1. NYSLRS determines an employer’s annual contribution according to its usual procedures. The CSP does not change these procedures or the method for determining annual contribution rates. For purposes of the CSP, the normal annual contribution is the employer’s total invoice, excluding payments for group term life insurance, deficiencies, previous amortizations, incentive costs and prior years’ adjustments.
2. NYSLRS establishes graded rates using the methods established by the law enacting the CSP.
3. NYSLRS determines what an employer’s contribution would be using the graded rate.
4. NYSLRS compares the employer’s normal annual contribution to the graded contribution to determine if the employer is eligible to amortize or required to make a graded payment. If the normal contribution exceeds the graded contribution, the employer is eligible to amortize. If the normal contribution is less than the graded contribution, the employer is required to make a graded payment.
5. If an employer is eligible to amortize, the maximum amount an employer can amortize is the difference between the employer’s normal annual contribution and the employer’s graded contribution.
6. If an employer is required to make a graded payment, the amount to be paid will be the difference between the employer’s graded contribution and the employer’s normal annual contribution.

Amortizations

Employers will see the maximum amount to amortize in their estimated invoice (available in Retirement Online every summer) and the annual invoice (issued in Retirement Online in November). The projected invoice, which is available 17 months in advance of the invoice due date, will show an estimated maximum amortization amount for the next fiscal year’s contribution. You are not required to amortize every year and you can choose to amortize less than the maximum amount allowed.

Employers will pay interest on their amortized amounts which is comparable to taxable fixed income investments of a similar duration. The interest rate is set annually by the Comptroller. For the invoice provided in November 2023 (for payment due by February 1, 2024), the interest rate for amounts you amortize will be 4.85 percent.

The interest rate applied to an amount amortized in a given year will be the interest rate for that year and for the duration of that ten-year payment period. Amounts amortized in other years will be at the interest rate set for the year of the amortization. You can prepay prior amortized amounts to reduce your outstanding deferral and accrued interest. There is no prepayment penalty. 

If you are both an Employees’ Retirement System (ERS) and Police and Fire Retirement System (PFRS) employer, you may choose to amortize amounts on either, both or neither invoice. ERS and PFRS invoices are treated separately.

Graded Payments and Reserve Accounts

If an employer is required to make a graded payment, the amount must be paid in full. Payment for your annual invoice (which is provided to you in November) must be received by February 1. You can pay a discounted prepayment amount of your annual invoice contribution if you pay by December 15. However, if you owe a graded payment, it cannot be discounted for paying early.

Graded payments will first be used to pay off existing amortizations.

If all amortizations have been paid, NYSLRS will set up a reserve account for the employer and any excess will be deposited into that account.

Reserve account funds will earn interest based on fixed rate securities of appropriate duration held by the New York State Common Retirement Fund (Fund). That rate of return will vary annually. The funds in the reserve account can be used toward a portion of an invoice once two conditions are met:

1. The System average rate must exceed a specific percentage in the previous fiscal year.
   • For the Employees’ Retirement System (ERS), the rate must exceed 9.5 percent.
   • For the Police and Fire Retirement System (PFRS), the rate must exceed 17.5 percent.
2. The employer’s average rate must exceed the employer’s graded rate (so, if an employer is eligible to amortize, then they are eligible to use their reserve funds).

If, at the end of a fiscal year, the balance in the reserve account exceeds the employer’s normal annual pension contribution (not including Group Term Life Insurance [GTLI]) from their last invoice, they will not be required to pay a graded payment during the next fiscal year.

To view reserve account fund balances:

• Sign in to your Retirement Online account.
• From your Account Homepage, click the “Access Billing Dashboard” button.
• Choose your location code and retirement system (ERS or PFRS).
• Click the “Reserve Fund Balance” link on the Billing Dashboard.

Reserve account balances in Retirement Online will be updated after February 1 each year to include any payments made from December 15 through February 1. Interest will be calculated and credited at the end of each fiscal year.

The Fund

For employers who participate in the CSP, interest on their amortizations is charged at a rate that approximates a market rate of return on taxable fixed rate securities of a comparable duration. The Fund has a diverse portfolio and holds 20.47 percent of its assets in fixed income as of fiscal year end 2023. The Fund will receive a return on the amortization obligation similar to what it would have if the employer had made a normal, ungraded payment.

Under the CSP, no money is taken from the Fund and there is no impact on the funding of NYSLRS pensions. CSP reserve fund assets and CSP reserve fund liabilities, reported in NYSLRS financial statements, offset each other, resulting in a “net zero” impact in the annual valuation.

Employers participating in the CSP carry the amortized amounts as a liability on their financial statements. Employers carry any reserve fund balances as assets on their financial statements.

In addition, the calculation of future employer contribution rates and the Retirement System’s funded ratio are not affected.

Rev. 12/23