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Retirement Plans
Enrollment Regulations
Enrollment in a pension plan for eligible staff employees is mandated by the State of New Jersey. Pension plan designation (PERS, PFRS, ABP or DCRP) is based on the job responsibilities and requirements of the position held by the employee and scheduled work hours.
Public Employees' Retirement System (PERS)
PERS Retirement Plan Eligibility
- Full-time and part-time regularly appointed employees in approved job titles
- Temporary or per diem employees are eligible after twelve (12) months of continuous employment. Enrollment is based on the following eligibility guidelines:
- Membership Tiers 1 and 2: Members enrolled prior to July 1, 2007 and before November 2, 2008 with earnings of $1,500 or more
- Membership Tier 3: Members enrolled after November 2, 2008 with earnings of $7,500 or more. The 2012 earnings amount is $7,800 or more
- Membership Tiers 4 and 5: Members enrolled after May 21, 2010 who work at the fixed rate of 35 hours or more per week
- Employees holding "F" or "J" visas are not eligible to participate
PERS Plan Highlights
- A defined benefit plan
- Retirement benefit is based on a formula
- Employee contributions
- Hired prior to July 1, 1996 – (6.64% of annual base salary before federal taxes with no compensation limit.)
- Hired between July 1, 1996 and June 30, 2007 - (6.64% of annual base salary before federal taxes up to the annual Revenue Reconciliation Act limit - $250,000 in 2012)
- Hired July 1, 2007 or later - (6.64% of annual base salary before federal taxes up to the annual Maximum Wage Limit for PERS Pension Contributions - $110,000 in 2012)
- Members in excess of this Maximum Wage Limit are eligible for enrollment in the DCRP in addition to PERS*
- Tiers 2 and 3 members whose base salary falls below the $7,800 earnings must enroll in the DCRP. If the members earn less than $5,000 annually, they may choose to make an irrevocable election to waive participation in the DCRP for that position. It will not affect his/her future enrollment options under a new position.
Tiers 4 and 5 members enrolled after May 21, 2010 are required to work at the fixed rate of 35 hours or more per week
- Ten (10) year vesting based on credited service (years of pension contributions)
- Service Retirement- Age Requirements: may retire regardless amount of service credit:
- Members enrolled in Tiers 1 and 2: age 60
- Members enrolled in Tiers 3 and 4: age 62
- Members enrolled in Tier 5: age 65
- Loans permitted upon completion of three (3) years of service
- Disability Insurance is available for members
* Defined Contribution Retirement Program (DCRP) provides eligible PERS members hired July 1, 2007 or later with a tax sheltered defined contribution retirement benefit, along with life insurance and disability coverage who earn salaries in excess of established "maximum compensation" limits for PERS contributions. Please consult with your campus Benefits Services Associate who will advise you of your eligibility.
PERS Formula Used to Calculate Maximum Annual Pension
- Membership Tiers 1, 2 and 3
(Years + months of service)/55 x average of the highest 3 years of membership or any highest fiscal years
- Membership Tiers 4 and 5
(Years + months of service)/60 x average of the last 5 years of membership or any 5 highest fiscal years
Purchasing Service Credit
- It may be beneficial to purchase additional service credit for prior public service
- Examples of service that members may be eligible to purchase include: temporary service (prior to enrollment), leave of absence without pay, former membership service, out-of-state service, U.S. government service or military service
- Application to Purchase Service Credit – available on the NJ Division of Pensions and Benefits website
For plan details refer to PERS Member Handbook
Alternate Benefit Plan (ABP)
ABP Retirement Plan Eligibility
- Positions requiring a Bachelor's Degree or higher are eligible
- Regularly appointed staff and faculty scheduled to work .5 Full Time Equivalent (FTE) or more
- NOTE: Employees holding either "F" or "J" visas are not eligible to participate
ABP Plan Highlights
- A defined contribution plan
- Retirement benefits based on investment growth over time and type of payout option selected
- Members allocate contributions to State-authorized investment carriers
- Members hired July 1, 1996 or later, contribute 5% of base salary pretax up to the annual compensation limit of $250,000 for 2012. Members hired prior to July 1, 1996 are grandfathered and not subject to this provision
- There is an 8% employer match that is limited to an annual salary of $141,000 based on state regulations
- Once the member (hired July 1, 1996 or later) reaches the annual compensation cap of $250,000, they are eligible to select the Benefits Assistance Program's After-Tax Annuity and Supplemental Life Insurance Plans. Members hired prior to July 1, 1996 are grandfathered and not subject to this provision
- Loans are permitted
- Vesting:
- Immediate if employee owns a retirement contract from a previous employer in the field of higher education or is an active/vested member of a state-administered retirement system
- Twelve (12) month delayed vesting for newly eligible employees who do not meet the above criteria
- Members in delayed vesting status who terminate UMDNJ employment will receive their contributions only (not employer contributions)
State-authorized Investment Carriers
AIG-VALIC
AXA Equitable
The Hartford
ING Financial
Metlife
TIAA-CREF
Purchase of Service Credit Option is not available under this retirement plan.
