Retirement Planning
Member Guidebook
For members of the Public Employees’ Retirement System (PERS)
and the Teachers’ Pension and Annuity Fund (TPAF)
Pensions & Benefits
January 2023 Page 2
Retirement Planning PERS & TPAF
MBOS Registration Information ......................................3
Retirement Considerations .........................................3
Social Security ...................................................3
Supplemental Retirement Savings Plans ..............................3
Expenses in Retirement ...........................................4
Purchase of Service Credit .........................................4
Types of Service Eligible for Purchase ................................4
Retirement Benets ............................................... 5
Types of Retirement ..............................................5
Retirement Estimates .............................................7
Pension Options .................................................7
Applying for Retirement ............................................ 8
Retired Loan Balances ............................................8
Group Life Insurance .............................................. 9
Active Employees ................................................9
Retired Members ................................................. 9
Designation of Beneciary ..........................................9
Conversion of Group Life Insurance ..................................9
Taxation of Retirement Benets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Electronic Funds Transfer (EFT) ....................................10
Health Benets in Retirement ...................................... 11
The Health Benet Programs ...................................... 11
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Enrollment ..................................................... 11
Medicare-Eligible Enrollees ........................................ 11
Cost of Retired Group Health Benets Coverage ....................... 11
Survivor Coverage ...............................................12
Dental Plan Costs ...............................................12
Contacting the New Jersey Division of Pensions & Benets ...............12
The information provided in this guidebook is a summary and not intended to provide all information. While every attempt at accuracy has been made, it cannot be guaranteed.
The complete terms governing the PERS, TPAF, and the other State-administered employee benet programs discussed on this booklet are set forth in the New Jersey Stat-
utes Annotated and the New Jersey Administrative Code. If there is are dierences between the information presented here and the statutes governing the plan or regulations
implementing the statutes, the statutes and regulations will take precedence.
If you are unsure of, or have questions about, any aspect of your PERS, TPAF, or other employee benets, you should ask about them by contacting your employer repre-
sentative or a counselor at the New Jersey Division of Pensions & Benets (NJDPB).
TABLE OF CONTENTS
Page 3 January 2023
PERS & TPAF Retirement Planning
MBOS REGISTRATION INFORMATION
As a member of a New Jersey State-administered re-
tirement system, you may access the Member Benets
Online System (MBOS).
MBOS is a set of Internet-based applications that allow
registered employees and retirees access to:
• Member Account Information;
• Beneciary Designation;
• Pension Letters and Statements; and
• Health Benets Account Information (if applicable).
For Employees
• Pension Loans — Estimates and Online Loan Ap-
plication;
• Online Purchase Application;
• Retirement Estimates and Online Retirement Appli-
cation; and
• Payroll Certications.
For Retirees
• Retirement Check Information and Check History;
• Online Direct Deposit/Electronic Fund Transfer
(EFT) Application;
• Federal and State Income Tax Withholding; and
• Form 1099-R Information and Duplicate Request.
Before you can begin MBOS you must be registered
with both MBOS and the myNewJersey website. You
can register for MBOS from any internet connection. To
see detailed instructions about MBOS registration, visit the
New Jersey Division of Pensions & Benets (NJDPB) web-
site at www.nj.gov/treasury/pensions
RETIREMENT CONSIDERATIONS
You might have some idea about how you would like
to spend your retirement. You may want to travel or
go back to school. You may have a hobby that will oc-
cupy your time. You may have plans to embark on a
second career or start your own business. Or, perhaps
you just plan to relax and enjoy the fruits of your labors.
No matter what your goal, it will take money to attain it.
However, many retirees do not fully comprehend how
much of their income they need to replace when they
retire. Because of this fact, retirees can nd themselves
working longer than they had planned or not having the
retirement lifestyle they had envisioned while they were
working.
While the Public Employees’ Retirement System (PERS)
and Teachers’ Pension and Annuity Fund (TPAF) are
excellent pension plans and provide a lifetime benet at
retirement, they will probably not provide you with all of
the income you need for a comfortable retirement. The
truth is that most retirees from the PERS and TPAF will
need to replace about 80 percent of their nal year’s
gross income. In some cases, they will need even more
than that. Where will that additional income come from?
SOCIAL SECURITY
Social Security was never intended to be a primary
source of income. It is crucial that you think of Social
Security as supplemental retirement income. It is also
important that you read your annual Social Security
Statement and check it for accuracy. Your benet will
be based upon your highest 35 years of earnings. Your
earnings history is listed on your annual statement. For
more information about Social Security please visit the
Social Security website or call 1-800-772-1213.
SUPPLEMENTAL RETIREMENT SAVINGS PLANS
Most members of the PERS and TPAF have the op-
portunity to participate in employer-sponsored supple-
mental retirement savings plans. These plans come in
several varieties depending on where you work, but all
of them have the same goal — to help people save for a
nancially secure retirement.
Deferred Compensation 457 Plans allow members
to make tax-deferred contributions directly from their
paychecks to a variety of investment options. A member
can contribute as little as one percent of their pay; there
is also a “catch-up” provision that permits members to
contribute even more as they approach retirement.
