PERS Handbook - Paterson Public Schools

MEMBER

HANDBOOK

State of New Jersey

PublicEmployees’Retirement

System

Department of the TreasuryDivision of Pensions and Benefits

July 2005

Public Employees’ Retirement System Handbook

July 2005 i

FOREWORD

The New Jersey Public Employees’ Retirement System (PERS) Member Handbook has been revisedto incorporate changes to the retirement system made since the last version was published in 1997.The PERS Member Handbook provides a summary description of the benefits of the plan and outlinesthe rules and regulations governing the plan. The PERS Member Handbook should provide you withall the information you need about your PERS benefits. It is as accurate as we could make it, howev-er, if there is a conflict with statutes governing the plan or regulations implementing the statutes, thestatutes and regulations will take precedence. Complete terms governing any employee benefit pro-gram are set forth in the New Jersey Statutes Annotated. Regulations, new or amended, are publishedin the New Jersey Register by the State Office of Administrative Law supplementing the New JerseyAdministrative Code. An online version of this handbook containing current updates is available forviewing over the Internet at: www.state.nj.us/treasury/pensions/persman.htm

Separate addenda booklets have been created for the Law Enforcement Officers (LEO), LegislativeRetirement System, Prosecutors Part, and Workers’ Compensation Judges Part of the PERS, whichare components of the PERS, but have significantly different benefits. These addenda are printed sep-arately from the basic PERS Member Handbook since they affect relatively few members. The adden-da are also available for viewing over the Internet.

If you are unsure of or have questions about any aspect of your PERS benefits, you should ask youremployer representative or a counselor at the Division of Pensions and Benefits about them.

Since this is your handbook, we would appreciate any comments or suggestions for improvement thatyou might have. Please send them to the address listed below. An evaluation form is available for youruse on page 35.

Division of Pensions and BenefitsATTN: Publications Unit

P.O. Box 295Trenton, NJ 08625-0295


July 2005ii

FOREWORD .................................................... i

CONTACTING THE DIVISION OF PENSIONS AND BENEFITS .......................... iv

DIRECTIONS TO THE DIVISION OF PENSIONS AND BENEFITS .......................... v

PLAN INFORMATION ........................................ vi

THE RETIREMENT SYSTEM .............................. 1PERS Special Employee Groups ................ 1

MEMBERSHIP ................................................ 1Eligibility Criteria ........................................ 1Optional Membership .................................. 2Factors for Ineligibility ................................ 2

ENROLLMENT .................................................. 2Enrollment/Certification of Payroll Deductions .................................................. 2Proof of Age ................................................ 2Contribution Rate ........................................ 3

MULTIPLE & DUAL MEMBERSHIP .................... 3

TRANSFERS .................................................... 3Intrafund Transfer ........................................ 3Interfund Transfer ........................................ 4

SERVICE CREDIT ............................................ 4

VESTING ........................................................ 4

CREDIT FOR MILITARY SERVICE AFTER ENROLLMENT ...................................... 4

PURCHASING SERVICE CREDIT ...................... 5

TYPES OF SERVICEELIGIBLE FOR PURCHASE .............................. 5

Temporary Service .................................... 5Leave of Absence Without Pay .................. 5Former Membership Service ...................... 5Out-of-State Service .................................. 5U.S. Government Service .......................... 6Military Service Before Enrollment ............ 6Military Service After Enrollment ................ 6Uncredited Service .................................... 6Local Retirement System Service .............. 6

IMPORTANT PURCHASE NOTES ...................... 6

COST AND PROCEDURES FOR PURCHASING SERVICE CREDIT ...................... 6

Purchase Rate Chart .................................. 7Partial Purchases ...................................... 7Estimating the Cost of a Purchase ............ 7Rollover for Purchase Payment .................. 8

LOANS ............................................................ 8Internal Revenue Service Requirements ............................................ 9

SUPPLEMENTING YOUR PENSION .................... 10New Jersey State EmployeesDeferred Compensation Plan .................... 10Local Deferred Compensation Plans .......... 10Supplemental Annuity Collective Trust (SACT) .............................. 10

RETIREMENT .................................................. 11Types of Retirement .................................. 11Service Retirement .................................... 11Early Retirement ........................................ 11Veteran Retirement .................................... 11

Definition of a Veteran ............................ 11Establishing Veteran Status .................... 12

Deferred Retirement .................................. 13Ordinary Disability Retirement .................. 14Accidental Disability Retirement ................ 14

OPTIONAL SETTLEMENTS AT RETIREMENT .............................................. 15

Age Limits on Non-spouse Beneficiaries .......................... 17

THE RETIREMENT PROCESS .......................... 176-8 Months Before Retirement .................. 17

Retirement Estimates .............................. 17Retirement Seminars................................ 18

4-6 Months Before Retirement .................. 18Retirement Applications .......................... 18Disability Retirement Applications ............ 18

Approximately 3 Months BeforeRetirement .................................................. 19

State Health Benefits Program Coverage at Retirement .......................... 19

Approximately 2 Months BeforeRetirement .................................................. 19

Unsatisfied Balances:Loans, Purchase Arrears, Shortages ...... 19

State of New JerseyPublic Employees’Retirement SystemTABLE OF CONTENTS


July 2005 iii

Approximately 1 Month BeforeRetirement .................................................. 20

Board Approval ........................................ 20COBRA .................................................... 20

AFTER YOUR RETIREMENT DATE .................... 20Statement of Retirement Allowance ........ 20Retirement Checks .................................. 20Change of Address ................................ 20Direct Deposit/Electronic Fund Transfer .......................... 20Withholding Federal and NJ State Income Tax .............................. 20Federal Income Tax After Retirement ...................................... 21NJ State Income Tax After Retirement ...................................... 21Cost-of-Living Adjustment ...................... 21Social Security ........................................ 22

REDUCTION OR SUSPENSION OF YOUR BENEFITS ........................................ 22

Divorce ........................................................ 23Misconduct .................................................. 23

EMPLOYMENT AFTER RETIREMENT ................ 24Returning to Work in a PositionCovered by a State of New Jersey-Administered Retirement System Other than the PERS ................................ 24Returning to a Position Under the PERS .... 24Reenrollment in the PERS ........................ 25Retiring for a Second Time ........................ 25Disability Retirees Restored to Active Service ............................................ 25Disability Retirees -Earnings After Retirement .......................... 25State Health Benefits Program Coverage .................................... 25Social Security Benefits .............................. 25

ACTIVE AND RETIRED DEATH BENEFITS ........ 25Noncontributory and ContributoryGroup Life Insurance .................................. 25Coverage For Active Members .................. 26

Active Group Life Insurance Amounts .................................................. 26

Coverage for Retired Members .................. 26

Retired Group Life Insurance Amounts .................................................. 26

Choosing a Beneficiary .............................. 26Payment of Group Life Insurance .............. 27Taxation of Group Life Insurance Payments .................................................... 27Group Life Insurance and Leave ofAbsence ...................................................... 27Taxation of Group Life InsurancePremiums .................................................... 27IRS Premium Rates .................................... 28Waiving Noncontributory GroupLife Insurance Over $50,000 ...................... 28

CONVERSION OF GROUP LIFE INSURANCE ................................ 28

Conversion: On Retirement ........................ 29Conversion: Termination of Employment or Leave of Absence ............ 30Conversion: Return to Public Employment ................................................ 30Group Life Insurance CoverageWhile Receiving Workers’Compensation Without Pay ........................ 30

ACCIDENTAL DEATH BENEFIT ........................ 30

WITHDRAWAL FROM THE PENSION FUND ........................................ 31

When Membership Ends ............................ 31Terminating Employment ............................ 31Expired Accounts ...................................... 32Withdrawing Contributions .......................... 33

WORKERS’ COMPENSATION ............................ 33

APPEALS ........................................................ 34

EVALUATION FORM ........................................ 35

Separate Addenda Booklets are also available formembers of the following groups:

LAW ENFORCEMENT OFFICERS (LEO)

LEGISLATIVE RETIREMENT SYSTEM

PROSECUTORS PART OF THE PERS

WORKERS’ COMPENSATION JUDGESPART OF THE PERS

http://www.state.nj.us/treasury/pensions/epbam/exhibits/handbook/sp0333-leo.pdf

http://www.state.nj.us/treasury/pensions/epbam/exhibits/handbook/sp0333-lrs.pdf

http://www.state.nj.us/treasury/pensions/epbam/exhibits/handbook/sp0333-pp.pdf

http://www.state.nj.us/treasury/pensions/epbam/exhibits/handbook/sp0333-wcj.pdf


July 2005iv

Telephone Numbers:

• For computerized information about your indi-vidual account 24 hours a day, seven days aweek, call our Automated Information Systemat (609) 777-1777. All you need is your SocialSecurity number and a touch-tone phone tohear personalized information about loans,purchase costs, retirement benefits, with-drawals, and your account with the retirementsystem.

• To talk with a counselor about your PublicEmployees’ Retirement System account or theState Health Benefits Program, call (609)292-7524 weekdays between 8:00 a.m. and4:30 p.m. (except State holidays). If you arehearing impaired, call the TDD at (609) 292-7718.

• To speak with a plan representative about theNew Jersey State Employees DeferredCompensation Plan, call (609) 292-3605weekdays between 8:15 a.m. and 4:30 p.m.(except State holidays). Plan representativescan answer your questions about the DeferredCompensation Plan and provide enrollmentand distribution forms.

• To speak with a plan representative about theSupplemental Annuity Collective Trust(SACT), call (609) 633-2031 weekdaysbetween 8:15 a.m. and 4:30 p.m. (exceptState holidays). SACT representatives cananswer your questions about the SACT andprovide enrollment and distribution forms.

• If you are a retired member who needs tochange your mailing address, call (609) 292-MOVE (6683) Monday through Fridaybetween 8:00 a.m. and 4:30 p.m. (exceptState holidays) to change your address overthe telephone. Retirees can also change theiraddress online at: www.state.nj.us/treasury/pensions/changead.htm

Mailing Address:

On all correspondence, be sure to include yourmembership number or Social Security number.

Division of Pensions and BenefitsPO Box 295Trenton, NJ 08625-0295

Counseling Services:

The Division of Pensions and Benefits offers individ-ual counseling services to members of the retire-ment systems and other benefit programs. Noappointments are taken. Counselors are availableMonday through Friday from 7:40 a.m. to 4:00 p.m.The office is located at:

One State Street Square50 West State Street, 1st FloorTrenton, NJ

Directions to the office appear on the next page.

Internet and E-Mail:

Most publications of the Division of Pensions andBenefits may be found on the Internet at:www.state.nj.us/treasury/pensions or you may e-mail the Division at: [email protected]

Member Benefits Online System:

The Member Benefits Online System (MBOS)allows registered PERS members access to theirpension and, if applicable, State Health BenefitProgram account information online. Resourcesavailable through MBOS include: member accountinformation; pension loan estimates and onlineapplication; a retirement calculator; and (if applica-ble) State Deferred Compensation Plan, SACT plan,and State Health Benefits Program account infor-mation. More applications are being added in thenear future.

Before you can begin using MBOS, you must beregistered with MBOS and the MyNewJersey Website. Registration is free.

To begin the MBOS registration process go to:www.state.nj.us/treasury/pensions/mbosregister.htm

Please be sure to read the registration instructions,as the process requires several steps.

CONTACTING THE DIVISION OF PENSIONS AND BENEFITS


July 2005 v

The Division of Pensions and Benefits is located at50 West State Street (One State Street Square)which is a half-block east of the State House. Thedirections below will take you to the parking garagenext door to the Division of Pensions and Benefits.You must pay to park in the parking garage.

When leaving the garage, you will be facing theside of One State Street Square. Turn left and walkto the front entrance of the building (on West StateStreet). “Check-in” with the guard in the main lobbywhere you will be directed to the Office of ClientServices.

From Northeast New Jersey via the NJ Turnpike

Take the NJ Turnpike South to Exit 7A. Follow I-195West until it ends, then follow signs for Route 29.After passing through a tunnel and two traffic lights,take the Calhoun Street exit. At the first traffic light,turn right onto West State Street. After passingthrough a traffic light turn left at the next corner ontoChancery Lane. One-half block up is a multilevelparking garage on the left. You must pay to parkhere. See “When leaving the garage” above to getto the office.

From Northeast New Jersey via Route 1

Take Route 1 South toward Trenton. Just north ofTrenton Route 1 splits into two roads. Stay to the left(do not use Route 1 Alternate). From Route 1 takethe Perry Street exit. At the end of the exit ramp,turn left onto Perry Street. At the fourth traffic lightafter turning onto Perry Street turn left onto WarrenStreet. At the second light, turn right onto WestState Street. At the next corner turn right ontoChancery Lane. One-half block up is a multilevelparking garage on the left. You must pay to parkhere. See “When leaving the garage” above to getto the office.

From Northwest New Jersey

Take Route 31 South to I-95 South to Exit 1 (Route29). Follow Route 29 South for five miles to theCalhoun Street exit. At the first traffic light, turn rightonto West State Street. Pass the State House andthe next light. At the next corner, turn left ontoChancery Lane. One-half block up is a multilevelparking garage on the left. You must pay to parkhere. See “When leaving the garage” above to getto the office.

From Southern New Jersey

If using the Turnpike, take exit 7A and follow thedirections from Northeast New Jersey via the NJTurnpike.

If using I-295 North, take exit 60 to Route 29 andfollow the directions for using Route 206 North(below) beginning with Route 29.

