New York’s Tier 6 pension changes, enacted in the 2026–27 state budget and signed as Chapter 58 of the Laws of 2026, lowered mandatory employee contribution rates for most members, cut the full-benefit retirement age for long-serving teachers from 63 to 58, and raised the amount of overtime that counts toward a pension. Those reforms sit on top of earlier fixes from 2022 and 2024 that shortened the vesting period and the final average salary calculation. More than 830,000 public employees hired on or after April 1, 2012 are affected.1Spectrum News. NY Budget Deal Includes Major Tier 6 Pension Revisions
What Changed in the 2026 Budget
The 2026 package took effect April 1, 2026, and represents the largest single rollback of Tier 6 restrictions since the tier was created. Governor Kathy Hochul and legislative leaders settled on an estimated $557 million per year in enhancements after unions had pushed for roughly $1.5 billion.1Spectrum News. NY Budget Deal Includes Major Tier 6 Pension Revisions2The Chief Leader. Tier 6 Changes Finalized What that means in practice depends on which retirement system you belong to.
Lower Employee Contribution Rates
If you’re a Tier 6 member of the state and local Employees’ Retirement System, the New York City Employees’ Retirement System, or the New York City Board of Education Retirement System, your mandatory payroll contribution went down. The old five-bracket scale topped out at 6 percent. The new scale is flatter and lower for most salary levels:
- $75,000 or less: 3 percent (previously 3 to 4.5 percent).
- $75,001 to $100,000: 4 percent (previously 5.75 percent).
- $100,001 to $125,000: 5.25 percent (previously 6 percent).
- Above $125,000: 5.75 percent (previously 6 percent).3PEF. Tier 6 Q and A4NYSUT. Fix Tier 6 Reform
CSEA estimated that about 90 percent of its Tier 6 members earn $75,000 or less and now pay the flat 3 percent rate.5CSEA. Tier 6 Agreement Brings Fairness, Boosts Affordability Teachers in the state and city teacher retirement systems were not included in the contribution-rate cuts.4NYSUT. Fix Tier 6 Reform
Earlier Retirement for Long-Serving Teachers
Tier 6 members in the New York State Teachers’ Retirement System and the New York City Teachers’ Retirement System can now retire with full, unreduced benefits at age 58, provided they have at least 30 years of credited service. Teachers with fewer than 30 years still need to wait until 63 for an unreduced benefit.6NYSTRS. New Law Impacts Tier 6 Members No other category of public worker received a retirement-age reduction in this package.1Spectrum News. NY Budget Deal Includes Major Tier 6 Pension Revisions
One practical note on timing. Tier 6 only began April 1, 2012, so a teacher who entered the system on day one with no prior service credit cannot reach 30 years of service until 2042. That delays the real-world impact of age 58 retirement for many members.3PEF. Tier 6 Q and A
Higher Overtime Caps
The amount of overtime pay that can count toward your final average salary went up. For civilian employees in the general retirement systems, the dollar cap rose from roughly $21,500 to $22,500 (plus annual CPI adjustments) to $30,000, with future increases still indexed to inflation.5CSEA. Tier 6 Agreement Brings Fairness, Boosts Affordability4NYSUT. Fix Tier 6 Reform
For Tier 5 and Tier 6 members of the Police and Fire Retirement System, the pensionable overtime ceiling was raised from 15 percent of non-overtime wages to 25 percent. That change takes effect January 1, 2027.7New York State Comptroller. 2026 Laws8New York State Association of Chiefs of Police. Pension Reform Chapter 58 Laws of 2026
SUNY and CUNY Optional Retirement Program
Higher-education employees in the SUNY and CUNY Optional Retirement Program will see their contribution bands adjusted to align with the other retirement system changes, and the state will make an additional 1 percent contribution to members’ accounts.9NYSUT. Media Release Budget Statement
Earlier Tier 6 Fixes Still in Effect
Two changes from prior budgets remain in force and stack with the 2026 package.