Annuity Savings 403b Plans are available to employ-
ees and are similar to 457 plans. Special tax-sheltered
provisions are available to employees of boards or edu-
cation or State/county colleges and universities.
• State Employees can visit the State Employees
Deferred Compensation Plan website at: www.
prudential.com/njsedcp or call 1-866-NJSEDCP
(1-866-657-3327); or get Supplemental Annuity
Collective Trust (SACT) information on the NJDPB
website, or call (609) 633-2031.
• Board of education, county and municipal em-
ployees can get SACT information on the NJDPB
website, or call (609) 292-7524; and should also
contact their employer’s Benets Oce to nd out
what additional supplemental savings plans are
available.
Dened Contribution Retirement Program – PERS
or TPAF members enrolled on or after July 1, 2007, may
be members of the Dened Contribution Retirement
Program (DCRP) if they had salaries in excess of, or
below, certain compensation limits established under
the provisions of P.L. 2007, c. 103 (Chapter 103) and
P.L. 2008, c. 89 (Chapter 89).
January 2023 Page 4
Retirement Planning PERS & TPAF
Elected and appointed ocials are also eligible for
DCRP enrollment. Members can contact the DCRP
at: 1-866-NJDCRP1 (1-866-653-2771) or visit:
www.prudential.com/njdcrp
Other supplemental investment options include IRA
accounts, life insurance annuities, stocks, bonds, and
mutual funds funded with after-tax savings.
Before you enroll and invest your money in any invest-
ment plan, be sure you understand the potential risks
and plan details.
EXPENSES IN RETIREMENT
After you retire, some of your expenses may be lower or
go away altogether. These include:
• Pension Contributions;
• FICA Taxes;
• Contributions to Supplemental Savings;
• Contributory Life Insurance premiums;
• Union Dues;
• Unemployment or Disability Insurance premiums;
• State Income taxes (depending on where you
choose to live in retirement); and
• Work-related expenses.
It is important to understand how your expenses will
change as you prepare for retirement. You can do this
on your own or with the help of a professional nancial
planner.
PURCHASE OF SERVICE CREDIT
Since your retirement allowance is based, in part, on
the amount of service credit posted to your retirement
system account, purchasing service credit normally
increases the amount of your retirement allowance. In
some cases, a purchase allows an employee to attain
the years of service required to qualify for Early Retire-
ment.
TYPES OF SERVICE ELIGIBLE FOR PURCHASE
Temporary Service
Members are eligible to purchase service credit for tem-
porary, provisional, certain intermittent, or substitute
employment if the employment was continuous and
immediately preceded a permanent or regular appoint-
ment.
Leave of Absence without Pay
Members are eligible to purchase service credit for o-
cial leaves of absence without pay up to a maximum of
two years for personal illness, and a maximum of three
months for personal reasons.
• Three months is the maximum period of purchase
for maternity leave unless certied by a physician
that a disability has occurred as a result of the preg-
nancy.
• Child-care leave is eligible for purchase as a leave
for personal reasons.
Former Membership Service
Members are eligible to purchase service credited un-
der a previous membership in any of the dened benet
retirement systems administered by the NJDPB — ex-
cept the Alternate Benet Program (ABP) or the DCRP.
Out-of-State Service
Members are eligible to purchase up to 10 years of pub-
lic employment rendered with any State, county, munici-
pality, school district, or public agency outside the State
of New Jersey but within the United States (including
U.S. territories or possessions) provided the service
rendered would have been eligible for membership in
a State of New Jersey-administered dened benet re-
tirement system.
This service is only eligible for purchase if the member
is not receiving or eligible to receive retirement benets
from the out-of-state public retirement system. Leaves
of absence from out-of-state employment are not eligi-
ble for purchase.
Note: Purchases of Out-of-State Service requested af-
ter November 1, 2008, cannot be used by members of
the PERS or TPAF to qualify for State-paid or employ-
er-paid health care benets in retirement.
U.S. Government Service (Full Cost)
PERS and TPAF members are eligible to purchase up
to 10 years of credit for civilian service rendered with the
U.S. Government provided the service rendered would
have been eligible for membership in a New Jersey
State-administered retirement system. This service is
only eligible for purchase if the member is not receiving
or eligible to receive retirement benets from the federal
government based in whole or in part on this service.
Note: Purchases of U.S. Government Service request-
ed after November 1, 2008, cannot be used by mem-
bers of the PERS or TPAF to qualify for State-paid or
employer-paid health care benets in retirement.
Military Service Before
Enrollment (Full Cost)
Members are eligible to purchase credit for up to 10
years of active military service rendered prior to enroll-
ment.
Additional information regarding eligible service is avail-
able on our website.
Purchase Cost
The cost of purchasing service credit is based on your
nearest age at the time the NJDPB receives your pur-
chase application and the higher of your current annual
salary or highest scal year (July 1 to June 30) base
salary as a member of the retirement system. For most
Page 5 January 2023
PERS & TPAF Retirement Planning
members, the cost of the purchase will increase with an
increase in your age and/or salary.
Members are given several options for payment:
• Lump-sum payment;
• Payroll deduction (minimum of ½ of regular pen-
sion deduction);
• Rollover from a qualied, tax-deferred savings plan
including the State Deferred Compensation Plan;
or
• A combination of the above options.