If using Route 206 North, about four miles beforereaching center-city Trenton take the I-295 exit but,once on the interstate highway, follow the signs forRoute 29, not I-295. After passing through a tunneland two traffic lights, take the Calhoun Street exit.At the first traffic light, turn right onto West StateStreet. After passing through a traffic light turn leftat the next corner onto Chancery Lane. One-halfblock up is a multilevel parking garage on the left.You must pay to park here. See “When leaving thegarage” to get to the office.

From the New Jersey Shore

Take I-195 West, then follow the directions fromNortheast New Jersey via the NJ Turnpike.

DIRECTIONS TO THE DIVISION OF PENSIONS AND BENEFITS


July 2005vi

PLAN INFORMATION

Name of Plan

The Public Employees’ Retirement System of New Jersey.

Administration

The Public Employees’ Retirement System is a defined benefit plan administered by the NewJersey Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey 08625-0295,(609) 292-7524.

Provisions of Law

The Public Employees’ Retirement System was established by New Jersey Statute and canbe found in the New Jersey Statutes Annotated, Title 43, Chapter 15A. Changes in the lawcan only be made by an act of the State Legislature. Rules governing the operation andadministration of the system may be found in Title 17, Chapters 1 and 2 of the New JerseyAdministrative Code.

Funding

The funds used to pay benefits come from three sources: employer contributions, employeecontributions, and investment income from those contributions. All contributions not requiredfor current operations are invested by the State Division of Investment.

Plan Year

For record keeping purposes the plan year is July 1 through June 30.

Service of Legal Process

Legal process may be served on the Director of the Division of Pensions and Benefits, theadministrator of the system.

Employment Rights Not Implied

Membership in the Public Employees’ Retirement System does not give you the right to beretained in the employ of a participating employer, nor does it give you a right of claim to anybenefit you have not accrued under terms of the system.

Benefits and provisions of the Public Employees’ Retirement System are subject to changes by the legis-lature, courts, and other officials. While this booklet outlines the benefit and contribution schedules of thePublic Employees’ Retirement System, it is not a final statement. Complete terms governing any employ-ee benefit program are set forth in the New Jersey Statutes Annotated. Regulations, new or amended, arepublished in the New Jersey Register by the State Office of Administrative Law supplementing the NewJersey Administrative Code.

PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (PERS)

as of July 2005

THE RETIREMENT SYSTEM

The State of New Jersey established the PublicEmployees’ Retirement System (PERS) in 1955after the repeal of the laws that created the formerState Employees’ Retirement System. The Divisionof Pensions and Benefits is assigned all administra-tive functions of the retirement system except forinvestment.

The PERS Board of Trustees has the responsibilityfor the proper operation of the retirement system.The Board consists of six employee representatives,the State Treasurer, and two individuals appointedby the Governor with the advice and consent of theSenate. The Board meets once a month. A PERSmember who wishes to be a candidate for thePERS Board of Trustees must be nominated bypetitions bearing the signatures of 500 active mem-bers. Nominating petition forms, together withinstructions for filing, are available upon writtenrequest to the Secretary of the PERS Board ofTrustees, Division of Pensions and Benefits, PO Box295, Trenton, New Jersey 08625-0295.

The purpose of this handbook is to provide you withinformation about the retirement system to assistyou in making decisions concerning your future andyour family’s future. If you have questions concern-ing your retirement system benefits, please seepage iv for information on contacting the Division ofPensions and Benefits.

An online version of this handbook containing cur-rent updates is available for viewing over theInternet at: www.state.nj.us/treasury/pensions/persman.htm Be sure to check the Division ofPensions and Benefits Internet home page at:www.state.nj.us/treasury/pensions for PERS relatedforms, fact sheets, and news of any new develop-ments affecting the PERS.

PERS Special Employee Groups

The information contained in this handbook appliesto the majority of the members enrolled in thePERS. However, certain members of the PERSqualify for enrollment into special employee groups:

• Law Enforcement Officers (LEO)

• Prosecutors Part of the PERS

• State Legislative Retirement System (LRS) ofthe PERS

• Workers’ Compensation Judges (WCJ) Part ofthe PERS

Members of these special employee groups shouldalso see the PERS Handbook Addendum specific totheir employee group for exceptions to the regularPERS rules and benefits. These exceptions are alsonoted under the section headings in this handbook.

MEMBERSHIP(LEO, LRS, Prosecutors Part, and

WCJ members see addendum)

Eligibility Criteria

Enrollment rules and regulations are described ingeneral terms in this handbook and may not coverall situations. If you have been a public employee forseveral years, you should be aware that presentrules and regulations governing enrollment in theretirement system may differ from past rules andregulations. If you have specific questions concern-ing your date of enrollment, you may wish to contactthe Division of Pensions and Benefits for additionalinformation.

Membership in the retirement system is generallyrequired as a condition of employment for mostemployees of the State, or any county, municipality,school district, or public agency. You are required toenroll in the PERS if:

• you are employed on a regular basis in aposition covered by Social Security; and

• your annual salary is $1,500 or more; and

• you are not required to be a member of anyother State or local government retirementsystem on the basis of the same position;

or if:

• you are receiving a monthly retirementallowance from the PERS and you earn morethan $15,000 annually from any PERS-cov-ered employment (see “Exceptions” on page24); or

• you retired on a PERS disability retirementand earn more than $1,500 annually from anyPERS-covered employment (see page 25 foradditional information).

Although most employees are required to enroll inthe retirement system when hired, in someinstances you may not qualify for enrollment in thesystem until up to one year from your date ofemployment.

July 2005 1


EXAMPLE 1: If you are hired as a temporary or pro-visional employee by an employer covered by CivilService you would not be eligible for enrollment untilyour 13th month of employment (or the date you arepermanently appointed to your position — Date ofRegular Appointment).

EXAMPLE 2: If you are an adjunct faculty member ata State or County college/university you would beenrolled immediately if you are already a member ofthe PERS due to other employment, otherwise, youwould not be eligible for enrollment until the start ofyour third consecutive semester of teaching.

Optional Membership

Membership in the retirement system is optionalfor:

• non-veteran elected officials. (Elected officialswho qualify as veterans must enroll in theretirement system. See page 11 for a defini-tion of “veteran”.)

• full-time non-veterans hired prior to July 1,1966 or the date of adoption of the retirementsystem by the employer, whichever is earlier.

• part-time non-veterans hired prior to July 1,1966.

• part-time school crossing guards receivingperiodic benefits from the federal government(whether military or civilian pension, includingSocial Security) unless the employee is previ-ously retired from the PERS.

• employees hired prior to September 10, 1991who are receiving monthly retirementallowances from another state.

• special service employees hired under thefederal Older American Community ServiceEmployment Act.

If you choose the option of joining the retirementsystem, you cannot withdraw your funds until youend your employment.

Factors for Ineligibility

You cannot join the PERS if:

• you are a provisional or temporary employeecovered by Civil Service with less than 12months of continuous service.

• you do not earn at least $1,500 annually.

• you are not covered by Social Security.

• you are a seasonal employee.

• you are a retired member of PERS who hasreturned to public employment and your annu-al salary from all PERS covered employmentis not expected to exceed $15,000.

• you are retired and receiving a monthly retire-ment allowance from another public retire-ment system in New Jersey.

• you are employed under the Job TrainingPartnership Act (JTPA) or its successor pro-gram established under the WorkforceInvestment Act of 1998 (WIA) and are paiddirectly from federal JTPA or WIA funds.

If you are in doubt about the eligibility of a position,write to the Division of Pensions and Benefits for anadministrative determination.

ENROLLMENT (Prosecutors Part members see addendum)

Enrollment/Certification of Payroll Deductions

Both you and your employer must complete anEnrollment Application for you to enroll in the retire-ment system. Your employer will send the completedapplication to the Division of Pensions and Benefitsfor processing. When processing is complete, youand your employer will receive a Certification ofPayroll Deductions showing the date deductions willbegin, your rate of contribution, and any backdeductions due.

You may wish to keep the Certification of PayrollDeductions on file with your other important papersso that you have a record of your enrollment in theretirement system.

Proof of Age

All members of the PERS must provide documenta-tion that proves their age before retiring. You shouldattach evidence of your proof of age to your enroll-ment application; however, do not delay sending theenrollment application if proof of age is not readilyavailable. Acceptable evidence of your age includesa photocopy of:

• your birth certificate;

• your passport;

• naturalization or immigration papers;

• certain other records including baptismalrecords or school records, or

• an affidavit from an older family member.

July 20052


Contribution Rate

The full rate of PERS employee contributions is fivepercent of base salary (Prosecutors Part memberspay a rate of 8.5 percent). The full rate of contribu-tion is established by the statutes governing thePERS.

Your contribution rate is applied to your base salaryto determine your pension deductions. Base salarydoes not include overtime, bonuses, or money youreceive as an adjustment before retirement. Yourpension contributions are deducted from your salaryeach payday and reported to the PERS by youremployer.

Temporary Reductions — The State Treasurer hasthe right under State law to make temporary reduc-tions in the contribution rate. Reductions in the fullcontribution rate are considered temporary and areauthorized by the Treasurer on a year-to-year basisprovided there are sufficient excess assets in thepension fund.

When authorized reductions are in effect, theemployer will take regular pension deductions at thereduced contribution rate, however, all voluntarydeductions (loan repayments, purchases) remainbased upon the full rate of five percent (except forProsecutors Part members, see addendum).

The pension deduction shown on the Certification ofPayroll Deductions for new employees alwaysreflects the full five percent rate even if a reductionis in effect.

Pensionable Maximum — Since the PERS is a“qualified” pension plan under the provisions of theInternal Revenue Code, Section 401(a)(17), the cur-rent federal ceiling on pensionable compensation($210,000 for 2005) applies to the base salaries ofPERS members.

Tax Deferral — Since January 1987, all mandatorypension contributions to the PERS have been feder-ally tax deferred. Under the 414(h) provisions of theInternal Revenue Code this reduces your grosswages subject to federal income tax. Purchases ofservice credit are voluntary pension contributionsand are not tax deferred unless funded by a rolloverfrom another tax-deferred plan (see “Rollover forPurchase Payment” on page 8).

MULTIPLE & DUAL MEMBERSHIP

Multiple Membership — You are considered a mul-tiple member if you are employed and reported to

the retirement fund by more than one PERS partici-pating employer.

EXAMPLE: If you are a plumbing inspector workingfor more than one municipality, you are enrolled asan employee of each public employer. All of yourbase salaries are posted to your PERS account andconsolidated in calculating your retirement benefit.In terms of service credit, however, no more than 12months of service credit will be given for any calen-dar or fiscal year.

You are required to file an Enrollment Applicationwhen hired by your first PERS employer. If youaccept PERS covered employment from a secondemployer (or subsequent employers), the newemployer should submit a Report of Transfer indicat-ing “Multiple Enrollment” in the space provided atthe top of the form.

Once you have established multiple membership,you will be classified as a multiple member for yourentire membership. Multiple members cannot with-draw or begin to collect retirement benefits until theyhave retired from or terminated every position cov-ered by the PERS.

Dual Membership — You are considered a dualmember if you are a member of more than oneNew Jersey State-administered retirement systemat the same time.

EXAMPLE: If you are a State employee enrolled inthe PERS and an educator enrolled in the Teachers’Pension and Annuity Fund (TPAF), you are a dualmember.

When establishing dual membership, EnrollmentApplications are filed by each employer with the dif-ferent retirement systems.

Unlike a multiple member, a dual member’s contri-butions and service credit are kept separate.Benefits will be paid separately from each retire-ment system in the event of death, retirement, orwithdrawal.

TRANSFERS (Prosecutors Part members see addendum)

Intrafund Transfer

An Intrafund Transfer is the transfer of your accountfrom one PERS employer to another PERS employ-er. If you terminate your current position covered bythe PERS and accept a position also covered by thePERS, your new employer should file a Report ofTransfer form with the Division of Pensions and

July 2005 3


Benefits, provided you have not withdrawn yourmembership or your account has not expired (see“Withdrawal from the Pension Fund” on page 31).

If you meet the criteria listed above, you are imme-diately eligible to continue your same membershipin the PERS with the new employer.

If you are a multiple member (see the definition ofa “multiple member” on page 3), your new employershould indicate “Multiple Enrollment” by checkingthe box provided at the top of the Report of Transfer.

Interfund Transfer

An Interfund Transfer is the transfer of your accountfrom a PERS employer to employment covered by adifferent New Jersey State-administered retirementsystem (or vice versa). If you terminate your currentposition covered by the PERS and accept a positioncovered by a different New Jersey State-adminis-tered retirement system, you may transfer your con-tributions and service credit to the new retirementsystem provided:

• you have not withdrawn your membership oryour account has not expired (see“Withdrawal from the Pension Fund” on page31);

• you are not a dual member with more thanthree years of concurrent service in theTeachers’ Pension and Annuity Fund* or withany concurrent service in any other retirementsystem (see the definition of a “dual member”on page 3); and

• you meet the eligibility requirements of thesecond retirement system.

If you are interested in transferring your member-ship account, an enrollment application for the newsystem and an Application for Interfund Transfershould be submitted by your employer to theDivision of Pensions and Benefits when you meetthe eligibility requirements of the new retirementsystem.

SERVICE CREDIT(Prosecutors Part members see addendum)

Since retirement benefits are based in part on accu-mulated service credit, it is important that youreceive the appropriate amount of credit for theamount of time you work. You receive one month ofservice credit for each month you make a full pen-sion contribution.

• Employees whose employers report serviceand contributions biweekly will receive onepay period of service credit for each pay peri-od a full pension contribution is made.

