Pension Reform Chapter 58 of the Laws of 2026
Pension Reform
Chapter 58 of the Laws of 2026
Effective Date: Reduced member contribution rates effective October 1, 2026; increased pensionable-overtime cap effective January 1, 2027
Synopsis: As part of the state budget, Governor Hochul signed legislation revising the benefit structure of Tier 5 and Tier 6 members of New York’s public retirement systems. Three provisions directly affect sworn officers in the Police and Fire Retirement System (PFRS): a reduction in Tier 6 member contribution rates, an increase in the amount of overtime that counts toward the pension calculation, and the continued exclusion of overtime from the wage figure used to set contribution rates.
This bulletin addresses only the provisions that reach sworn municipal police, many of whom are generally Tier 5 or Tier 6 members of the Police and Fire Retirement System (PFRS).1 New York City police, who belong to a separate police pension fund, are not addressed by these PFRS provisions.
Part I: Reduced Tier 6 Member Contribution Rates (effective October 1, 2026)
Effective October 1, 2026, the act lowers the member contribution rates for Tier 6 PFRS officers. The rate an officer pays is keyed to a salary band,2 and the new schedule reduces rates in every band above $45,000:
Annual Base Wages | Current Tier 6 Rate | New Rate (eff. Oct. 1, 2026) |
$45,000 or less | 3.00% | 3.00% |
$45,001 – $55,000 | 3.50% | 3.00% |
$55,001 – $75,000 | 4.50% | 3.00% |
$75,001 – $100,000 | 5.75% | 4.00% |
$100,001 – $125,000 | 6.00% | 5.25% |
More than $125,000 | 6.00% | 5.75% |
1“Tier 6” refers to members who first joined a New York public retirement system on or after April 1, 2012; “Tier 5” covers membership from January 9, 2010 through March 31, 2012. Sworn municipal police outside New York City are generally members of the New York State and Local Police and Fire Retirement System (PFRS), governed by Article 11 of the Retirement and Social Security Law (§§ 1203–1204).
2Contribution rates are set by reference to the member’s base wages in the second plan year preceding the current plan year. Through March 31, 2028, base wages used for this determination exclude overtime; beginning April 1, 2028, overtime and other pensionable earnings are included.
The reduction applies to Tier 6 members – generally officers who joined on or after April 1, 2012, which is the large majority of the current and future workforce. Tier 5 officers, who contribute a flat 3 percent, are unaffected by this change. No contributions paid before October 1, 2026 will be refunded on account of the new rates.
What You Need to Know: Most Tier 6 officers will see lower pension contributions and higher take-home pay beginning with the first full pay period on or after October 1, 2026. Coordinate early with payroll and human resources, and with the Office of the State Comptroller (which administers PFRS), so the new rates are implemented on time. This is a tangible recruitment and retention benefit worth communicating to current and prospective officers.
Part II: More Overtime Counts Towards Pension (effective January 1, 2027)
A member’s pension is based on final average salary, and overtime counts toward that figure only up to a cap. Under prior law, overtime exceeding 15 percent of an officer’s non-overtime wages was excluded from the final-average-salary calculation. For members who retire on or after January 1, 2027, that cap rises to 25 percent. This change applies to both Tier 5 and Tier 6 PFRS members.
What You Need to Know: Officers who work significant overtime and retire on or after January 1, 2027 may see a higher final average salary, and therefore a higher pension, than under the old 15 percent cap.
Part III: Overtime Excluded in Rate Determination; Extended Through 2028
Separately, the temporary rule that excludes overtime from the wage figure used to set an officer’s contribution-rate band – previously set to expire – is extended for two additional fiscal years, through the fiscal year ending in 2028. Beginning April 1, 2028 (unless extended again), all pensionable earnings, including overtime, will again be counted in determining the rate band.
What You Need to Know: Through March 31, 2028, an officer’s overtime will not push them into a higher contribution-rate band. Beginning April 1, 2028, it will, which may raise some officers’ contribution rates.