For more information or to calculate the cost of your pur-
chase, see the Purchase of Service Credit resources on
our website.
Purchase Procedures
Before you can purchase service credit, you must sub-
mit a Purchase Application via MBOS and receive a
Purchase Quotation Letter from the NJDPB. Once you
receive a purchase quotation, the nal authorization of
the purchase is at your discretion.
If you decide to purchase some or all of your eligible
service, you will have 90 days to return the Purchase
Authorization portion of the quotation to the NJDPB.
For more details about the purchase of service credit,
see the Purchase of Service Credit resources on our
website.
RETIREMENT BENEFITS
The PERS and the TPAF are Dened Benet plans un-
der section 401(a) of the Internal Revenue Code (IRC).
These plans are designed to pay a lifetime retirement
benet to eligible members.
Denitions
The terms below are dened in relation to the retirement
process as follows:
Years of Service is the amount of pension membership
service credit you have accumulated in your pension
account.
Salary refers to the base salary on which your pension
contributions are based. It does not include extra pay
for overtime or money given in anticipation of your re-
tirement.
Final Average Salary for Tiers 1, 2, and 3 refers to the
average salary for the 36 months (30 months for em-
ployees with 10-month contracts) immediately preced-
ing your retirement; and for Tier 4 and 5 the average
salary for the 60 months (50 months for employees with
10-month contracts) immediately preceding your retire-
ment. If your last years are not your highest years of sal-
ary, your allowance will be calculated using your highest
scal years (July – June) of salary. If this is the case,
you must indicate it on your retirement application.
TYPES OF RETIREMENT
Recent legislation changed the calculation methods and
retirement age for some PERS and TPAF members. A
PERS or TPAF member will be enrolled under one of
ve membership tiers.
Membership Tier 1 — Enrolled prior to July 1, 2007.
Membership Tier 2 — Enrolled on or after July 1, 2007,
and prior to November 2, 2008.
Membership Tier 3 — Enrolled on or after November 2,
2008, and on or before May 21, 2010.
Membership Tier 4 — Enrolled after May 21, 2010 and
prior to June 28, 2011.
Membership Tier 5 — Enrolled on or after June 28,
2011.
There are several types of retirement that vary by mem-
bership tier.
Service Retirement
The Service Retirement age is 60 or older for Tier 1
and Tier 2 members, 62 or older for Tier 3 and Tier 4
members, or 65 or older for Tier 5 members, with no
minimum required amount of pension membership ser-
vice credit. The benet is calculated using the following
formulas:
Tiers 1, 2, & 3
Years of Service X Final = Annual
55 Average Salary Retirement
(3 years) Allowance
Tiers 4 & 5
Years of Service X Final = Annual
60 Average Salary Retirement
(5 years) Allowance
For example: A Tier 1 member with 22 years of service
credit would receive 22/55 (40 percent) of Final Average
Salary.
Early Retirement
Available to members who have 25 years or more of
pension membership service credit and are under age
60 for Tier 1 and Tier 2 members or age 62 for Tier 3 or
Tier 4 members; or with 30 years or more of pension
membership service credit and under age 65 for Tier 5
members. The benet is calculated using the appropri-
ate Service Retirement formula.
January 2023 Page 6
Retirement Planning PERS & TPAF
• For Tier 1 members who retire before age 55, your
allowance is reduced 1/4 of one percent (three per-
cent per year) for each month under age 55.
Example: If you retire at age 54, you will receive
97 percent of your full retirement allowance. If you
retire between the ages of 55 and 60, there is no
reduction.
• For Tier 2 members who retire before age 60, your
allowance is reduced 1/12 of one percent (one per-
cent per year) for each month under age 60 through
age 55, and 1/4 of one percent (three percent per
year) for each month under age 55.
Example: If you retire at age 54, you will receive
92 percent of your full retirement allowance. If you
retire at age 57 you will receive 97 percent of your
full retirement allowance.
• For Tier 3 or Tier 4 members who retire before age
62, your allowance is reduced 1/12 of one percent
(one percent per year) for each month under age
62 through age 55, and 1/4 of one percent (three
percent per year) for each month under age 55.
Example: If you retire at age 54, you will receive
92 percent of your full retirement allowance. If you
retire at age 57 you will receive 95 percent of your
full retirement allowance.
• For Tier 5 members who retire before age 65, your
allowance is reduced 1/4 of one percent (three per-
cent per year) for each month under age 65.
Example: If you retire at age 57, you will receive
76 percent of your full retirement allowance. If you
retire at age 63, you will receive 94 percent of your
full retirement allowance.
Veteran Retirement
Available to qualied military veterans. If you are not
already listed as a veteran on NJDPB’s records, you
should submit a copy of your Form DD214 (military
discharge papers) showing both your induction and dis-
charge dates to:
N.J. Department of Military and Veterans
Aairs
ATTN: DVP-VBB P.O. Box 340
Trenton, N.J. 08625-0340
Attach a note to the Form DD214 indicating that you
want to obtain veteran status for pension purposes and
include your address on the note.
For additional information, see the Veteran Status Fact
Sheet. Qualied veterans must be in active employment
until the eective date of retirement or must have met
the requirements for a Veteran Retirement as of their
termination date.