• Employees paid on a ten-month contract fromSeptember through June will receive credit forthe July and August that preceded September,if a full month’s pension deduction is taken forSeptember.

VESTING(LEO, LRS, and Prosecutors Part members

see addendum)

You are vested in the PERS after you have attained10 years of service credit.

Being vested in the PERS means that you are guar-anteed the right to receive a retirement benefitwhen you reach age 60.

• If you are vested and terminate your employ-ment before retiring, your pension account willremain open pending either a return to cov-ered employment, your filing for a DeferredRetirement to be effective at age 60 (seepage 13 — you must file a retirement applica-tion prior to receipt of any benefits), or yourwithdrawal from the pension system (seepage 31).

• If you are not vested and you terminateemployment before retiring, your options varydepending on the nature of your terminationand/or your age at the time of your termina-tion (see “Terminating Employment” on page31).

CREDIT FOR MILITARY SERVICE AFTER ENROLLMENT

The federal Uniformed Services Employment andReemployment Rights Act of 1994 (USERRA) pro-vides that a member who leaves employment toserve on active duty is entitled to certain pensionrights upon return to employment with the same

July 20054


*A PERS member with three years or less of con-current service in a Teachers’ Pension and AnnuityFund account may, under certain conditions, trans-fer all service credit from one fund to the other, lessany concurrent service credit.

employer. The time in military service is to count, forvesting and retirement eligibility purposes, asthough the employee had not left. However, themember will, at a minimum, have to make the pen-sion contributions normally required to have the mili-tary service time included in the calculation of theretirement benefit.

When an employee returns from uniformed militaryservice to PERS covered employment within thetime frames specified under USERRA, the employershould notify the Division of Pensions and Benefitsno later than 30 days after the employee’s return bysubmitting a Request for USERRA-Eligible Serviceform. Once notified, the Division will annotate theemployee’s pension account to reflect the USERRAcredit for benefits eligibility and will provide theemployee with a quotation for the cost for purchas-ing the pension service credit so that it countstoward the calculation of benefits.

PURCHASING SERVICE CREDIT

Since your retirement allowance is based in part onthe amount of service credit posted to your accountat the time of retirement, it may help you to pur-chase additional service credit if you are eligible todo so. Only active members of the retirement sys-tems are permitted to purchase service credit. Anactive member is one who has not retired or with-drawn, and who has made a contribution to theretirement system within two years of the purchaserequest. In no case can you receive more than oneyear of service credit for any calendar or fiscal year.A dual member (see page 3) cannot purchase con-current service from any other retirement system.

TYPES OF SERVICE ELIGIBLE FOR PURCHASE

(Prosecutors Part members see addendum)

If a type of service is not listed below, it is not eligi-ble for purchase.

Temporary Service – Members are eligible to pur-chase service credit for temporary or provisionalemployment provided the employment was continu-ous and immediately preceded a permanent or reg-ular appointment in a position covered by thePERS.

• Members are allowed to purchase temporaryservice rendered under a former membershipin a New Jersey State-administered retire-ment system.

• Part-time, hourly, and substitute service maybe eligible for purchase.

• Service through the Job Training PartnershipAct (JTPA), and its successor program estab-lished under the Workforce Investment Act of1998, is not eligible.

Leave of Absence Without Pay – Members are eli-gible to purchase service credit for official leaves ofabsence without pay. The amount of time eligible forpurchase depends on the “type of leave” that wastaken.

• up to two years may be purchased for leavestaken for personal illness;

• up to three months may be purchased forleaves taken for personal reasons.

• Maternity leave is considered personal ill-ness.*

• Child care leave is eligible for purchase as aleave for personal reasons.

A leave of absence without pay under a formermembership in a New Jersey State-administeredretirement system may be eligible for purchase.

If a member who is employed 10 months per yeargoes on an approved leave for personal reasons forthe months of May, June, and/or September, themember will be allowed to purchase credit for themonths of July and August as part of the leave ofabsence — up to a maximum of five months.

Former Membership Service – Members may pur-chase all service credited under a previous mem-bership in a New Jersey State-administered retire-ment system (PERS, TPAF, PFRS, SPRS) whichhas been terminated after two continuous years ofinactivity in accordance with statute or by withdrawalby the member of the contributions made undersuch membership.

Out-of-State Service – Members are eligible to pur-chase up to 10 years of service credit for publicemployment rendered with any state, county, munic-ipality, school district, or public agency outside theState of New Jersey, provided the service renderedwould have been eligible for membership in a New

July 2005 5


*A certification from a physician that a member wasdisabled due to pregnancy and a resulting disabilityfor the period in excess of three months is required.Otherwise, three months is the maximum period ofpurchase for maternity.

Jersey administered retirement system had theservice been rendered as a public employee in thisstate. This service is only eligible for purchase if themember is not receiving nor eligible to receiveretirement benefits from the out-of-state public pen-sion fund.

U.S. Government Service – Members are eligible topurchase up to 10 years of service credit for civilianservice rendered with the U.S. government if thepublic employment would have been eligible forcredit in a State of New Jersey-administered retire-ment system had the service been rendered as apublic employee in this state. This service is only eli-gible for purchase if the member is not receiving noreligible to receive retirement benefits from the feder-al government based in whole or in part on thisservice.

Military Service Before Enrollment – Membersmay purchase service credit for up to 10 years ofactive military service rendered prior to enrollmentprovided the member is not receiving nor eligible toreceive a military pension or a pension from anyother state or local source for such military service.

Active military service eligible for purchase meansfull-time duty in the active military service of theUnited States and includes full-time training duty,annual training duty, and attendance, while in theactive military service, at a school designated as aservice school by law or by the Secretary of the mil-itary department concerned. It cannot include peri-ods of service of less than 30 days. It does notinclude weekend drills or annual summer training ofa national guard or reserve unit or time spent as acadet or midshipman at one of the military acade-mies.

Active military service that has been combined withreserve component service to qualify for a militarypension as a reserve component member may beeligible for purchase.

If you qualify as a veteran, you may be eligible topurchase an additional five years of military service(see “Important Purchase Notes” at right).

Military Service After Enrollment – Under therequirements of the federal Uniformed ServicesEmployment and Reemployment Rights Act of 1994(USERRA), members may receive credit for militaryservice rendered after October 13, 1994 (see page4). However, USERRA eligible service will only beused to determine eligibility for benefits. The calcu-lation of retirement benefits will not use the USER-

RA eligible service unless the employee pays therequired pension contributions for the period of mili-tary service.

Note: There is a time sensitive element to this pur-chase (see page 4).

Uncredited Service – Members may purchase anyregular employment with a public employer in NewJersey for which the member does not now haveretirement credit. This is credit for time when themember should have been enrolled, but was not.

Local Retirement System Service – Members maypurchase service credit established within a localretirement system in New Jersey if they were ineligi-ble to transfer that service to the PERS upon with-drawal from the local retirement system. This serv-ice is only eligible for purchase if the member is notreceiving nor eligible to receive retirement benefitsfrom that public pension fund.

IMPORTANT PURCHASE NOTES

• If you qualify as a non-veteran, you are eligi-ble to purchase an aggregate of 10 years ofservice credit for work outside New Jersey(Out-of-State, Military, and U.S. GovernmentService).

• If you qualify as a military veteran (see“Definition of a Veteran” on page 11), you maybe eligible to purchase an additional fiveyears of military service rendered during peri-ods of war for an aggregate of 15 years ofservice outside New Jersey (Out-of-State,Military, and U.S. Government Service).

• To qualify for an Ordinary DisabilityRetirement, members need 10 years of NewJersey service; therefore, the purchase ofU.S. Government, Out-of-State, or MilitaryService cannot be used to qualify for this typeof retirement.

• Purchases of service credit are voluntary pen-sion contributions and are not tax deferredunless funded by a rollover from another tax-deferred plan (see “Rollover for PurchasePayment” on page 8).

COST AND PROCEDURES FOR PURCHASING SERVICE CREDIT

You may obtain a quotation of the cost for purchas-ing additional service credit by submitting anApplication to Purchase Service Credit to the

July 20056


Division of Pensions and Benefits. This applicationis available from your employer, by writing to theDivision of Pensions and Benefits, or over theInternet at: www.state.nj.us/treasury/pensions

You can receive an estimate of the cost of purchas-ing service credit by calling the AutomatedInformation System at (609) 777-1777 or by usingthe online Purchase Calculator which can be foundon the Division of Pensions and Benefits’ Internetsite.

The cost of a purchase is based on four factors:

• A purchase factor based on your nearest ageat the time the Division receives your pur-chase application (see chart below);

• The higher of either your current annualsalary or highest fiscal year salary (July -June) posted to your membership account;

• The years and months of service being pur-chased; and

• The type of service purchased.

The cost of the purchase will generally increasewith an increase in your age and/or salary.

The cost of purchasing service is borne by both youand the participating employers with the importantexceptions of Military Service, U.S. GovernmentCivilian Service, and Local Retirement SystemService — where statute specifically provides thatthe employer shall not be liable for any costs of thepurchase. If you purchase U.S. GovernmentService, Military Service Before Enrollment, or LocalRetirement System Service, you, as the member,are responsible for the full cost; therefore, the costquoted to you for purchasing these types of servicewill be twice the cost for other types of purchase.

Partial Purchases

You may purchase all or part of any eligible service.If you make a partial purchase, you may purchaseany remaining eligible service at a later date. Thecost of any later purchase will be based upon yourage and the annual salary or highest fiscal yearsalary at the time you request the second purchase.

Estimating the Cost of a Purchase

To estimate the cost of a purchase, multiply thehigher of your current annual salary or highest fiscalyear salary times the purchase factor (see chart)corresponding to your nearest age. The result is thecost of one year of service. Multiply this cost by theappropriate number of years being purchased. Thisprocedure can be used for calculating the cost ofTemporary Service; Former Membership; Leaves ofAbsence; Uncredited Service; and Out-of-StateService.

To calculate the purchase cost of Military ServiceBefore Enrollment, U.S. Government Service, orLocal Retirement System Service, the same proce-dure is used except the resulting cost is doubled.

Note: The cost of a purchase of Military ServiceAfter Enrollment under USERRA (see pages 4 and6) is based on the required pension contributions forthe period of military service,

EXAMPLE: Member, age 45, earning $60,000 ayear, wishes to purchase 18 months TemporaryService: Purchase Factor (from chart) = 0.048761

July 2005 7


Purchase Rate Chart

Purchase PurchaseAge Factor Age Factor

20 0.031379 46 0.04993221 0.031759 47 0.05115522 0.032158 48 0.05243323 0.032578 49 0.05376824 0.033018 50 0.05516325 0.033480 51 0.05662026 0.033964 52 0.05814427 0.034471 53 0.05973728 0.035002 54 0.06140329 0.035558 55 0.06314530 0.036139 56 0.06496731 0.036748 57 0.06687332 0.037384 58 0.06886833 0.038048 59 0.07095634 0.038743 60 0.07314235 0.039469 61 0.07202136 0.040227 62 0.07085337 0.041019 63 0.06963738 0.041847 64 0.06838039 0.042711 65 0.06708340 0.043613 66 0.06574641 0.044555 67 0.06437642 0.045539 68 0.06297343 0.046567 69 0.06154544 0.047640 70 0.06010045 0.048761 (and older)

Purchase Annual Time Being PurchaseFactor X Salary X Purchased = Cost

0.048761 X $60,000 X 1.5 years = $4,388.50

If the same member were to purchase 18 months ofMilitary Service, the Purchase Cost would be$8,777 (twice the amount of the TemporaryService).

After the Division of Pensions and Benefits process-es your Application to Purchase Service Credit, youwill receive a quotation of the cost of the purchase.

No quotations of cost will be calculated until verifi-cation of employment is received by the Division ofPensions and Benefits. It is the member’s responsi-bility to obtain certification of employment from aformer employer for the purchase of Out-of-State orU.S. Government Service.

You must respond to the quotation letter within thespecified time period. When you agree to purchasea certain amount of service credit, the Division ofPensions and Benefits assumes that you will com-plete the purchase and credits your account withthe entire amount of service, even if you are payingthe cost through payroll deductions. Any estimatesof retirement allowance you receive, including yourPersonal Benefits Statement, are based on the fullamount of credit you agreed to purchase.

You may pay the cost of purchasing service credit:

• in one lump-sum payment;

• by having extra payroll deductions withheldfrom your pay. The minimum deduction isequal to one-half of your normal rate of contri-bution to the pension system over a maximumperiod of 10 years and includes interest of8.25 percent; or

• by paying a single down payment and havingthe remainder paid through payroll deduc-tions.

If you retire before completing the purchase, youmay choose to receive prorated credit for theamount of service actually paid for, or you can paythe balance at the time of retirement to receive fullcredit.

A member who authorizes a purchase of servicecredit through payroll deductions may cancel thosedeductions at any time. No refunds will be made ofany lump-sum payments, partial payments, orinstallment payments. The member will receive pro-rated service credit for the service purchased to the

date installment payments cease. Any subsequentrequests to purchase the remaining service creditshall be based on the laws and rules in effect on thedate that the subsequent request is received.

If you have an outstanding arrears obligation for thepurchase of additional service credit, interest maybe assessed if there is a lapse of two years or morein payments toward the purchase.

