pension funding policies for nearly all state and local governments, a requirement that contrasts with private sector pension plans, whose participants do not contribute to their pension benefit, according to a 2023 brief from the National Association of State Retirement Administrators (NASRA). 

Closing the Gap: The Role of Public Pensions in Reducing Retirement Inequality
Pensions ensure adequate retirement income, providing a critical buffer against economic hardship in old age for all groups, including women, Blacks, Latinos and seniors without a four-year college degree, according to a 2023 report from the National Institute on Retirement Security (NIRS).  

Pensionomics 2023: Measuring the Economic Impact of DB Pension Expenditures
Defined benefit pensions provide a huge boost to economic output in all levels of the U.S. economy – including jobs, incomes and tax revenues in New York State – according to the National Institute on Retirement Security (NIRS). 

Do Pension Expenditures Impact Education Spending?
States can afford both public pension costs and education spending, according to this 2023 study by the National Conference on Public Employee Retirement Systems (NCPERS). 

Fortifying Main Street: The Economic Benefit of Public Pension Dollars in Rural America
Public pension benefit dollars account for significant amounts of total personal income and gross domestic product across metropolitan, rural and small towns, according to this 2022 study from the National Institute on Retirement Security (NIRS). The impact of public pension spending was greatest in small towns, where public pensions make up a larger portion of the overall local economy.

A Better Bang for the Buck 3.0
The National Institute on Retirement Security (NIRS) finds that defined benefit pension plans offer substantial cost advantages over 401(k)-style defined contribution accounts, in this 2022 report.

Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk
Investments by public pension plans as well as spending by public retirees provide a huge boost to the economy and government tax revenues, according to this 2020 study by the National Conference on Public Employee Retirement Systems (NCPERS). Without those plans, state and local governments in 2018 would have had to increase taxes by $179.4 billion just to maintain current public services, the study said.