The formulas for calculating a Veteran Retirement are
the same for all Membership Tiers.
Qualied veterans may retire after 25 years of pension
membership service credit at age 55 or older or after
20 years of service credit at age 60 or older. The an-
nual benet is equal to 54.5 percent of the highest 12
consecutive months of base salary upon which pension
contributions were based.
Qualied veterans with 35 years or more of pension
membership service credit at age 55 or older are entitled
to an annual allowance based on the member’s highest
12 consecutive months of base salary, as shown in the
following formula:
Years of Service X Highest 12 = Annual
55 Consecutive Retirement
Months of Salary Allowance
Veteran members may retire on a Service Retirement if
that provides a higher benet.
Deferred Retirement
Available to members who have at least 10 years of
pension membership service credit (but less than the
25 or 30 years required for Early Retirement) and who
are not yet 60 years of age for Tier 1 or Tier 2 mem-
bers, 62 years of age for Tier 3 or Tier 4 members, or 65
years of age for Tier 5 members, when they terminate
employment.
You must le a retirement application via MBOS before
the Deferred Retirement can become eective and pay-
ments can begin. After ling and upon reaching your
appropriate Service Retirement age, you will begin to
receive a retirement allowance based on the Service
Retirement.
If you do not le before you attain your appropriate Ser-
vice Retirement age, your retirement will be eective on
the rst on the month after the NJDPB receives your
properly completed retirement application.
At any time before your Deferred Retirement becomes
eective, you may change your mind and apply for with-
drawal of your contributions instead. Once you cancel
your Deferred Retirement and withdraw your contribu-
tions, all rights and privileges of pension membership
end.
Disability Retirement
Ordinary and Accidental Disability Retirement benets
are also available to Tier 1, Tier 2, and Tier 3 members.
For more information on the qualications for a disability
retirement see the PERS or TPAF Member Guidebook
or the Disability Retirement Benets (PERS and TPAF)
Fact Sheet available on our website.
Note: Tier 4 and Tier 5 members may be eligible for
long term disability insurance after one year of continu-
ous employment. Visit our website for details.
Page 7 January 2023
PERS & TPAF Retirement Planning
RETIREMENT ESTIMATES
As you approach retirement eligibility, it is important that
you obtain a retirement estimate. The estimate will help
you to plan your income in retirement. There are a vari-
ety of ways to obtain an estimate.
If you are within two years of retirement eligibility, you
may use the Retirement Estimate Calculator on MBOS,
or make an appointment to speak with a counselor.
If you are more than two years from retirement, you may
use the Online Reitrement Estimate Calculator avail-
able on our website. This calculator can be used by all
members at any stage in their career.
PENSION OPTIONS
To plan for a successful retirement, you must be famil-
iar with the retirement payment options available to you
from the PERS or TPAF. These options determine what
will happen to your pension when you pass away.
When you apply for retirement, you will have to choose
one of nine ways to receive your retirement benets.
Please be sure you understand the dierent payment
options available to you because, once you have made
your choice and your retirement becomes due and pay-
able (usually when your rst check is issued), you can
not change your payment option.
You should also consider your nancial needs in retire-
ment, your health, your beneciary’s health, the need to
provide survivor benets, life insurance benets avail-
able, income from other sources, such as Social Securi-
ty benets, investments, life insurance, etc.
This is an extremely important decision that aects both
you and your beneciary. It should not be taken lightly.
The NJDPB cannot advise members on which option to
select. Therefore, you may want to consult with a nan-
cial professional before making this decision.
Option Example:
To help illustrate how the dierent pension options work,
we have created the following sample retirement esti-
mate for an imaginary, but typical, retirement system
member (see table).
Mary Jones is a 59 year old public employee with 29
years and 8 months of retirement system service credit.
Mary’s Final Average Salary (average of her last three
years) is $58,500.
Mary has over 25 years of service credit and qualies
for an Early Retirement benet. She is also over age 55,
so there will not be any reduction of her benet amount
due to age. Mary names her 60 year old spouse, John
Jones, as her beneciary.
Sample Options for Member — Mary Jones
Options Member Beneciary
Maximum $2,629.55 $0
Option A $2,248.26 $2,248.26
Option B $2,353.44 $1,765.08
Option C $2,471.77 $1,235.89
Option D $2,553.29 $638.32
Option 1 $2,558.55 $306,079.09
Reducing
reserve
Option 2 $2,274.56 $2,274.56
Option 3 $2,484.92 $1,242.46
Option 4 Individually calculated based on
ages of member and beneciary
The Maximum Option
The Maximum Option provides the highest retirement
benet payable — in our example, Mary could re-
ceive a benet payment under the Maximum Option
of $31,554.55 a year, or $2,629.55 per month. Upon
Mary’s death, all retirement benets end.
Joint and Survivor Options
Mary could also select one of eight dierent options that
reduce her benet in order to provide for a benet to be
paid to her named beneciary upon her death.
Options A, B, C and D — Under these options, Mary’s
benet would increase to the Maximum Option amount
if predeceased by the named beneciary.
Note: For these options, you may name only one ben-
eciary, and the beneciary cannot be changed once
your retirement becomes due and payable.