Rollover for Purchase Payment

Members may pay for all or part of a purchase bytransferring or rolling over tax-deferred funds froman eligible or qualified retirement savings plan. Thetypes of plans from which a transfer or rollover canbe made are:

• 401 (a) qualified plan (including 401(k) plan)and 403(a) qualified annuity

• 403 (b) - Tax-Sheltered Annuity Plan

• 457 (b) - State and Local GovernmentDeferred Compensation Plan

— IRA - With tax-deferred funds

— Traditional IRA

— Simple IRA (must have been open for 2 ormore years)

— Simplified Employee Pension Plan (SEP)

— Conduit IRA

— Rollover IRA

Note: The Division cannot accept rollovers from aRoth IRA or a Coverdell Education Savings Account(formerly known as an education IRA).

Additional information on requesting a transfer orrollover of tax-deferred funds for the purchase ofservice credit is included in the purchase cost quo-tation letter you receive upon the Division’s determi-nation of your eligibility to purchase service.

LOANS(Prosecutors Part members see addendum)

If you are an active contributing member of thePERS, you may be eligible to borrow from youraccount twice per calendar year. You may borrow upto a total of one-half of your posted pension contri-butions or up to a maximum loan balance of$50,000, whichever is less.

Loans are governed by the following conditions:

• Service Credit – You must have three years ofpension membership credit posted to your

July 20058


pension fund account. Pension contributionsare posted to your account on a quarterlybasis. It normally takes 60 days after the endof a quarter for your contributions to be post-ed to your account. For example, if youenrolled in the pension fund on January 1,2005, you would not have three years postedto your account until March, 2008.

• Loan Amount – The minimum amount youmay borrow is $50, and loan amounts thenincrease in increments of $10. The maximumyou may borrow is one-half of your contribu-tions that are posted to your account, up to amaximum loan balance of $50,000, whicheveris less. You may learn the amount you mayborrow by calling the Automated InformationSystem at (609) 777-1777.

• Loan Repayment – The maximum time periodover which a loan may be repaid is five years.The minimum deduction toward the repay-ment of a loan is equal to the full pensioncontribution rate of five percent of salary atthe time of your request. The maximum allow-able deduction toward the repayment of yourloan is 25 percent of your base salary. Theminimum loan repayment amount will be simi-lar whether you borrow $500 or $5,000; how-ever, the repayment of a larger loan will con-tinue for a longer period of time than for asmaller loan.

If you have an outstanding loan balance andtake a subsequent loan, the Internal RevenueService requires that the new combined loanbalance must be repaid within five years ofthe date of the first loan (see “InternalRevenue Service Requirements” at right).

You may learn the minimum deduction towardthe repayment of a loan by calling theAutomated Information System at (609) 777-1777.

• Interest – Interest is charged at the rate offour percent per year on the declining bal-ance.

• Number of Loans Per Year – You may borrowtwice in any calendar year. This is determinedby the date of the check, not the date of therequest. For example, if you made a requestfor a loan on December 24th but the checkwas dated January 5th, the loan would beyour first for the new year.

• Return to Payroll – If you have been out of

work without pay within the last six months,your employer must complete the bottom por-tion of the Loan Application to certify that youhave returned to employment.

• For Loans Made Prior to January 1, 2002 –If you are out of work without pay after loanpayments are set up, no loan payments willbe made until you return to work though inter-est will continue to accrue.

• For Loans Made After January 1, 2002 –See the Internal Revenue Service require-ments for loan repayment which are detailedin the next section.

You may obtain a Loan Application from youremployer, or you may download an application overthe Internet at: www.state.nj.us/treasury/pensions

You may apply for a loan regardless of your age. Ifyou retire before repaying the outstanding balanceof your loan, your loan payments will be carried intoretirement. That is, your pension allowance will bereduced by the same monthly amount you werepaying towards your loan just prior to retirement.You may also repay your outstanding loan balancein one lump sum prior to retirement.

If you die before repaying your loan (either before orafter retirement), the outstanding balance will bededucted from the proceeds of any benefits beingpaid to your beneficiaries.

If you terminate employment and withdraw yourcontributions before repaying your loan, all yourcontributions less the loan balance will be returnedto you (see “Internal Revenue ServiceRequirements” below).

The Automated Information System, at (609) 777-1777, gives you complete access to information youmay need about loans. It will tell you if you are eligi-ble to borrow, how much you can borrow, and whenyour check will be sent if you have filed an applica-tion for a loan. It will also allow you to model differ-ent loan and repayment amounts before you applyfor a loan or provide you with the balance on anexisting loan as of the last quarterly posting.

Internal Revenue Service (IRS) Requirements

Internal Revenue Code Section 72(p) requires thatloan balances cannot exceed $50,000 and must berepaid within five years. Furthermore, if you take asubsequent loan (or loans) and your original loanbalance is not completely paid off, the repaymentperiod will remain five years from the date of the

July 2005 9


first loan. The repayment rules on subsequentloans may result in either a substantial increase inyour repayment amount or may even limit theamount that you can borrow if the payroll deduc-tions to repay the loan exceeds the 25 percent ofbase salary restriction on loan repayments.

The IRS regulations also require members to maketimely payments toward outstanding loan balances.While it is your employer’s responsibility to withholdloan deductions from your salary, if you are out ofwork without pay, your employer has no salary fromwhich to take deductions. Members who leave pay-roll with an outstanding loan balance will be notifiedafter six months of nonpayment and offered theoption of paying off the entire loan balance or mak-ing loan repayment through a monthly personalbilling. Failure to repay the loan as scheduled(through either lump-sum payment, personal billing,or return to payroll) will result in the unpaid loan bal-ance being declared in default. If a loan is in default,the loan balance is declared a taxable or “deemeddistribution” and will be reported to the IRS. For thetax year in which the default occurs, the Division ofPensions and Benefits will send you a Form 1099-Rfor tax filing purposes in January of the followingyear. You will be required to include the portion ofthe loan representing before-tax contribution asincome on your federal return. In addition, if you areunder age 59½, you will be required to pay an addi-tional ten percent tax for taking an early pensiondistribution.

If you default on your loan, it will be your responsi-bility to make an estimated tax payment to the IRSto cover your tax liability on the deemed distribution;no withholding will be deducted from your accountby the Division.

If you resume your loan repayments after thedefault, the payments received will be posted toyour account as already-taxed contributions that willincrease the nontaxable portion of your pension atretirement. A deemed distribution cannot be can-celled by resuming your loan payments or repayingthe loan in full prior to the end of the tax year inwhich the default occurs. Please note that, unlike anormal pension distribution, a loan treated as a dis-tribution cannot be rolled over to an IRA or otherqualified retirement plan.

SUPPLEMENTING YOUR PENSION

In addition to your regular pension contributions,there are other opportunities to supplement yourretirement income and possibly set aside money ona tax-deferred basis.

New Jersey State Employees DeferredCompensation Plan

If you are an employee of the State, you may be eli-gible for the New Jersey State Employees DeferredCompensation Plan (IRC Section 457). Contribu-tions to the plan are not subject to federal incometax until you take a distribution from the plan, eitherat retirement or termination before retirement. Themain benefits of the plan are to help you save onfederal income tax now and to supplement yourretirement income through investments.

Brochures on investment options and other perti-nent information are available by calling (609) 292-3605 or by writing to: Division of Pensions andBenefits, New Jersey State Employees DeferredCompensation Plan, PO Box 295, Trenton, NJ08625-0295.

Local Deferred Compensation Plans

PERS members employed by a municipality, county,or board of education may also be eligible to con-tribute to an IRC Section 457 deferred compensa-tion plan. Contact your employer to see if this typeof plan is available to you.

Supplemental Annuity Collective Trust (SACT)

The Supplemental Annuity Collective Trust (SACT)is a voluntary investment program that providesretirement income separate from, and in addition to,your basic pension plan. Your contributions areinvested conservatively in the stock market. Theprogram consists of two separate plans. The SACT-Regular Plan is available to all actively contributingmembers of a New Jersey State-administered retire-ment system. Contributions to this plan are madeafter deductions for federal income tax. The SACT-Tax Sheltered Plan (IRC Section 403(b)) is availableto actively contributing members of public educa-tional institutions. Contributions to this plan aremade before deductions for federal income tax.

SACT brochures and enrollment packets are avail-able by calling (609) 633-2031 or by writing to:Division of Pensions and Benefits, SupplementalAnnuity Collective Trust, PO Box 295, Trenton, NJ08625-0295.

July 200510


RETIREMENT(LEO, LRS, Prosecutors Part, and

WCJ members see addendum)

All applications for retirement must be received bythe Division of Pensions and Benefits prior to theeffective date of the retirement. It is the member’sresponsibility to ensure the receipt of the retire-ment application and any other required documen-tation.

Types of Retirement

There are several types of retirement for which youmay qualify.

Service Retirement

Service Retirement is available to members uponreaching age 60 or older. No minimum amount ofpension membership credit is required.

The formula to calculate the maximum annual pen-sion is:

Years of Service X Final Average = Maximum55 Salary Annual

Allowance

FOR EXAMPLE: A member with 22 years of servicewould receive 22/55 or 40% of Final AverageSalary. You receive a slightly higher percentage foreach additional month of service.

‘Years of Service’ means the years and months ofpension service credited to your account —including purchased service credit. It does not nec-essarily mean years and months of employment.

‘Salary’ means the base salary on which your pen-sion contributions are based. It does not includeextra pay for overtime or money given in anticipationof your retirement. Nor does it include amounts paidfor housing, clothing, or uniform allowances.

‘Final Average Salary’ means your average salaryfor the three years immediately preceding yourretirement (either 36 months for employees with 12-month contracts or 30 months for employees with10-month contracts). If your three last years are notyour highest years of salary, your allowance may becalculated using your three highest fiscal years (July1 to June 30) of salary. If this is the case, pleaseindicate on your retirement application that you hadhigher fiscal years of salary.

Early Retirement

Early Retirement is available to members who have

25 years or more of pension membership creditbefore reaching age 60. The benefit is calculatedusing the Service Retirement formula; however, ifyou retire before age 55, your allowance is perma-nently reduced 1/4 of 1 percent for each monthunder that age (three percent per year). For exam-ple, if you retire at age 54, you will receive 97 per-cent of your full retirement allowance.

Here are other reduction factor examples:

Reduction ReductionAge Factor Age Factor54 .97 50 .8553 .94 49 .8252 .91 48 .7951 .88 47 .76

Veteran Retirement

Veteran Retirement is available to qualified militaryveterans who remain in active employment until theeffective date of retirement and who meet the mini-mum age and pension service credit requirementsfor a Veteran Retirement as of their retirement date.

A qualified military veteran may retire with:

• 25 years of service credit at age 55 or older;or

• 20 years of service credit at age 60 or older;or

• 35 years of service credit at age 55 or older.

• Veterans meeting the age requirement withbetween 20 and 34 years of service credit willretire with an annual benefit equal to 54.5 per-cent of the salary upon which pension contri-butions were based during the last year ofemployment or highest 12 consecutivemonths of base salary.

• Veterans with 35 or more years of servicecredit at age 55 or older are entitled to anannual allowance based on the following for-mula:

Years of Service X Highest 12 = Maximum55 Consecutive Annual

Months of Salary Allowance

Veteran members may retire on a ServiceRetirement if that provides a higher benefit.

Definition of a Veteran — A veteran is a personwho holds an honorable discharge from the militaryservice of the United States who served during the

July 2005 11


following periods:

• World War II – September 16, 1940 toDecember 31, 1946

• Korean Conflict – June 23, 1950 to January31, 1955

• Lebanon Crisis – July 1, 1958 to November 1,1958

• Vietnam Conflict – December 31, 1960 to May7, 1975

• Lebanon Peacekeeping Mission – September26, 1982 to December 1, 1987

• Grenada Peacekeeping Mission – October 23,1983 to November 21, 1983

• Panama Peacekeeping Mission – December20, 1989 to January 31, 1990

• Operation Desert Shield/Storm – August 2,1990 to February 28, 1991

• Operation Northern Watch/Southern Watch –August 27, 1992 to May 1, 2003

• Operation Restore Hope in Somalia –December 5, 1992 to March 31, 1994

• Operations Joint Endeavor/Joint Guard-Republic of Bosnia and Herzegovina –November 20, 1995 to June 20, 1998

• Operation Enduring Freedom – September11, 2001 to present

• Operation Iraqi Freedom – March 19, 2003 topresent

Veteran status can be granted for World War II, theKorean Conflict, or the Vietnam Conflict as long asthe member had at least 90 days of continuousactive military service, of which at least one day fellwithin the dates listed above. Any honorably dis-charged member of the American Merchant Marinewho served at least 90 days between September16, 1940 and December 31, 1946 also qualifies forveteran status.

Service with the Women’s Army Auxiliary Corps(WAAC) and Women’s Army Corps (WAC) may alsoqualify for veteran status.

For veteran status for the listed missions/operationsafter Vietnam, the member must have served atleast 14 days in the country or region or on shipspatrolling in the territorial waters of these nations.

• If the start of the member's service began onor after the beginning date of the war era, vet-eran status will be granted as long as any one

of the 14 days of service fell on or within thedates listed above.

• If the start of the member's service was priorto the beginning date of the war era, then themember must have served all 14 days in thearea within the dates specified for the conflictin order to be granted veteran status.

If the veteran was discharged because of a service-incurred disability during a period of conflict, the 90or 14-day requirement for service is waived. AbsentWithout Leave (AWOL) periods must be deductedfrom active service and if this reduces the activeservice to less than the 90 or 14-day servicerequirement, veteran status will be denied.

Veteran status cannot be granted if an individualreceived a dishonorable discharge, a dischargefrom the draft, disenrollment from the Coast GuardReserve, or a discharge from the reserve with noevidence of active service in time of war.