For plan details refer to NJ Division of Pensions and Benefits website
Police and Firemen's Retirement System (PFRS)
PFRS Eligibility
- Full-time permanent police officers under age 35 at date of hire
- Must satisfy medical requirement
- Employees who do not satisfy age and medical requirements for PFRS enroll in PERS
- Employees holding "F" or "J" visas are not eligible to participate
PFRS Plan Highlights
- A defined benefit plan
- Retirement benefit is a formula based on service credit and final compensation
- Tier 1 Members enrolled on/or prior to May 21, 2010, final compensation is based on the base salary in the 12 months immediately preceding retirement
- Tier 2 & 3 Members enrolled after May 21, 2010, final compensation is based on the average annual compensation for any three fiscal years of membership
- Maximum Wage Limit for PERS Pension Contributions ($110,100 in 2012) for enrollments after May 21, 2010
- Employee contribution = 10% of base salary before federal taxes (up to the annual compensation limit of $250,000 for 2012)
- Employer contributions are also made (amount is determined annually by the State of New Jersey)
- Ten (10) year vesting based on credited service (years of pension contributions)
- Members older than 55 may retire regardless of amount of service credit
- Retirement is mandatory at age 65
- Loans are permitted upon completion of three (3) years of service
- Disability Retirement Options are available for members
Purchasing Service Credit
- It may be beneficial to purchase additional service credit for prior public service
- Examples of service that employees may be eligible to purchase include: temporary service (prior to enrollment), leave of absence without pay, former membership service, out-of-state service, U.S. government service, or military service
- Application to Purchase Service Credit – available on the NJ Division of Pensions and Benefits website
For plan details refer to PFRS Member Handbook
Defined Contribution Retirement Program (DCRP)
DCRP Eligibility
- Hired after May 21, 2010 (Tier 4)
- Earns more than $5,000 and works less than 35 hours per week
- Membership Tier 3: Members enrolled after November 2, 2008 with earnings between $1,500 and $5,000. Waive (irrevocable election)
- Mandatory enrollment between $5,001 and $7,799 in 2011
DCRP Plan Highlights
- A defined contribution plan
- Retirement benefits based on investment growth over time and type of payout option selected
- Members allocate contributions to State authorized investment carrier (Prudential Retirement)
- Employee contributions – 5.5% of annual base salary
- Employer contributions – 3%
- Maximum Wage Limit for PERS Pension Contributions ($110,100 in 2012)
- Vesting Employer contributions are not vested in a DCRP until after the member commences the second year of employment, unless the member is a member of another State administered pension plan
- A PERS member enrolled in DCRP is immediately vested
- Purchase of Service Credit Option is not available under this retirement plan
For plan details, refer to the Defined Contribution Retirement Program (DCRP) web site.