Option A provides that upon your death, your bene-
ciary will receive, for life, the same monthly benet that
you were receiving at the time of your death — in the
example, Mary’s benet is $2,248.26 per month. Upon
her death, the named beneciary would also receive
$2,248.26 per month.
Option B provides that upon your death, your benecia-
ry will receive, for life, 75 percent of the monthly benet
that you were receiving at the time of your death — in
the example, Mary’s benet is $2,353.44 per month.
Upon her death, the named beneciary would receive
$1,765.08 per month.
Note: For Options A and B, Internal Revenue Service
(IRS) age restrictions apply for a nonspouse beneciary.
Option C provides that upon your death, your benecia-
ry will receive, for life, 50 percent of the monthly benet
that you were receiving at the time of your death — in
the example, Mary’s benet is $2,471.77 per month.
Upon her death, the named beneciary would receive
$1,235.89 per month.
Option D provides that upon your death, your benecia-
ry will receive, for life, 25 percent of the monthly benet
that you were receiving at the time of your death — in
the example, Mary’s benet is $2,553.29 per month.
Upon her death, the named beneciary would receive
$638.32 per month.
January 2023 Page 8
Retirement Planning PERS & TPAF
Option 1 calculates a reserve of money based on the
amount expected to be paid to you in retirement ben-
ets over your lifetime. This reserve is reduced each
month by the amount of your original monthly retirement
benet. Upon your death, any balance remaining in the
reserve is paid to your beneciary(ies). If you deplete
your retirement reserve, you continue to receive your
monthly retirement benet during your lifetime; howev-
er, upon your death, no retirement benets are payable
to your beneciary(ies).
You may name one beneciary or multiple beneciaries
for Option 1 and you can change your Option 1 bene-
ciary at any time — in the example, Mary’s Option 1
benet is $2,558.55 per month and draws against a re-
serve of $306,079.09. In Mary’s case, she would collect
the full amount of her reserve after receiving retirement
benets for 120 months (10 years).
Note: It is important to realize that each individual
member’s Option 1 reserve will vary and could last for a
shorter or longer period of time.
Options 2, 3 or 4 — Under these options, Mary’s bene-
t would remain at the reduced amount if predeceased
by the named beneciary.
Note: For these options, you may name only one ben-
eciary, and the beneciary cannot be changed once
your retirement becomes due and payable.
Option 2 provides that upon your death, your bene-
ciary will receive, for life, the same monthly benet that
you were receiving at the time of your death — in the
example, Mary’s benet is $2,274.56 per month. Upon
her death, the named beneciary would also receive
$2,274.56 per month.
Option 3 provides that upon your death, your benecia-
ry will receive, for life, 50 percent of the monthly benet
that you were receiving at the time of your death — in
the example, Mary’s benet is $2,484.92 per month.
Upon her death, the named beneciary would receive
$1,242.46 per month.
Option 4 provides that upon your death, your bene-
ciary(ies) will receive whatever monthly benet you
designate on your retirement application. The bene-
ciary’s monthly benet cannot be greater than your
monthly benet. Option 4 amounts are manually calcu-
lated based on the ages of the member and the bene-
ciary(ies), so no example is provided here. If you are
interested in selecting an Option 4 retirement benet,
contact the NJDPB.
Note: For Options 2 and 4, IRS age restrictions apply
for a nonspouse beneciary.
For more information see the, Pension Options Fact
Sheet, which is available on our website.
APPLYING FOR RETIREMENT
All retirement applications must be submitted online us-
ing MBOS. Paper applications are not accepted.
It is your responsibility to le an Application for Retire-
ment Allowance. Your application must be submitted to
the NJDPB before your retirement date. All retirements
are eective the rst of a month. Under no circumstanc-
es can a retirement become eective prior to the date
the application is received by the NJDPB.
Four months advance ling is recommended. Process-
ing times vary and cannot begin until we have received
all the necessary information and forms from both you
and your employer.
If you have not furnished proof of your age to the NJD-
PB, you will receive a letter requesting a photocopy of
your birth certicate or other acceptable documentation.
Proof of age for your beneciary is required if you select
pension Option A, B, C, D, 2, 3, or 4.
RETIRED LOAN BALANCES
If you retire with an outstanding pension loan balance,
you must decide how you wish to repay your loan. You
may:
• Pay the loan in its entirety prior to receiving any
benets; or
• Continue your monthly loan repayment schedule
into retirement until the loan balance plus interest
has been repaid.
You will receive this information on your Quotation of
Retirement Benets after your retirement has been cal-
culated.
Page 9 January 2023
PERS & TPAF Retirement Planning
GROUP LIFE INSURANCE
An important part of membership in a New Jersey
State-administered retirement system is the payment
of Group Life Insurance death benets to your named
beneciaries.
ACTIVE EMPLOYEES
PERS Insurance Coverage While Actively Employed
Age at
Death
Member with
Noncontributory
Insurance Only
Member with Both
Contributory and
Noncontributory
Insurance
Any Age 1.5 x salary 3 x salary
TPAF Insurance Coverage While Actively Employed
Age at
Death
Member with
Noncontributory
Insurance Only
Member with Both
Contributory and
Noncontributory
Insurance
Any Age 1.5 x salary 3.5 x salary
RETIRED MEMBERS
Group Life Insurance in retirement is payable only if the
PERS or TPAF member retires with 10 or more years of
pension membership credit or Tier 1, 2, or 3 members
on a Disability Retirement.