Veteran status cannot be granted if the individualservice was:

• State Militia;

• Student training corps during World War II;

• Army of the Allies but not as a citizen of theUnited States at the time of such service;

• Military service during peacetime;

• Military service for training purposes. Also,courses of education and training under theArmy Specialized Training Program or theNavy College;

• Training Program where the courses were acontinuation of the individual’s civilian coursesand were pursued to completion;

• As a cadet or midshipman at one of the serv-ice academies; or

• Any military service performed pursuant to theprovisions of Section 511(d) of Title 10,United States Code, pursuant to enlistment inthe Army National Guard or as a reserve forservice in the Army Reserve, Naval Reserve,Air Force Reserve, Marine Corps or CoastGuard Reserve.

Establishing Veteran Status — Individuals wishingto establish veteran status with the retirement sys-tem should submit a photocopy of their dischargepapers (Form DD 214) showing both their inductionand discharge dates to:

July 200512


NJ Department of Military and Veterans AffairsATTN: DVP-VBBPO Box 340Trenton, NJ 08625-0340

Since the NJ Department of Military and VeteransAffairs also makes determinations of veteran's pref-erence for Civil Service and property tax appeals, anote should be attached to say that the discharge isbeing sent for pension purposes. Include youraddress on the note.

Deferred Retirement

Deferred Retirement is available to members whohave at least 10 years of service credit and are notyet 60 years of age when they terminate employ-ment. The retirement would be effective on the firstof the month after attaining age 60. The benefit iscalculated using the Service Retirement formula.

You may apply for a Deferred Retirement when youterminate covered employment or at any time priorto age 60. You must file an Application forRetirement Allowance for the retirement to takeeffect. Under no circumstances can a retirementbecome effective prior to the date the application isreceived by the Division of Pensions and Benefits. Ifa member is removed from employment for cause,the member will be ineligible for DeferredRetirement.

At any time before your Deferred Retirementbecomes effective, you may change your mind andapply for a lump-sum withdrawal of all your pensioncontributions instead. Once you cancel yourDeferred Retirement and withdraw your contribu-tions, all the rights and privileges of membership inthe retirement system end.

Please note the following important informationabout your life insurance, health care coverage,loans, and purchase arrears if you are considering aDeferred Retirement:

• Life Insurance — Your life insurance cover-age will end 31 days after you terminateemployment and will not be in effect until yourDeferred Retirement becomes payable. If youdie before your Deferred Retirement becomeseffective, the last named beneficiary willreceive a return of your pension contributions.There is no life insurance benefit under thesecircumstances. However, during the 31-dayperiod after you terminate employment you

may convert your group life insurance cover-age to a private policy with the PrudentialFinancial. For more information see“Conversion: On Retirement” on page 29.

• Health Benefits — PERS members with lessthan 25 years of service credit who are elect-ing a Deferred Retirement cannot normallytransfer their active health care coverage tothe retired group of the State Health BenefitsProgram (SHBP); however, those electingDeferred Retirement may be eligible for con-tinuation of SHBP coverage under the federallegislation called COBRA* for up to 18 monthsif they were covered by the SHBP just prior toterminating employment. If the actual retire-ment commences while the 18 months ofCOBRA coverage is in effect, the retiree maythen transfer from the COBRA coverage andcontinue the SHBP coverage into retirement.If the 18 months of COBRA coverage endsbefore the retirement commences, the mem-ber will not be entitled to maintain health cov-erage through the SHBP. Participants shouldcontact their employer to see if they qualify forCOBRA continuation.

PERS members with 25 or more years ofservice credit who were employed by aschool board or a county college, are eligi-ble for employer-paid health benefits, and whoelect Deferred Retirement are eligible forSHBP coverage when the DeferredRetirement becomes effective at age 60 orlater.

• Loans — If you terminate employment, failureto repay a pension loan as scheduled mayresult in the unpaid loan balance beingdeclared a taxable distribution that will bereported to the IRS. See page 9 for moreinformation about the IRS regulations regard-ing the repayment of pension loans.

• Purchase Arrears — If you have an outstand-ing arrears obligation for the purchase of addi-tional service credit, interest may be assessedif there is a lapse in payments of two years ormore. For purchases authorized afterSeptember 8, 1998, the purchase will be can-celed after two years with no payments andthe service credit prorated. Members return-

July 2005 13


*The Consolidated Omnibus Budget ReconciliationAct (COBRA) of 1985.

ing to employment can have the original pur-chase resumed.

• Supplemental Compensation on Retirement(SCOR) — State employees who retire on aDeferred Retirement are not eligible for pay-ment for unused sick days under the SCORprogram. See your payroll administrator formore information.

Ordinary Disability Retirement

To qualify for an Ordinary Disability Retirement youmust:

• have an active pension account. i.e. you musthave had at least one pension contributioncredited to your account within the past twoyears. If more than two years have elapsedsince the last contribution and you terminatedemployment because you were totally andpermanently disabled and continue to be dis-abled for the same reason(s), special rulesapply; contact the Division of Pensions andBenefits for more information;

• have 10 or more years of New Jersey servicecredit (Out-of-State, Military, and U.S.Government civilian service purchases cannotbe used to attain the 10 years);

• be considered totally and permanently dis-abled (you must prove that you are physicallyor mentally incapacitated from performingyour normal or assigned job duties with nopossibility of significant improvement); and

• submit medical reports certifying your disabili-ty.

Note: If the medical documentation suppliedby you is not sufficient to support your claimof disability, you may be examined by physi-cians selected by the retirement system. Theexamination will be scheduled by the Divisionof Pensions and Benefits — at no cost to you.All medical information is confidential andonly for use by the PERS Board ofTrustees in evaluating your application.

If you qualify for an Ordinary Disability Retirement,the annual benefit is equal to 43.6 percent of yourFinal Average Salary (FAS) or 1.64 percent of yourFAS for each year of service credit, whichever pro-vides the higher benefit.

The application process begins by filing theApplication for Disability Retirement with theDivision of Pensions and Benefits (see “Disability

Retirement Applications” on page 18). The applica-tion contains forms for your physician(s) to completeand a form for the release of hospital records relat-ed to your disability. The application requires corrob-oration of your condition by at least two medicalsources. The more complete the application, thefaster it can be evaluated, although the process maytake six months or more.

It is the applicant’s responsibility to arrange forall physicians’ statements and hospital recordsto be sent to the Division.

Your employer has the right to apply for an involun-tary disability retirement on your behalf.

Once the Board approves a member for a disabilityretirement allowance, the member’s retirementapplication cannot be withdrawn, canceled, oramended (except to change your retirement optionselection provided that you file written notice withthe Division of pensions and Benefits within 30 daysof the date of the Board’s approval or your retire-ment date, whichever is later; otherwise, the retire-ment option will remain and cannot be changed forany reason thereafter).

Approval for Workers’ Compensation or SocialSecurity Disability benefits has no bearing on yourapplication for Ordinary Disability Retirement fromthe PERS. However, if you are approved forOrdinary Disability Retirement benefits and receivea Workers’ Compensation award, your Workers’Compensation award may be reduced by theamount of your Ordinary Disability Retirement bene-fit. If you have any questions concerning this issue,please contact the Division of Workers’Compensation at (609) 292-2515 or send e-mail to:[email protected]

Accidental Disability Retirement

To qualify for an Accidental Disability Retirementyou must:

• be an active member of the PERS on the dateof the “traumatic event” (see definition onpage 15) and at the time you file your applica-tion for retirement;

• be considered totally and permanently dis-abled (you must prove that you are physicallyor mentally incapacitated from performingyour normal or assigned job duties with nopossibility of significant improvement) as aresult of a “traumatic event” that happenedduring and as a direct result of carrying outyour regular or assigned job duties;

July 200514


• file an Application for Disability Retirementwithin five years of the date of the “traumaticevent”; and

• be examined by physicians selected by theretirement system. The examination will bescheduled by the Division of Pensions andBenefits — at no cost to you. All medicalinformation is confidential and used onlyby the PERS Board of Trustees in review-ing your claim.

If you qualify for Accidental Disability, your annualretirement allowance will be 72.7 percent of yoursalary at the time of the “traumatic event”.

‘TRAUMATIC EVENT’ has been defined by the courtsas one in which the worker is involuntarily exposedto a violent level of force or impact which is notbrought into motion by the worker. To be eligible forAccidental Disability benefits, the applicant mustdemonstrate that:

• the injury was not induced by normal workeffort;

• the worker met involuntarily with the objectthat was the source of the harm; and

• the source of the injury was a violent oruncontrollable power.

The following would not be considered “traumaticevent”s:

• Slip and fall cases, no force or power origi-nates anywhere except from the person fallingand the gravitational force on the person isnot considered “great”;

• A worker who injures his wrist when a jack-hammer twists in his hand is not injured as adirect result of a great rush of force or uncon-trollable power;

• A member’s heart attack, although the resultof job stress and tension, is not considered a“traumatic event”.

If you apply for Accidental Disability and are foundby the Board of Trustees to be totally and perma-nently disabled but not as a result of a “traumaticevent”, you may be retired on an Ordinary Disabilityif you have the required service credit (see page14).

The application process begins by filing theApplication for Disability Retirement with theDivision of Pensions and Benefits (see “Disability

Retirement Applications” on page 18). The applica-tion contains forms for your physician(s) to com-plete, a form for your employer to complete withquestions regarding the “traumatic event”, and arelease for hospital records relating to your disabili-ty. The more complete the application, the faster itcan be evaluated, although the process may takesix months or more.

It is the applicant’s responsibility to arrange forall physicians’ statements and hospital recordsto be sent to the Division.

Your employer has the right to apply for an involun-tary disability retirement on your behalf.

Once the Board approves a member for a disabilityretirement allowance, the member’s retirementapplication cannot be withdrawn, canceled, oramended (except to change your retirement optionselection provided that you file written notice withthe Division of Pensions and Benefits within 30 daysof the date of the Board’s approval or your retire-ment date, whichever is later; otherwise, the retire-ment option will remain and cannot be changed forany reason thereafter).

Approval for Workers’ Compensation or SocialSecurity Disability benefits has no bearing on yourapplication for Accidental Disability Retirement fromthe PERS. However, if you receive periodic Workers’Compensation benefits while receiving anAccidental Disability Retirement, the pension portionof your retirement allowance will be reduced dollar-for-dollar by the amount of the periodic benefits.

OPTIONAL SETTLEMENTS AT RETIREMENT

(WCJ members see addendum)

You may want to leave a pension benefit to a bene-ficiary in addition to any life insurance for which youare eligible. When you complete your Application forRetirement Allowance you will have to choose eitherthe Maximum Option or one of eight other optionsthat provide a pension benefit to your beneficiary.Selecting an option other than the Maximum Optionwill reduce your monthly retirement allowance. Theamount of this reduction depends on which optionyou select. Regardless of the payment option youselect, your retirement benefits are paid for theremainder of your lifetime (see exceptions in“Reduction or Suspension of Your Benefits” on page22). Once your retirement becomes due andpayable you cannot change your option selection.

July 2005 15


“Due and payable” is defined as 30 days after yourretirement date, or 30 days after your retirement hasbeen approved by the PERS Board of Trustees,whichever is later.

• Maximum Option provides the highest retire-ment allowance payable. Upon your death allpension benefits will cease. If your deathshould occur before you have received distri-bution of all your accumulated pension contri-butions, with interest, the remainder of anyundistributed contributions will be paid to yourbeneficiary. If you are legally married or in adomestic partnership and choose theMaximum Option, State law requires that wenotify your spouse or domestic partner of yourchoice.

• Options A, B, C, and D pay a monthlyallowance to a beneficiary upon your death forthe lifetime of that beneficiary. Under any ofthese options, once your retirement hasbecome due and payable, you cannot changethe beneficiary, regardless of the circum-stances. If your designated beneficiary diesbefore you, your monthly allowanceincreases to the Maximum Option amount.Your age and the age of the beneficiary deter-mine your monthly allowance - the youngerthe beneficiary, the more your pension isreduced to account for the longer lifeexpectancy of the beneficiary. Should you andyour beneficiary die before all your accumulat-ed pension contributions plus interest havebeen distributed in the form of a monthlyallowance, the remainder will be paid to yourestate.

Note: for Options A, B, C, and D, you mayonly designate one beneficiary.

• Option A provides that upon your death, yourbeneficiary will receive the same monthlyallowance that you were receiving at the timeof your death, for the duration of his/her life-time.

• Option B provides that upon your death, yourbeneficiary will receive 75 percent of themonthly allowance that you were receiving atthe time of your death, for the duration ofhis/her lifetime.

• Option C provides that upon your death, yourbeneficiary will receive one-half of the monthlyallowance that you were receiving at the time ofyour death, for the duration of his/her lifetime.

• Option D provides that upon your death, yourbeneficiary will receive 25 percent of themonthly allowance that you were receiving atthe time of your death, for the duration ofhis/her lifetime.

• Option 1 sets aside an initial reserve basedon your life expectancy. This reserve is thenreduced each month by the amount of yourinitial monthly retirement allowance. Uponyour death, the balance of the reserve, if any,is paid to your beneficiary(ies). If you exhaustyour initial reserve, you will continue toreceive your monthly retirement allowance forthe rest of your life; however, there are no fur-ther pension benefits payable to your benefici-ary(ies). You may designate more than onebeneficiary for Option 1. A beneficiary may bea person, a charity, an institution, or yourestate. You may change a beneficiary underthis option at any time. Upon your death, yourbeneficiary may elect to receive the proceedsin a lump sum or as an annuity payable over acertain number of years.