The fiscal year 2023 budget, enacted as Chapter 56 of the Laws of 2022, cut the vesting period for Tier 5 and Tier 6 members from 10 years to five years. It applies to both the Employees’ Retirement System and the Police and Fire Retirement System.10New York State Comptroller. Are You Vested and What It Means
The 2024–25 budget shortened the final average salary calculation from five consecutive years to three, matching the Tier 4 standard.11New York State Comptroller. 2024 Laws12CSBANYC. Fixing Tier 6 A 10 percent annual growth cap on that calculation, meant to prevent salary spiking, was part of the original Tier 6 design.13Tompkins County. NYS Tier 6 Plan Document
What Tier 6 Still Looks Like After the Changes
The reforms did not restore full parity with Tier 4. A few original Tier 6 rules remain in place, and they matter when you plan a retirement date.
- The pension multiplier is still 1.75 percent of salary per year for the first 20 years and 2 percent after that. Tier 4 reached 2 percent at 20 years.14New York State Comptroller. Comparison of ERS Benefits
- The full-benefit retirement age remains 63 for non-teacher Tier 6 members. Retiring earlier at 55 still carries a permanent 6.5 percent reduction for each year before 63, up to 52 percent at age 55.14New York State Comptroller. Comparison of ERS Benefits
- Tier 6 members contribute for their entire careers rather than stopping at 10 years the way Tier 4 members did.15PEF. Unions Rally for Pension Reform With Historic Rally
CSEA has said the “fight to Fix Tier 6 continues” and is pushing for further changes.16CSEA. Fix Tier 6
Who Pays for the Changes
The $557 million annual cost of the 2026 package is not split evenly. The state absorbs $118 million, and the remaining $440 million falls on local governments and school districts. The contribution-rate cuts alone account for about $244 million of the total.1Spectrum News. NY Budget Deal Includes Major Tier 6 Pension Revisions
The legislation was explicitly excluded from Section 25 of the Retirement and Social Security Law, the provision that normally requires the state to cover pension-benefit enhancements. That exclusion shifts the cost onto local participating employers. For the Employees’ Retirement System, the present-value cost increase was estimated at $2.33 billion, with local employer billing rates projected to rise by up to 0.9 percent of Tier 6 payroll. For the Police and Fire Retirement System, the present-value increase was estimated at $311 million, with billing rates rising up to 1 percent of Tier 6 payroll.17Association of Towns of the State of New York. S8133B A10939 Summary Tier 6 Employee Contribution Reform
Employer contribution rates were already rising before the reforms took effect. For fiscal year 2026–27, the state Comptroller set the average Employees’ Retirement System rate at 17.6 percent of payroll, up from 16.5 percent, and the Police and Fire Retirement System rate at 36.5 percent, up from 33.7 percent, citing market turbulence, salary changes, and “recent legislative changes (including reforms to tier 6).”18New York State Comptroller. NYSLRS Announces Employer Contribution Rates SFY 2026-27
The New York State Association of Counties, the New York Conference of Mayors, and the Association of Towns issued a joint statement in March 2026 calling on the state to “fully fund all costs associated with those changes.” They noted that nearly 60 percent of county, city, town, and village employees are in Tier 6, and warned the added expense could force municipalities to choose between “cutting essential services, eliminating positions, or seeking property tax increases that local taxpayers cannot afford.”19NYSAC. Statement on Proposed Amendments to Tier 6 The Citizens Budget Commission flagged a related mechanism: New York’s property tax levy cap exempts pension contribution increases above a 2-percentage-point threshold, and CBC projected the enhancements would trigger that exemption in some jurisdictions, allowing property tax increases above the cap.20Citizens Budget Commission. Statement Opposing Costly Tier 6 Pension Enhancements
Effective Dates and Who Is Covered
Tier 6 covers public employees who joined the New York State and Local Retirement System or the Teachers’ Retirement System on or after April 1, 2012. The 2026 reforms took effect April 1, 2026, with one exception: the Police and Fire Retirement System overtime cap increase to 25 percent takes effect January 1, 2027.7New York State Comptroller. 2026 Laws If you’re a Tier 4 or earlier member, none of the 2026 changes apply to you; the earlier vesting cut to five years applies only to Tier 5 and Tier 6 members. For questions about how the new rules affect your specific benefit calculation, your retirement system (NYSLRS, NYSTRS, NYCERS, NYCTRS, BERS, or the SUNY/CUNY ORP administrator) is the authoritative source.