PERS Insurance Coverage for Retired Members
Type of
Retirement
Death Before
Retirement Age
for Your Tier
Death After
Retirement Age
for Your Tier
Service N/A 3/16 x nal salary
Early &
Veteran
3/16 x nal salary 3/16 x nal salary
Deferred None 3/16 x nal salary
Disability 1.5 x nal salary 3/16 x nal salary
Note: The percentages above apply to the total base salary
upon which pension contributions were based during the
year preceding retirement.
TPAF Insurance Coverage for Retired Members
Type of
Retirement
Member with
Noncontributory
Insurance Only
Member with Both
Contributory and
Noncontributory
Insurance
Death
Before
Retire-
ment
Age for
Your
Tier
Death
After
Retire-
ment
Age for
Your
Tier
Death
Before
Retire-
ment
Age for
Your
Tier
Death
After
Retire-
ment
Age for
Your
Tier
Service
N/A
3/16
x nal
salary N/A
7/16
x nal
salary
Early &
Veteran
3/16
x nal
salary
3/16
x nal
salary
7/16
x nal
salary
7/16
x nal
salary
Deferred
None
3/16
x nal
salary None
7/16
x nal
salary
Disability 1.5 x
nal
salary
3/16
x nal
salary
1.75
x nal
salary
7/16
x nal
salary
Note: The percentages above apply to the total base sal-
ary upon which pension contributions were based during
the year preceding retirement or highest contractual year.
DESIGNATION OF BENEFICIARY
Upon your death, the NJDPB will pay death benets to
the last named beneciary, or beneciaries, you had
designated. Therefore, it is very important to keep your
beneciary information up to date.
While designations for some pension options cannot be
changed after retirement , you should review and update
your designation of beneciary information any time you
experience a major life event such as marriage, divorce,
birth of a child, etc. Members can check or update their
beneciary information online using MBOS.
CONVERSION OF
GROUP LIFE INSURANCE AT RETIREMENT
For most retirees who are covered by Group Life In-
surance while employed, the insurance coverage is re-
duced, or in some cases ends, 31 days after your termi-
nation of employment or date of retirement (whichever
is earlier).
You have a guaranteed right to convert any remaining
group life insurance coverage to an individual policy
with the Prudential Insurance Company when you re-
tire. This conversion to a Prudential policy is guaranteed
(you cannot be denied coverage for health or other rea-
sons), but it may be more expensive or less suitable to
your needs than other policies for which you may qualify
from Prudential or other insurance carriers. You should
contact other insurance carriers and compare the avail-
able policies and costs before you decide to purchase
the conversion policy. (Other carriers may accept or
reject your application based on their evaluation of the
status of your health and other factors.) Additional provi-
sions and limitations apply to members with a Deferred
Retirement or a Disability Retirement.
If you wish to purchase a conversion policy, you have a
one time option to do so prior to the 31st day after you
cease employment. After that date, you will not be eligi-
ble to purchase a conversion policy.
To apply for conversion, contact your local Prudential
agent or call the Prudential Insurance Company at
1-855-364-7783.
For additional information about conversion, including
procedures for obtaining a conversion policy, see the
Conversion of Group Life Insurance Fact Sheet, which
is available on our website.
January 2023 Page 10
Retirement Planning PERS & TPAF
TAXATION OF RETIREMENT BENEFITS
Federal Income Tax
Retirement benets (except for Accidental Disability re-
tirement and Accidental Death benets) are subject to
federal income tax. However, if you paid tax on any of
your contributions to the retirement system, that portion
of your monthly benet representing a return of your
previously-taxed contributions is not taxable.
Withholding Federal Income Tax
The NJDPB is required by federal law to automatically
withhold federal income tax from your pension check,
based on a default status of Single with no adjustments.
In order to change your federal withholding status, you
must log in to your MBOS account to complete a federal
W-4P. You will have access to this application after you
have retired, which will allow you to elect no withhold-
ing, or if you want withholding, to select the appropriate
tax ling status so that the proper amount is withheld
from your pension check.
You should refer to IRS Form W-4P for instructions re-
garding federal tax withholding. Please note that IRS
Form W-4R should be used for non-periodic payments
and eligible rollover distributions. This form can be
found on the IRS website at www.irs.gov
New Jersey State Income Tax
Most retirees are not subject to New Jersey income tax
until they recover in pension checks the amount of the
contributions which they made to the retirement system
while working.