• Options 2, 3 and 4 pay a monthly allowanceto a beneficiary upon your death, for the life-time of that beneficiary. Under any of theseoptions, once your retirement has becomedue and payable, you cannot change the ben-eficiary, regardless of the circumstances. Ifyour designated beneficiary dies beforeyou, your monthly allowance will not beincreased nor can you name a new benefi-ciary. Your age and the age of the beneficiarydetermine your monthly allowance — theyounger the beneficiary, the more your pen-sion is reduced to account for the longer lifeexpectancy of the beneficiary. Should you andyour beneficiary die before all your accumulat-ed pension contributions plus interest havebeen distributed in the form of a monthlyallowance, the remainder will be paid to yourestate.

Note: for Options 2 and 3, you may only des-ignate one beneficiary. For Option 4, you maydesignate more than one beneficiary.

• Option 2 provides that upon your death, yourbeneficiary will receive the same monthlyallowance that you were receiving at the timeof your death, for the duration of his/her life-time.

• Option 3 provides that upon your death, yourbeneficiary will receive one-half of the monthly

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allowance that you were receiving at the timeof your death, for the duration of his/her life-time.

• Option 4 provides that upon your death, yourbeneficiary(ies) will receive a specified fixedmonthly allowance for the duration of his/herlifetime. Your allowance cannot be less thanthat provided under Option 2.

Note: Members should allow for additionalprocessing time for Option 4 calculations withmultiple beneficiaries.

Should a member apply for retirement, other than aDeferred Retirement, and die prior to the retirementbecoming effective, the retirement benefit benefici-ary may choose between the active death benefit orthe retired optional settlement that the memberselected. The member must have been eligible forretirement at the time of death for the beneficiary tobe eligible to choose between active and retireddeath benefits.

Age Limits on Non-spouse Beneficiaries

For all options, you can name your spouse as yourbeneficiary regardless of your spouse's age. ForOptions C, D, 1, or 3, you can name someone otherthan your spouse as beneficiary regardless of age.

Note: Federal law does not recognize a New Jerseydomestic partner in the same manner as a spouse.Therefore, a domestic partner listed as a beneficiarywill be considered in the same way as a non-spouse beneficiary.

For Options 2, A, or B, if you are naming a benefici-ary who is not your spouse, Internal RevenueService regulations restrict the age of your benefici-ary:

For Options 2 and A (100% to beneficiary):

• If you are age 70 or older at retirement, yournon-spouse beneficiary can be no more than10 years younger than you.

• If you are under age 70 at retirement, deter-mine 1.) the number of years differencebetween your age at retirement and age 70;and 2.) the number of years differencebetween your age at retirement and the ageof your non-spouse beneficiary. Subtract theage 70 difference from the difference in agebetween yourself and your beneficiary. Theresulting age difference can be no more than10 years (younger than you).

For Option B (75% to beneficiary):

• If you are age 70 or older at retirement, yournon-spouse beneficiary can be no more than19 years younger than you.

• If you are under age 70 at retirement, deter-mine 1.) the number of years differencebetween your age at retirement and age 70;and 2.) the number of years differencebetween your age at retirement and the ageof your non-spouse beneficiary. Subtract theage 70 difference from the difference in agebetween yourself and your beneficiary. Theresulting age difference can be no more than19 years (younger than you).

If you name a non-spouse beneficiary under Option4, and the dollar amount of your beneficiary's pen-sion is more than half of your allowance, restrictionson your beneficiary's age apply.

THE RETIREMENT PROCESS

The time frames in this section serve as a guide tohelp you understand the retirement process. Actualprocessing times, however, may vary and cannotbegin until the Division of Pensions and Benefitsreceives all the necessary information and formsfrom both you and your employer.

6-8 Months Before Retirement

When planning for a successful retirement, it isimportant to give yourself enough time to reviewyour benefits and options. You should inquireabout retirement at least six months before yourretirement date.

Retirement Estimates — If you are within two yearsof retirement, you may submit a Request forRetirement Estimate to the Division of Pensions andBenefits. This will provide you with a written esti-mate of the retirement allowances available underthe various pension options and the amount of yourgroup life insurance benefits. If you provide us withthe birth date of your beneficiary, we will estimatenot only the Maximum Option but alternate paymentoptions. Your employer will not be notified if yourequest a retirement estimate.

The request form is available over the Internet at:www.state.nj.us/treasury/pensions, by contactingthe Division of Pensions and Benefits, or from youremployer.

July 2005 17


You may also call the Division of Pensions andBenefits' Automated Information System at (609)777-1777 to hear an estimate of your retirementbenefits over the phone. Please have your SocialSecurity number available when you call.

For long term retirement planning, the Division alsoprovides an online retirement estimate calculatorthat uses service and salary information that youprovide. This calculator can be reached over theInternet at: www.state.nj.us/treasury/pensions

Retirement Seminars — Consider attending a pre-retirement seminar conducted by the Division ofPensions and Benefits. A list of seminar dates isavailable over the Internet at: www.state.nj.us/treasury/pensions. Contact the Division’s BenefitsEducation Office at (609) 777-2111 to register (thisnumber is for seminar information only). Stateemployees must register through their training offi-cer.

4-6 Months Before Retirement

Retirement Applications — It is your responsibili-ty to file an Application for RetirementAllowance with the Division of Pensions andBenefits. Retirement applications are available fromyour employer, by contacting the Division ofPensions and Benefits, over the Internet at:www.state.nj.us/treasury/pensions (if you are apply-ing for a disability retirement, see “DisabilityRetirement Applications” below for additional infor-mation).

All retirements are effective on the first of amonth. You are permitted to submit your Applicationfor Retirement Allowance as late as the last busi-ness day prior to your retirement date, but fourmonths advance filing is recommended. Under nocircumstances can a retirement become effectiveprior to the date the application is received by theDivision of Pensions and Benefits. Processing timesvary and cannot begin until the Division hasreceived all the necessary information and formsfrom both you and your employer.

• Multiple members (see page 3) cannot beginto collect retirement benefits until they haveterminated all employment covered by thePERS (except for elected officials).

• If you have not furnished proof of your age tothe Division of Pensions and Benefits, youmust do so when applying for retirement (seepage 2 for acceptable proofs of age). Proof of

age for your beneficiary is required if youchoose Options A, B, C, D, 2, 3, or 4. If yourbeneficiary’s birth evidence is given under amaiden name, please identify with your pen-sion membership number or Social Securitynumber. Please attach photocopies of anyproofs of age to your retirement application,as we cannot guarantee that original docu-ments will be returned. Your retirementapplication will not be processed until theDivision receives copies of birth date evi-dence.

• If applying for a Veteran Retirement, you mustqualify as a military veteran for pension pur-poses. If you are not already listed as a veter-an in the Division of Pensions and Benefits’records, you must send a photocopy of yourmilitary discharge (Form DD 214) to the NJDepartment of Military and Veteran Affairs(see pages 11 and 12 for more information).

• The amount of your life insurance coveragethrough the pension plan decreases at retire-ment or terminates if you have less than 10years of service credit. You may convert thedollar difference between the group coverageyou had before retirement and the group cov-erage you will have after retirement to a non-group life insurance policy. To protect yourconversion privilege it is suggested that youapply for conversion of your insurance at thetime you file your retirement application withthe Division of Pensions and Benefits. See“Conversion of Group Life Insurance” on page28 and Fact Sheet #13, Conversion of GroupLife Insurance, for details.

• Ask your employer to submit a Certification ofService and Final Salary to the Division ofPensions and Benefits.

• Contact the State Employees DeferredCompensation Plan office at (609) 292-3605 ifyou participate in the plan.

• Contact the Supplemental Annuity CollectiveTrust (SACT) office at (609) 633-2031 if youparticipate in SACT.

When your application is received by the Division ofPensions and Benefits you will be sent a letteracknowledging receipt of your retirement applica-tion. Also included will be answers to some fre-quently asked questions about retirement.

Disability Retirement Applications — TheApplication for Disability Retirement is not available

July 200518


from your employer. You should contact the Divisionof Pensions and Benefits to obtain this applicationor it is available over the Internet at:www.state.nj.us/treasury/pensions.

The application contains forms for your physician(s)to complete and a form for the release of hospitalrecords related to your disability. It is the appli-cant’s responsibility to arrange for all physi-cians’ statements and hospital records to besent to the Division. The more complete the appli-cation, the faster it can be evaluated, although theprocess may take six months or more. Applicationsfor Disability Retirement should be sent to:

Division of Pensions and BenefitsDisability Review UnitPO Box 297Trenton, NJ 08625-0297

Approximately 3 Months Before Retirement

State Health Benefits Program Coverage AtRetirement — If you fall into one of the categorieslisted below, you will be offered coverage under theNew Jersey State Health Benefits Program (SHBP)in retirement:

• Members already covered by the SHBPthrough their employer. (If you are not eligiblefor State or employer-paid coverage, you maycontinue the coverage into retirement by pay-ing the appropriate premium);

• Members employed by a board of educationor a county college who retire with 25 or moreyears of service credit in one or more State-or locally-administered retirement systems orwho retire on a disability retirement, even iftheir employer did not participate in the SHBP.This includes members who elected DeferredRetirement with 25 or more years of servicecredit in one or more State- or locally-admin-istered retirement systems. Eligibility is limitedto full-time employees as defined by N.J.A.C.17:9-4. The State has agreed to pay for thehealth benefit cost if you fall into this catego-ry;

• Members eligible for Medicare who retiredfrom full-time employment at a board of educa-tion, vocational/technical school, or specialservices commission not participating in theSHBP, provided you are participating in thehealth benefits plan of your employer and areenrolled in Medicare Parts A and B. You will berequired to pay the full cost of the coverage;

• Part-time State employees and part-time fac-ulty at institutions of higher education thatparticipate in the SHBP if enrolled in theSHBP at the time of retirement. You will berequired to pay the full cost of the coverage;and

• PERS members enrolled as Law EnforcementOfficers (LEO) who retire from an employerwho does not provide any payment towardretiree health coverage or reimbursement ofMedicare Part B premiums, should see thePERS Handbook Law Enforcement OfficerAddendum for information about SHBP eligi-bility under Chapter 330, P.L. 1997.

Note: Enrollment for coverage as a retiree in theSHBP is not automatic. You must submit an appli-cation to enroll.

If you are 65 or older, contact your local SocialSecurity Administration office for full Medicareenrollment. You must be covered by both Part A andPart B of Medicare to be eligible to enroll in theSHBP at retirement.

If you do not qualify for retired SHBP coverageunder the criteria listed above, see your employer toexplore other options that may be available for con-tinuing your health coverage.

Approximately 2 Months Before Retirement

You will receive a Quotation of Retirement Benefitsletter which shows your monthly retirementallowance with:

• the option you selected;

• a quote of any outstanding loan balance withrepayment options; and

• any other unsatisfied balance on your account(see below).

Unsatisfied Balances

Loans — If you retire with an outstanding loan bal-ance, you may:

• pay the loan in full prior to receiving anyretirement benefits; or

• continue your monthly loan repayment sched-ule into retirement.

Purchase Arrears — When you apply for a pur-chase of service credit, the Division assumes thatthe obligation will be paid before your retirement.Therefore, your account is credited with the full

July 2005 19


amount of service you have agreed to purchase. Ifthis obligation has not been fully paid when youretire, your Quotation of Retirement Benefits willstate the balance of your arrears (purchase) as ofyour retirement date. At that time, you must pay thebalance of your arrears. If you do not pay off thebalance, the service credit which has not been paidfor will be subtracted from your total years andmonths of service. This will reduce the amount ofyour retirement allowance and may even affect youreligibility for retirement.

If you have an outstanding arrears obligation for thepurchase of additional service credit, interest maybe assessed if there was a lapse in payments oftwo years or more.

Shortages — A shortage in your pension accountoccurs when your employer does not deduct theproper pension contribution from your salary. Youwill be notified by the Division of Pensions andBenefits of the amount of any shortage. You areresponsible for payment of any shortages at retire-ment.

No retirement will be paid until purchase arrearsand shortage obligations have been satisfied.

Approximately 1 Month Before Retirement

Board Approval — Your retirement will be present-ed to the PERS Board of Trustees for approval.

• You will receive a Board approval letter. Youhave 30 days from the Board approval date oryour effective retirement date (whichever islater) to request any change to your retire-ment date, option selection, or option benefici-ary. If you wish to make a change after Boardapproval, your new selection must again beapproved by the Board of Trustees. This maydelay your first retirement check.

• You may choose to cancel your retirementwithin 30 days of your retirement date orBoard approval date (whichever is later). Thisrequest must be in writing to the Division ofPensions and Benefits. Canceling yourretirement does not guarantee reemploy-ment with your employer.

Note: Members who are approved forDisability Retirement cannot cancel theirretirement.

COBRA — You may want to discuss with youremployer the possibility of continuing benefits underthe provisions of COBRA — The Consolidated

Omnibus Budget Reconciliation Act (COBRA) of1985.

AFTER YOUR RETIREMENT DATE

Statement of Retirement Allowance — You willreceive a letter confirming your retirement anddeath benefits. The letter will also supply figuresneeded in filing your income tax return. Keep thiswith your important papers.

Retirement Checks — Your first retirement checkcannot be issued earlier than 30 days following yourretirement date. If processing of your retirement isdelayed, your first check will be retroactive to thedate of your retirement.

Regular retirement checks are dated on the first ofthe month to cover the allowance for the previousmonth. For example, if you retire on July 1st, yourfirst retirement check would be due and payable onAugust 1st and is payment for the month of July.