Life Insurance
Plan Highlights
- Underwritten by the Prudential Insurance Company
- Payable to named beneficiary
- New PERS and ABP members age 60 or older require proof of insurability prior to enrollment
- Ceases 31 days after termination of employment
Public Employees' Retirement System (PERS)
Coverage amount:
- Non-contributory amount = one and a half times (1.5 x) the total annual base salary upon which your pension contributions were based during the year proceeding your death during active service (100% employer paid)
- Contributory amount = one and a half times (1.5 x) annual base salary (100% employee paid)
- Members hired July 1, 2007 or later will have their annual base salary capped at the annual Maximum Compensation Limit
- Cost of contributory life insurance to employee = annual base salary x .0050
- Member may cancel contributory portion after one (1) year
- Irrevocable decision for members who cancel, they cannot be reinstated
- Contact your Campus Benefits Office for more information:
Newark |
973-972-5314 |
Piscataway/New Brunswick |
732-235-9417 |
Stratford/Camden |
856-566-6168 |
Alternate Benefit Program (ABP)
- Coverage amount = three and a half times (3.5 x) annual base salary received prior to death (prorated in the first year)
- Members hired on July 1, 1996, or later will have their annual base salary capped at $875,000
- No cost to employee
Police and Fireman's Retirement System (PFRS)
- Coverage amount = three and a half times (3.5 x) Final Compensation, total annual base salary upon which pension contributions were based during the year preceding death (prorated in the first year)
- No cost to employee
Defined Contribution Retirement Program (DCRP)
- Coverage amount = one and a half times (1.5 x) annual base salary (prorated in first year)
- No cost to employee
Changing Group Life Insurance Beneficiary
Waiving Group Life Insurance Coverage Over $50,000
- Change anytime
- Members can elect to waive insurance coverage over $50,000
Additional information:
NJ Division of Pension and Benefits website
Disability Insurance
Plan Highlights
- Underwritten by the Prudential Insurance Company
- Ceases 31 days after termination of employment
Public Employees' Retirement System (PERS)
- Members enrolled on/or prior to May 21, 2010
Occupation Disability- 43.6% of retirement allowance
Accidental Disability – 72.7% of retirement allowance
- Members enrolled after May 21, 2010
Disability Insurance – 60% of base monthly salary offset by Social Security and Workers Compensation
Police and Firemen's Retirement System (PFRS)
- Enrolled on/or prior to May 21, 2010
Ordinary disability – 40% of final compensation or 1.5% of final compensation for each year of service credit, whichever is greater. Final compensation means the base salary in the 12 months immediately preceding retirement
- Enrolled after May 21, 2010
Ordinary disability – 40% of final compensation or 1.5% of final compensation for each year of service credit, whichever is greater. Final compensation is based on the average annual compensation for any three fiscal years of membership
Defined Contribution Retirement Program (DCRP)
- 60% of base monthly salary offset with Social Security and Workers Compensation
Alternate Benefit Program (ABP)
- 60% of base monthly salary offset with Social Security and Workers Compensation
Loan Requests for PERS & PFRS
Revised January 1, 2012 - Change in Loan Interest Rate for Calendar Year 2012
The Division of Pensions and Benefits' has announced that the Public Employees' Retirement System (PERS) and the Police and Firemen's Retirement System (PFRS) loan interest rate will not changed for 2012. For eligible borrowers, the interest rate for pension loan applications received in 2012 will remain the same as in 2011 at 5.25% per annum on the declining balance of the loan. The administrative processing fee in 2012 will also remain at $8.00 per loan
- Reminder - An eligible PERS or PFRS member who wishes to borrow against their pension account must submit the loan request online using the Pension Loan Application accessible through a personal account with the Member Benefits Online System (MBOS)
- Interest Rate - Interest is charged on the declining balance of all loans at a commercially reasonable rate set annually by the New Jersey State Treasurer. For loan applications received in calendar year 2011, the interest rate is 5.25% on the declining balance of the loan
- Administrative Fee - Chapter 92, P.L. 2007, established an administrative processing fee on all pension loans. For loan applications received in 2012, the administrative processing fee will remain at $8.00. The administrative processing fee is not an added charge, but is taken from the requested amount of the loan to recover the actual costs of administering the pension loan program. The administrative processing fee is subject to change annually with any change announced in December and the new fee taking effect the first of January
- Refer to the Division of Pensions and Benefits website for loan request information
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