If you are at least 62 or considered disabled by Social
Security, you may exclude the following amounts of re-
tirement income from New Jersey income tax for the tax
year indicated in the following chart:
New Jersey Retirement Income Exclusions
Tax Year
Married
Filing
Jointly Single
Married
Filing
Separately
2003–2016 $20,000 $15,000 $10,000
2017 $40,000 $30,000 $20,000
2018 $60,000 $45,000 $30,000
2019 $80,000 $60,000 $40,000
2020 and
after
$100,000 $75,000 $50,000
2021 and
After
50 percent
of retirement
income if
gross in-
come is over
$100,000 up
to $125,000
37.5 percent
of retirement
income if
gross in-
come is over
$100,000 up
to $125,000
25 percent
of retirement
income if
gross in-
come is over
$100,000 up
to $125,000
25 percent
of retirement
income if
gross in-
come is over
$125,000 up
to $150,000
18.75
percent of
retirement
income if
gross in-
come is over
$125,000 up
to $150,000
12.5 percent
of retirement
income if
gross in-
come is over
$125,000 up
to $150,000
Note: The “Retirement Income Exclusions” listed above
are limited to taxpayers with gross income of $100,000
or less. Please see the instructions for the Form NJ-
1040 or contact the N.J. Division of Taxation or a profes-
sional tax advisor for further information.
Withholding New Jersey State Income Tax
Unlike federal income tax, withholding for New Jersey
income tax is completely voluntary. No New Jersey in-
come tax will be withheld unless you authorize it through
your MBOS account by completing a New Jersey State
W-4P. The amount withheld must be at least $10.00 per
month and in even dollar amounts (no cents). If you
need help deciding whether or not to have New Jersey
income tax withheld or how much tax to have withheld,
you can contact the N.J. Division of Taxation at 1-800-
323-4400.
If you live outside New Jersey, you are not required to
pay New Jersey income tax on the pension you receive
from the retirement system. The NJDPB does not with-
hold income tax for other states. Check with your home
state’s tax oce to determine if your pension is taxable
in your state of residence.
Note: Tax planning is an important part of your retire-
ment plan. You may want to consult a nancial or tax
professional before setting up tax withholding.
For Federal Tax Information, visit the IRS’s website or
call 1-800-TAX-1040.
For N.J. State Tax Information, visit the N.J. Divi-
sion of Taxation’s website or call (in New Jersey)
1-800-323-4400.
ELECTRONIC FUNDS TRANSFER (EFT)
Direct deposit, also known as Electronic Funds Transfer
(EFT), of your retirement check to a bank account is
mandatory, except for foreign mailing addresses. You
may set up direct deposit for your retirement check up
to 60 days before your retirement date. Direct deposit
must be initiated through your MBOS account using the
Electronic Funds Transfer application. You can make
changes to an existing direct deposit any time after re-
tirement, but please allow approximately 60 days for a
new direct deposit or changes to take eect.
Page 11 January 2023
PERS & TPAF Retirement Planning
HEALTH BENEFITS IN RETIREMENT
THE HEALTH BENEFIT PROGRAMS
Some retirees will qualify for health coverage under the
State Health Benets Program (SHBP) or the School
Employees’ Health Benets Program (SEHBP) upon
retirement. The following is a general explanation of re-
tiree health benets. Complete details on health benet
coverage for retirees can be found on our website.
ELIGIBILITY
SHBP or SEHBP eligibility in retirement is generally
reserved for full-time employees who were eligible for
employer-paid health insurance coverage in the active
group of the SHBP or SEHBP until their retirement date.
Certain employees of education employers (boards of
education, universities, colleges, etc.) may also be eligi-
ble for SEHBP coverage in retirement if they are eligible
for another employer-paid health insurance plan until
their retirement date.
Eligible retirees may enroll a spouse, civil union partner,
or eligible same-sex domestic partner, and children un-
der the age of 26 (and upon proof of disability, disabled
dependents over age 26). These terms are dened as
follows:
Spouse: This is a person to whom you are legally mar-
ried. A photocopy of the Marriage Certicate and sup-
porting documentation is required for enrollment.
Civil Union Partner: This is a member of the same-
sex with whom you have entered a civil union. A photo-
copy of the New Jersey Civil Union Certicate or a valid
certication from another jurisdiction that recognizes
same-sex civil unions and supporting documentation is
required for enrollment. The cost of coverage for a civil
union partner may be subject to federal tax (see your
employer or the Civil Unions and Domestic Partnerships
Fact Sheet for details).
Domestic Partner: This is a member of the same-sex
with whom you have entered domestic partnership. For
health benets coverage an eligible same-sex domestic
partner is further dened under P. L. 2003, c. 246 (Chap-
ter 246), the Domestic Partnership Act, as the same-sex
domestic partner of any State employee, State retiree,
or an eligible employee or retiree of a participating local
public entity if the local governing body adopts a resolu-
tion to provide Chapter 246 health benets. A photocopy
of the New Jersey Certicate of Domestic Partnership
dated prior to February 19, 2007, or a valid certica-
tion from another jurisdiction that recognizes same-sex
domestic partners and supporting documentation is re-
quired for enrollment. The cost of same-sex domestic
partner coverage may be subject to federal tax (see
your employer or the Civil Unions and Domestic Part-
nerships Fact Sheet for details).
Eligibility is explained in detail in the Enrolling in Health
Benets Coverage When You Retire Fact Sheet, which
is available on our website.
ENROLLMENT
Eligible retirees receive an oering letter shortly before
their retirement date. For most retirees, this will be the
only opportunity to enroll for retired group health bene-
ts coverage. (Waiver of enrollment due to other group
medical coverage is permitted in limited circumstances;
see the Health Benets Coverage — Enrolling as a Re-
tiree Fact Sheet for details.)