Change of Address — Although retirement checkscan be forwarded to a new address, it is importantthat you inform the Division of Pensions andBenefits of the change. When informing the Divisionof a change of address, be sure to include your newaddress and your retirement number or SocialSecurity number. You can change your address withthe Division of Pensions and Benefits by calling(609) 292-MOVE (6683) or over the Internet at:www.state.nj.us/treasury/pensions/changead.htm

Direct Deposit/Electronic Funds Transfer —Direct deposit of retirement checks is strongly rec-ommended. Shortly after your retirement date youwill receive an Authorization of Direct Deposit formfrom the Division of Pensions and Benefits. If youwish to have your retirement checks directlydeposited, send the completed form to the Divisionof Pensions and Benefits. Please allow approxi-mately 60 days for the direct deposit to begin. Directdeposit will prevent your retirement checks frombeing lost, stolen, or delayed in the mail.

Withholding Federal and NJ State Income Tax —The Division of Pensions and Benefits will providefor the withholding of federal and New Jersey Stateincome tax from your retirement check.

The Division is obligated to withhold federal incometax unless you file a Form W-4P instructing us notto do so.

New Jersey income tax withholding is voluntary, andnone will be withheld unless you instruct us to do

July 200520


so. Please keep in mind that if you live outside NewJersey your retirement benefits are not subject toNew Jersey State income tax, but may be subject tostate or local taxes in the jurisdiction in which youreside. There is no provision for withholding anylocal or out-of-state taxes.

New retirees will automatically receive federal andNew Jersey W-4P forms for withholding income tax.After that, you may obtain a federal or New JerseyState W-4P form by calling or writing the Division ofPensions and Benefits. W-4P forms are also avail-able over the Internet at: www.state.nj.us/treasury/pensions

The Division of Pensions and Benefits cannot pro-vide tax advice. Any questions about your federalincome tax should be directed to the InternalRevenue Service at 1-800-TAX-1040. For questionsabout New Jersey income tax, call the New JerseyDivision of Taxation at 1-800-323-4400.

Federal Income Tax After Retirement — InJanuary, the Division of Pensions and Benefitsissues each retiree an annual Form 1099-R reflect-ing the taxable retirement allowance paid during thepreceding tax year. The degree to which your pen-sion is taxed, other than Accidental DisabilityRetirement, depends on whether or not the pay-ments you receive have been previously taxed.Employee contributions made prior to 1987 weremade with after tax dollars, that is, they were feder-ally taxed prior to being made. Contributions for thepurchase of service are also made with after taxdollars unless funded by a rollover from another tax-deferred plan.

If you began contributing to the pension plan in1987 or after, and you have not made a purchase ofservice credit, your entire pension is subject to fed-eral income tax because your contributions havenever been taxed.

If you contributed to the pension plan before 1987,or if you have made a purchase of service creditsince 1987, your pension is immediately taxablebased on the “expected return rule.” Part of yourretirement allowance comes from your own pensioncontributions. Since your contributions before 1987and most purchases of service credit were alreadytaxed, the Internal Revenue Service (IRS) will allowyou to recover those contributions tax-free. Thisrecovery is spread out over your expected lifetimeor the combined lifetime of you and your beneficiary,according to IRS life expectancy tables. This meansthat a small portion of each monthly retirement

check is tax-free. The remainder of the monthly ben-efit is subject to federal income tax.

If you retired on an Accidental Disability Retirement— or if you are a survivor (except for domestic part-ners) receiving Accidental Disability or AccidentalDeath benefits — the Division of Pensions andBenefits reports your benefit as exempt from federalincome tax.

Ordinary Disability Retirement benefits are subjectto federal tax to the same extent as other pensions.

Any federal tax questions should be referred to theIRS at 1-800-TAX-1040.

NJ State Income Tax After Retirement — If you livein New Jersey, you will be subject to New JerseyState income tax when you have recovered in pen-sion checks the amount of pension contributionsyou made to the retirement system while working.However, if you will not recover your total contribu-tions within three years of retirement, contact the NJDivision of Taxation at 1-800-323-4400, or see theNJ Gross Income Tax Return Form 1040 instruc-tions to determine how your pension is taxed.

If you are receiving an Ordinary Disability orAccidental Disability retirement allowance, your pen-sion is exempt from New Jersey income tax if youare under age 65. When you reach age 65, yourdisability pension is treated as a regular pensionand is considered taxable for New Jersey incometax.

Cost-of-Living Adjustment — The PensionAdjustment Program provides a cost-of-living adjust-ment (COLA) to retirees and their survivors whoreceive a monthly retirement allowance from thePERS. The first adjustment is received by allretirees and eligible survivors in the 25th monthafter the member’s retirement. Subsequent cost-of-living adjustments are computed annually and arereflected in the February 1st check (which is pay-ment for the month of January). The COLA is basedon your initial retirement allowance; however, if youchose Option 1, the COLA is calculated using theMaximum Option amount.

The Division of Pensions and Benefits uses theConsumer Price Index (CPI) for Urban WageEarners and Clerical Workers (CPI-W), U.S. CityAverage, All Items, 1982-84=100 in calculating theCOLA. Your rate of increase is equal to 60 percentof the percentage change between the average CPIfor the calendar year in which you retired and the

July 2005 21


average CPI for the 12 month period ending August31, immediately preceding the year when theadjustment is payable.

Retirees can find their current cost-of-living adjust-ment under the Current Earnings section of theirmost recent retirement benefit Statement ofAllowances and Deductions (check or EFT stub).

You can also verify your current allowance anddeduction information at any time by calling ourAutomated Information System, (609) 777-1777.When calling, you will be asked to enter your SocialSecurity number. Then by pressing 3 after the firstprompt — indicating that you requesting retirementinformation — and 3 again at the second prompt,you can hear the check information in the order as itwould appear on your check stub.

EXAMPLE: To calculate the COLA due February 1,2005.

A member retired in 2000 with a monthly retirementallowance of $1,278.35. The average CPI for thetwelve months ending December 31, 2000 was168.9. The average CPI for the twelve months end-ing August 31, 2004 was 182.6.

To calculate the change in the CPI, subtract 168.9from 182.6.

182.6 - 168.9 = 13.7

To calculate the percentage change in the CPIbetween the retirement year 2000 and the 12months ending August 31, 2004, divide 13.7 by168.9. The result is 8.111%.

13.7 ÷ 168.9 = 8.111%

The cost-of-living adjustment rate for February 1,2005 equals 60% of 8.111%, or 4.867%.

60% X 8.111% = 4.867%

Therefore, the cost-of-living adjustment for thismember is 4.867% of $1,278.35, or $62.22.

4.867% X $1,278.35 = $62.22

The total monthly benefit equals $1,340.57.

$1,278.35 + $62.22 = $1,340.57

Social Security — Your pension is not reduced byany Social Security benefits you may receive norshould your Social Security benefits be reducedbecause of your PERS retirement benefit.

REDUCTION OR SUSPENSION OF YOUR BENEFITS

Normally, you will receive retirement benefits aslong as you live. Your benefits, however, could bereduced or suspended if:

• you return to a position covered by the PERSand are required to reenroll (see “EmploymentAfter Retirement” on page 24).

• you become mentally or physically incompe-tent. Your benefits will not be reinstated until alegal representative has been appointed.

• you have an outstanding purchase arrearsbalance or a shortage at the time of yourretirement.

• you receive salary from your employer forservice rendered after your date of retirement.

• you waive your right to a portion of any pen-sion to which you are entitled.

• as a disability retiree, you fail to appear for aperiodic medical re-examination whenrequested to do so.

• as an Accidental Disability retiree, you receiveperiodic Workers’ Compensation benefits afteryour retirement date.

• as a disability retiree, you fail to file yourannual statement of earnings if requested.

• as a disability retiree, your employmentincome exceeds the amount allowable by law.The Division of Pensions and Benefits moni-tors the earnings history of retired memberson an annual basis. If any discrepancies arefound, retirees will be reenrolled in the PERSimmediately and any retirement benefitsreceived during reemployment must be repaidto the PERS.

• you fail to file a Certificate of Eligibility whenyou are asked to do so. This certificate is nec-essary, for example, if you or one of your ben-eficiaries has a change in marital status.

• you go to jail (although the Board of Trusteesmay permit the continuance of your benefitsto your dependents).

• an accounting error is made and the PERSmust be repaid.

• If a retiree does not complete a policy assign-ment of group life insurance as requested bythe Board of Trustees.

July 200522


Your pension is normally exempt from any liensagainst it. Exceptions are: tax liens imposed by thefederal Internal Revenue Service, and court ordersfor child support, alimony, or equitable distribution.The order is effective only when you withdraw yourfunds or when you begin to receive monthly retire-ment payments. If the order is received while youare in active employment, it is deferred until pensionfunds are disbursed (retirement, death, or withdraw-al).

Divorce

As stated above, the Division of Pensions andBenefits will honor court orders for child support,alimony, or equitable distribution. Such matrimonialorders cannot take effect until you retire and beginto receive a monthly retirement allowance. To beimplemented by the Division, the matrimonial ordermust designate a specific dollar amount, a specificpercentage, or a percentage of the benefit you willreceive based on the number of years of serviceyou accrued while married. The amounts withheldare sent directly to the divorced spouse unless theorder specifies another payee, such as a probationdepartment.

Upon the death of either the retired member or thedivorced spouse, all withholding mandated under amatrimonial order cease. If the divorced spouse isdesignated the beneficiary under a PERS pensionoption, the surviving divorced spouse is entitled tothe survivor’s benefit for as long as he or she lives.If another person is designated beneficiary of thepension option, the divorced spouse cannot receiveany equitable distributions from the survivor’s bene-fit.

Before a matrimonial order is issued, the text of theorder should be sent for review and comment to theOffice of Professional Services, Division of Pensionsand Benefits, PO Box 295, Trenton, NJ 08625-0295.

Misconduct

The receipt of retirement benefits is expressly con-ditioned upon the rendering of honorable service bya public officer or employee. Your benefits may bereduced or forfeited if you are convicted of a crimein any way related to your employment, or if you aresuspended or dismissed from your employment. Inaccordance with N.J.S.A. 43: 1-3, the Board ofTrustees is required to order the forfeiture of all orpart of the retirement allowance of a member formisconduct during public service, which renders theservice, in whole or in part, dishonorable. The Board

evaluates the member's disciplinary and/or criminalcharges using the following 11 factors to determinewhether the member's public service is consideredhonorable.

1. The employee's length of service;

2. The basis for retirement, i.e., age, service,disability, etc. (includes the effective date ofretirement);

3. The extent to which the employee's pensionhas vested;

4. The duties of the particular employment;

5. The employee's public employment andservice (includes the date of last pensioncontribution);

6. The employee's other public employmentand service;

7. The nature of the misconduct or crime,including the gravity or substantiality of theoffense, whether it was a single or multipleoffense and whether it was continuing orisolated;

8. The relationship between the misconductand the employee's public duties;

9. The quality or moral turpitude or the degreeof guilt and culpability, including the employ-ee's motives and reasons, personal gainand the like;

10. The availability and adequacy of other penalsanctions; and

11. Other personal circumstances relating tothe employee bearing upon the justness ofthe forfeiture.

The Division of Criminal Justice in the Departmentof Law and Public Safety and the County andMunicipal Prosecutor's Offices are required toinform the Division of Pensions and Benefits when-ever a public official or employee is prosecuted orconvicted. State and Local public employers arealso required to notify the Division of Pensions andBenefits whenever a public employer takes formaldisciplinary action to remove a member from publicoffice or employment for cause on charges of mis-conduct or delinquency. In these cases, the Boardof Trustees will consider all relevant documentationto render a determination on any appropriate action.

The Board will suspend processing of a member'sapplication for retirement pending the receipt of thefinal disposition of charges against the member. Allclaims for retirement, death benefits, or the return of

July 2005 23


July 200524


the member's contributions cannot be processeduntil the criminal or administrative matter has beenresolved to the satisfaction of the Board of Trustees.The Division will postpone action on all claimswhere there is pending litigation against the mem-ber's employment. In this case, the Division will holdall applications or requests in abeyance until suchtime as the matter is fully resolved. Once all therequired information is provided to the Division, theBoard of Trustees will consider each case on itsown merits.

New Jersey law stipulates that a retired member isnot eligible to collect retirement benefits if theretiree is confined in a penal institution as a result ofa conviction of a crime involving moral turpitude.The law provides that an eligible dependent maycontinue to collect a retirement benefit if they canprove to the satisfaction of the Board of Trusteesthat they rely on the retiree's benefits for their main-tenance.

The member should contact the Division's Boardand Trustee Administration Office, in writing, if anyof the conditions listed above should occur in orderto obtain more specific instruction on how to pro-ceed.

EMPLOYMENT AFTER RETIREMENT(LRS and WCJ members see addendum)

For most PERS retirees, working for private indus-try, the federal government, or a governmentagency in another state will not affect your retire-ment benefits (disability retirees should see“Disability Retirees - Earnings After Retirement” onpage 25).

For PERS retirees who resume public employmentin New Jersey after retirement, there are severalareas of concern.

Returning to Work in a Position Covered by aState of New Jersey-Administered RetirementSystem Other than the PERS

In this case, your retirement allowance continuesand you can receive salary but you cannot becomea member of that retirement system.

