Tier 4/6 Definition of Wages - Effect on Your Pension Benefit

There is a sharp distinction in the definition of wages between state pension members and city pension members.

See the statute, Section. 601., below.

It appears that the wages for city pension members are not subject to the overtime ceiling. Wages come into play in determining a member's required contributions, final average salary, and in turn your pension benefit.

Of course, the wages for all Tier 6 members, city and state, are limited by the governor's official salary:

• 2012-2018 - $179,000
• 2019 - $200,000
• 2020 - $225,000
• 2021 - $250,000 (maybe $225,000 since Cuomo turned down the increase).

I'll bet Albany didn't focus on the pension cost implications when they passed the pay increases in 2019.

New York State Tier 4/6 pension law

RSSL.601. Definitions a. . . .

l.

(a) "Wages" shall mean regular compensation earned by and paid to a member by a public employer,

except that for members who first join
the New York state and local employees' retirement system or
the New York state teachers' retirement system
on or after January first, two thousand ten,
overtime compensation paid in any year
in excess of the overtime ceiling, as defined by this subdivision,
shall not be included in the definition of wages.

(b) "Overtime compensation" shall mean, for purposes of this section,
compensation paid under any law or policy
under which employees are paid at a rate greater
than their standard rate for additional hours worked beyond those required,
including compensation paid under section one hundred thirty-four
of the civil service law and section ninety of the general municipal law.

(c) The "overtime ceiling" shall mean fifteen thousand dollars per annum
on January first, two thousand ten, and
shall be increased by three per cent each year thereafter,
provided, however, that:

(i) for members who first become members of a public retirement system of the state
on or after April first, two thousand twelve,
"overtime ceiling"
shall mean fifteen thousand dollars per annum
on April first, two thousand twelve,
and shall be increased each year thereafter by a percentage
to be determined annually by reference
to the consumer price index (all urban consumers, CPI-U,
U.S. city average, all items, 1982-84=100),
published by the United States bureau of labor statistics,
for each applicable calendar year.
Said percentage shall equal the annual inflation
as determined from the increase in the consumer price index
in the one year period
ending on the December thirty-first
preceding the overtime ceiling adjustment
effective on the ensuing April first.

(ii) Commencing January first, two thousand eighteen, and each year thereafter,
the overtime ceiling percentage
shall be increased by an amount equal to the annual inflation
as determined from the increase in the consumer price index
in the one year period ending on the September thirtieth
prior to the overtime ceiling adjustment
effective on the ensuing January first.

(d) For members who first join a public retirement system of the state on or after April first, two thousand twelve,
the following items shall not be included in the definition of wages:

• 1. wages in excess of the annual salary paid to the governor pursuant to section three of article four of the state constitution,
• 2. lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked,
• 3. any form of termination pay,
• 4. any additional compensation paid in anticipation of retirement, and
• 5. in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each additional employer.