Eligible retirees may enroll in one of the available med-
ical plans. All retired group medical plans include pre-
scription drug coverage.
Most new retirees will be automatically enrolled into
retired group health benets coverage based on their
current active group coverage. Members not eligi-
ble for automatic enrollment include those who have
changed their retirement date; those who have waived
coverage as active employees; those who have ap-
plied for a Disability Retirement; and those retiring from
non-participating employer locations. These new retir-
ees must complete and return a Retiree Health Benet
Enrollment and/or Change Form to be enrolled in retired
group health benets.
Once enrolled, retired group members may change
their plan after they have been in a selected plan for at
least 12 months (or if plan rates change).
MEDICARE-ELIGIBLE ENROLLEES
Retired group SHBP or SEHBP members who are el-
igible for Medicare, and their Medicare-eligible depen-
dents, must enroll in both Medicare Part A (Hospital)
and Part B (Medical). Medicare eligibility is generally at
age 65 or after 24 months of Social Security Disability.
Retired group SHBP or SEHBP members who are eligible
for Medicare, or a Medicare-eligible spouse or partner,
are automatically enrolled in the SHBP/SEHBP’s Medi-
care Part D plan. The plan design maintains the same
copayments and out-of-pocket maximums as those for
non-Medicare retirees.
COST OF RETIRED
GROUP HEALTH BENEFITS COVERAGE
Some retirees will have to pay some or all of the cost of
SHBP or SEHBP coverage, while others may qualify for
employer- or State-paid coverage.
The NJDPB will deduct the monthly premium or contri-
bution from the retirement allowance of enrolled retirees
who must pay for their health benets coverage. If the
retirement allowance is not sucient to cover the cost
of the premium or contribution — or if the member does
not receive a retirement allowance from the NJDPB —
the member will be billed on a monthly basis.
Detailed information on health benet costs in retire-
ment is available in the Health Benets Coverage —
Enrolling as a Retiree Fact Sheet.
January 2023 Page 12
Retirement Planning PERS & TPAF
SURVIVOR COVERAGE
Your spouse’s, civil union partner’s, or eligible same-sex
domestic partner’s coverage under your plan will termi-
nate at the end of the month in which you die. However,
your spouse, civil union partner, or eligible same-sex
domestic partner will be sent a letter and application
oering continuation of coverage in the plan of their
choice at their own cost.
Note: Some local and board of education employers
have agreed to pay for the coverage of spouses, civil
union partners, or eligible same-sex domestic partners
of deceased retirees; check with your employer to see if
they provide this benet. The State does not pay for the
coverage of spouses, civil union partners, or domestic
partners of deceased retirees.
For most retirees, this will be the only opportunity to en-
roll for Retiree Dental Plans coverage. (Waiver of enroll-
ment due to other group dental coverage is permitted in
limited circumstances, see the Dental Plans — Retirees
Fact Sheet, for details.)
DENTAL PLAN COSTS
The Retiree Dental Plans are oered with the under-
standing that the State will bear no costs for the plans;
therefore, enrolled retirees pay the full cost of coverage.
The NJDPB will deduct the monthly premium from the
retirement allowance of enrolled retirees. If the retire-
ment allowance is not sucient to cover the cost of the
premium — or if the member does not receive a retire-
ment allowance from the NJDPB — the member will be
billed on a monthly basis.
CONTACTING THE NJDPB
Telephone Numbers
• For information about your individual account – 24
hours a day, seven days a week – call our Auto-
mated Information System at (609) 292-7524. All
you need is your Social Security number, Pension
Membership number, and a touch-tone phone to
hear personalized information about loans, retire-
ment benets, purchase costs, withdrawals, and
your account with the retirement system.
• To speak with a counselor about your pension
account, the State Health Benets Program, the
School Employees’ Health Benets Program, or the
Supplemental Annuity Collective Trust (SACT), call
(609) 292-7524 weekdays (except State holidays).
The most current hours of operation can be found
on our website.
• If you are hearing impaired, call the TDD at (609)
292-6683.
• To speak with a representative about the State
Employees Deferred Compensation Plan, call
1-866-NJSEDCP (1-866-657-3327) weekdays be-
tween 8:00 a.m. and 9:00 p.m. (except State holi-
days).
Member Benets Online System (MBOS)
Personalized account information; online loan, pur-
chase, and retirement applications; beneciary informa-
tion, and more is available 24 hours, seven days a week
on MBOS. Registration is required. For details visit our
website.
Internet and Email
Our website address: www.nj.gov/treasury/pensions
Send email to: [email protected]
Email response times may be 7-10 days.
Mailing Address
New Jersey Division of Pensions & Benets
P.O. Box 295
Trenton, NJ 08625-0295
On all correspondence, be sure to include your full
name and your membership number or Social Security
number.
Counseling Services
The NJDPB oers individual counseling services to
members of the retirement systems and other bene-
t programs. Online video-based personal counseling
appointments are available for members of the PERS,
TPAF, PFRS, SPRS, and DCRP. In-person counseling
is available by appointment only on a limited basis for
members of the PERS, TPAF, PFRS, SPRS, and DCRP.
Walk-in counseling services will not be available. Ap-
pointments can be made on our website.
