Pension or the SUNY ORP: the one-time choice at Stony Brook

What a new Stony Brook Medicine employee gives up and gains on each side of the one-time choice between the state pension system and the SUNY Optional Retirement Program.

Most retirement decisions can be revisited. You can change a savings rate, move a balance, or delay a claim. The choice some Stony Brook Medicine employees face in their first weeks on the job is different. As the Stony Brook Medicine page on this site explains, staff in some titles choose a retirement plan once, within 30 days of appointment, and the choice generally cannot be changed while they work for the university. That makes it worth understanding before the window opens, not after it closes.

Who faces the choice, and what is on the menu

Stony Brook Medicine staff are employed by the State University of New York, so the retirement options are set by the state, not the hospital. Which options appear on a given employee’s menu depends on the title of the appointment. SUNY’s Optional Retirement Program information for new employees describes who is eligible to elect the ORP and which state retirement systems are the alternatives for each category of title. For many hospital titles the alternative is the New York State and Local Retirement System, NYSLRS, and a new member of that system joins its current tier, Tier 6. If you are unsure which systems your title qualifies you for, that SUNY document and the campus benefits office are the places to confirm, because this article cannot know your title.

The defined benefit path: a pension set by statute

A defined benefit pension is a promise of an amount. The rules for NYSLRS tiers are written into the New York Retirement and Social Security Law, in Articles 14 and 15, and the benefit at retirement comes from a formula in that law: it is built from your years of credited service and an average of your earnings over a period the statute defines. The result is a monthly payment for life. It does not rise or fall with markets, and the investment risk sits with the state’s pension fund, not with you.

The pension has conditions. Members contribute from their pay at rates set in law, and the pension only becomes yours after a minimum period of credited service, called vesting, also set in statute. Leave state service before vesting and you generally have a right to your own contributions back, not to a pension. The formulas, contribution rules, vesting periods and retirement ages differ by tier and have changed over the years, which is why this article states none of them. The NYSLRS member publications on Tiers 4, 5 and 6 give the current figures for each tier, and the site’s Tier 6 pension calculator walks through how the current formula fits together.

The defined contribution path: the SUNY ORP

The Optional Retirement Program is a promise of contributions, not of an amount. SUNY and the employee pay into an account held in the employee’s name with one of the investment providers SUNY authorizes, and the balance at retirement depends on what went in and how the investments performed. There is no statutory benefit formula. The account is generally portable if you leave SUNY, which matters to people who do not expect to spend a career there. It produces lifetime income only if you arrange that yourself, by a withdrawal plan or by using the balance to buy an annuity, an insurance contract that pays income for life.

The pension promises an amount. The ORP promises contributions. Nearly everything that matters in this choice follows from that one difference.

Contribution rates and the ORP’s own vesting rules are described in SUNY’s Optional Retirement Program information for new employees. Do not rely on a colleague’s memory of them: colleagues who joined in different years may have joined under different terms.

What the decision actually turns on

Stripped to its essentials, the choice is about who bears which risk, and for how long you expect to stay.

• Who bears investment risk. In the pension, the state does. In the ORP, you do, in both directions.
• How long you stay. The pension formula rewards long service and vesting; the ORP travels with a shorter stay.
• Longevity. A pension pays as long as you live. An ORP balance lasts as long as the money does, unless you convert it to lifetime income.
• The fine print. Survivor benefits, disability provisions and post-retirement adjustments work differently in each, and the details are in the statute, the NYSLRS publications and the SUNY ORP materials, not in any summary, including this one.

One conflict of interest is worth naming plainly: an ORP account holds investments that generate fees for investment providers, and a state pension does not, so anyone who is paid on invested assets has a financial interest in which way a new employee chooses.

Where the current rules and figures live

This article has deliberately stated no contribution rate, vesting period, retirement age or deadline beyond the 30-day window the Stony Brook page describes, because those figures depend on tier and change over time. The current rules come from three places: the New York Retirement and Social Security Law for the statutory framework, the NYSLRS member publications for the pension tiers, and SUNY’s Optional Retirement Program information for new employees for the ORP and for eligibility by title. Your appointment letter and the campus benefits office confirm your own window. The voluntary savings plans available at Stony Brook are a separate matter from this choice, and the Stony Brook Medicine page covers them alongside the rest of the picture.

Written by Zachary Zanghi.