Returning to a Position Under the PERS

If you accept regular employment in a position cov-ered by the PERS and expect to receive an aggre-gate annual salary of over $15,000 from all PERScovered employment, you must reenroll in the

PERS as a condition of employment (see theexceptions listed below). If reenrolled, your retire-ment allowance and any related health benefits willbe canceled for the duration of your employment.Your date of enrollment is determined under thegeneral enrollment procedures of the PERS (see“Enrollment” on page 2) and you are treated as anactive member in all respects. If you die while in thesecond membership, no benefits from the previousmembership or retirement are payable (except forthe return of any uncollected contributions). Thisincludes optional settlements and death benefits. (Ifyou are over age 60, you must prove insurability forlife insurance coverage.)

Exceptions

Reenrollment in the PERS is optional if you are:

• A non-veteran elected official; or

• Any elected official whose retirement did notresult entirely from service credit accrued asan elected official; or

• A special service employee hired under thefederal Older American Community ServiceEmployment Act.

If you decide not to enroll in the PERS, you are enti-tled to collect your PERS retirement allowance whileyou are receiving salary as an elected official orspecial service employee.

Reenrollment in the PERS is not required if:

• The aggregate annual salary or salaries forthe position, or positions, does not exceed$15,000 in a calendar year, or $1,499 from asingle employer if retired on a disability retire-ment (see also, “Disability Retirees Restoredto Active Service” on page 25);

• The position is not covered by Social Security;

• You are a seasonal or intermittent employee;

• You are employed with an institution of highereducation in a teaching position covered bythe PERS;

• You are employed by the New JerseyDepartment of Education* in a position of criti-cal need as determined by the Commissionerof Education; or

• You are employed by a board of education* ina position of critical need as determined bythe superintendent of the district on a contrac-tual basis for a term of not more than oneyear. You will be able to renew the employ-

ment contract for one additional year; howev-er, your total period of employment with anyindividual board of education may not exceeda two-year period.

Reenrollment in the PERS

If you return to employment under the PERS andare eligible for membership and you fail to reenroll,you would be required to reimburse the retirementsystem for the amount of all retirement benefits youreceived since the date you should have enrolled. Inaddition, you would be required to pay pension con-tributions in the form of back deductions back toyour enrollment date. There is no limitation on theamount of reimbursement that may be recovered bythe retirement fund in these situations.

Retiring for a Second Time

When you retire again, you must file an Applicationfor Retirement Allowance with the Division ofPensions and Benefits before any benefits can bepaid. In no case will retirement benefits be paidretroactively for a period prior to receipt of the appli-cation.

Upon application, the first retirement allowance isrestored and a second retirement allowance is cal-culated based solely on your second membership.Each retirement account stands alone and cannotbe combined to provide a larger benefit or anothertype of benefit. These two calculations are paid inthe same retirement check.

Disability Retirees Restored to Active Service

Before returning to active service with the PERS,disability retirees must first prove to the satisfactionof the Board of Trustees that they are no longer dis-abled. When you return to active service in a posi-tion covered by the PERS, you must enroll again inthe retirement system. Deductions for pension areresumed and you are treated as an active memberin all respects. Upon subsequent retirement, you willreceive a benefit based on total service.

Disability Retirees - Earnings After Retirement

A disability retirement allowance may be adjusted ifyou have earnings from any occupation after retire-ment. If your pension, when added to the earningsfrom other employment, exceeds what your formerposition curently pays, the law states that the dis-ability pension shall be reduced dollar for dollar bythe excess earnings above what the former positioncurently pays. PERS disability retirees are subject to

an annual earnings test and the Division ofPensions and Benefits may request copies of yourfederal tax returns and Form W-2.

State Health Benefits Program Coverage

Returning to public employment in New Jersey mayaffect your eligibility to continue coverage under theState Health Benefit Program (SHBP). If your retire-ment allowance is canceled because you return towork in a position covered by the PERS, yourretired SHBP coverage is also canceled until youretire again. Returning to a position not covered bythe PERS will not affect your eligibility for retiredgroup coverage under the SHBP. Maintaining SHBPretired group coverage also does not affect your eli-gibility for active group health coverage associatedwith your new employment not covered by thePERS.

Social Security Benefits

There is an earnings test for people receiving SocialSecurity benefits under the age of 65. Check withthe Social Security Administration at 1-800-772-1213 for information on their earnings limit beforeaccepting employment after retirement.

ACTIVE AND RETIREDDEATH BENEFITS

(LRS, Prosecutors Part, and WCJ members see addendum)

Noncontributory and Contributory Group LifeInsurance

As an active employee you may be covered by twotypes of group life insurance:

• NONCONTRIBUTORY GROUP LIFE INSURANCEis provided by your employer through the pen-sion fund. There is no cost to you for this cov-erage.

• CONTRIBUTORY GROUP LIFE INSURANCE islife insurance for which you pay. The cost ofthe insurance is 0.5 percent (.005) of yourbase salary. The law requires that you mustbe covered by contributory insurance for thefirst 12 months of your membership. After the12 months have elapsed, you may cancel thiscoverage if you wish by filing a Notice ofWithdrawal from Contributory Group LifeInsurance. Once you have canceled thiscoverage, you cannot be reinstated nor areyour premium deductions refunded.

July 2005 25


All optional enrollees (see page 2) regardless ofage, employees who are age 60 or older at the timeof enrollment, or those who have converted theirinsurance to a private policy and returned to work,are ineligible for both noncontributory or contributorygroup life insurance coverage until they take andpass a medical examination.

Both noncontributory and contributory group lifeinsurance are covered by policies issued by theinsurance carrier (Prudential Financial).

The amount of death benefits paid to your benefici-aries at your death depends on three factors:

• your membership status at the time of death;

• your last 12 months of salary; and

• your age (if you are a disability retiree).

Coverage for Active Members

When an active member dies, not as a result of anaccident during regular or assigned duties (see“Accidental Death Benefit” on page 30), the namedbeneficiaries are entitled to the payment of grouplife insurance benefits and the return of the mem-ber’s accumulated pension contributions with inter-est.

Active Group Life Insurance Amounts

Member with BothMember with Noncontributory and

Age at Noncontributory Contributory Death Insurance Only Insurance

Any age 1½ times salary 3 times salary

Note: The definition of salary in this chart is the totalbase salary upon which your pension contributionswere based during the year preceding your deathduring active service. If death occurs within the firstyear of enrollment, the amount of the noncontrubu-tory insurance is based on the base salary earneduntil the date of death. The amount of contributoryinsurance, however, is based on the full annualbase salary.

Coverage for Retired Members

Life insurance for retired members of the PERS whoenrolled on or after July 1, 1971, is payable only ifthe member retired with 10 or more years of pen-sion membership credit or retired on a disabilityretirement.

When a retired member dies, the named beneficiar-ies are entitled to the payment of group life insur-ance benefits (if eligible) and the pension optionselection made by the member at retirement (see“Optional Settlements at Retirement” on page 15).

Retired Group Life Insurance Amounts

Member with BothMember with Noncontributory and

Type of Noncontributory Contributory Retirement Insurance Only Insurance

Death Death Death Death Before After Before AfterAge 60 Age 60 Age 60 Age 60

Disability 1½ 3/16 1½ 3/16

Early & 3/16 3/16 3/16 3/16Veteran

Deferred None 3/16 None 3/16

Service N/A 3/16 N/A 3/16

Note: The fractions listed above are multiplied bythe total base salary upon which pension contribu-tions were based during the year preceding retire-ment.

Choosing a Beneficiary

Your PERS enrollment application contains a sec-tion in which you name beneficiaries for both yourgroup life insurance benefits and the return of yourpension contributions. You may name any person,organization, your estate, or trust as beneficiary. Youmay change your designation at any time duringyour active membership by filing a properly complet-ed Designation of Beneficiary form.

At retirement, you are asked on your Applicationfor Retirement Allowance to name a beneficiary(ies)for pension benefits and separately name benefici-aries for group life insurance benefits. Some restric-tions apply to who may be named for pension bene-fits (see “Optional Settlements at Retirement” onpage 15), however, you may name any person,organization, your estate, or trust as beneficiary forgroup life insurance benefits. You may also changeyour group life insurance designation at any timeduring your retirement by filing a properly completedDesignation of Beneficiary form.

The Designation of Beneficiary form can beobtained over the Internet at: www.state.nj.us/treasury/pensions, by contacting the Division ofPensions and Benefits, or from your employer.

July 200526


If you have additional questions regarding designa-tions, please see Fact Sheet #68, Designating aBeneficiary.

For your protection, beneficiary designations cannotbe accepted nor confirmed over the telephone or bye-mail. The Division will only accept a writtenrequest from the member.

Payment of Group Life Insurance

Group life insurance benefits for active memberscan be paid in one of several ways (group life insur-ance for retirees must be paid in a lump sum). Theoptions are:

• Lump Sum — a single payment to your bene-ficiary.

• Annuity Certain — equal installments over aselected period of years.

• Life Annuity — paid monthly to your benefici-ary for life.

Death benefits cannot be paid until all the neces-sary information and claim forms have beenreceived from your beneficiary by the Division ofPensions and Benefits.

To report a death, contact the Office of ClientServices at (609) 292-7524.

Taxation of Group Life Insurance Payments

Information regarding death claim payments aresupplied to the New Jersey Division of Taxation, inaccordance with their requirements. A beneficiary orbeneficiaries may be considered by the Division ofTaxation to be personally liable for any and all inher-itance and/or estate taxes until paid.

Group Life Insurance and Leave of Absence

Your group life insurance coverage will continue infull force for an official leave of absence without payunder the following conditions:

• up to two years while on an official leave ofabsence for personal illness. In this case, con-tributions are not necessary to continue cov-erage under the contributory plan.

• up to one year while on an official leave to ful-fill a residency requirement for an advanceddegree or as a full-time student at an institu-tion of higher education. In this case, contribu-tions are necessary to continue coverageunder the contributory plan (see note at right).

• up to 93 days while on official leave for per-sonal reasons (also family leave). In this case,contributions are necessary to continue cover-age under the contributory plan (see notebelow).

An official leave of absence requires documentationthat establishes the nature of the leave and the con-tinuing relationship between the employer and themember.

Note: You may continue contributory life insurancecoverage during these periods by forwarding to theDivision of Pensions and Benefits a completedPersonal Insurance Contribution Remittance cardand a check made payable to “PERS CGIPF”. Theamount due to cover the premium is 0.005 of yourmonthly base salary in effect at the time you wenton leave. This premium payment must be sent inadvance on a monthly basis while on leave for aslong as you wish to keep your contributory life insur-ance in effect. The Personal Insurance ContributionRemittance card is available from your employer orover the Internet at: www.state.nj.us/treasury/pensions

Taxation of Group Life Insurance Premiums

The Internal Revenue Service classifies all employ-er-provided life insurance coverage over $50,000 asa fringe benefit subject to taxation. The amount oflife insurance coverage is not taxable but rather thepremium required to pay for the life insurance cover-age is taxable.

To determine the taxable amount, if any, add theamount of your noncontributory life insurance cover-age to your contributory life insurance coveragethen subtract $50,000 from that total. The premiumrates are then applied to the remaining life insur-ance amount. The premium costs for the life insur-ance are determined by the IRS based on your age(see chart on page 28) and your salary. The premi-ums you pay for your contributory life insurance cov-erage (.005 x salary) are subtracted from the premi-um costs determined by the IRS. The remainingpremium cost (if any) is the taxable amount and isadded to your income on the Form W-2 for thatyear.

July 2005 27


IRS Premium Rates*as of 7/1/99

(Annual cost per $1,000 of coverage)

Age Premium

Under age 25 $ 0.60

25-29 0.72

30-34 0.96

35-39 1.08

40-44 1.20

45-49 1.80

50-54 2.76

55-59 5.16

60-64 7.92

65-69 15.24

70 and older 24.72

*These rates are subject to change by the IRS.

EXAMPLE: A PERS member is age 56 and has bothcontributory and noncontributory life insurance cov-erage.

The member’s annual base salary is $60,000. Themember’s life insurance coverage totals $180,000 (3 x $60,000).

The fringe benefit amount is determined by sub-tracting $50,000 from the total benefit amount,$180,000. That equals $130,000 ($180,000 -$50,000).

According to the IRS, the premium cost for an indi-vidual 56 years of age is $5.16 per $1,000 of cover-age. The premium cost in this example is $670.80(130 x $5.16).

Under the PERS, members pay premiums equal to0.5% of base salary for contributory life insurancecoverage. In this example this member pays$300.00 per year for life insurance coverage (.005 x$60,000).

The net taxable value of the premiums is $370.80($670.80 - $300.00) and would be added to thismember’s Form W-2. This does not mean that themember would pay an additional $370.80 in taxesbut that $370.80 would be added to the member’staxable wages for the year.

Waiving Noncontributory Group Life Insuranceover $50,000

PERS members are permitted to waive their non-contributory group life insurance over $50,000 toavoid a possible federal and State tax liability on thatbenefit.

Waivers of partial amounts are not permitted. Anymember who waives noncontributory group lifeinsurance, must waive the total amount of noncon-tributory coverage in excess of $50,000.

Even if a member waives the noncontributory grouplife insurance over $50,000, there still may be a fed-eral tax liability for some PERS members who havecontributory group life insurance coverage.

In the example shown above, the member’s noncon-tributory life insurance coverage equals $90,000(1.5 x $60,000). In this example the member couldwaive $40,000 of noncontributory life insurance cov-erage because members are only permitted towaive noncontributory life insurance coverage over$50,000. The net taxable value would be reduced to$164.40 by subtracting the premium for $40,000($206.40) from the taxable premium shown above($370.80 - $206.40).

You may waive your noncontributory group life insur-ance coverage in excess of $50,000 by completinga waiver form and submitting it to the Division ofPensions and Benefits. The form is available fromthe Division of Pensions and Benefits or youremployer. The waiver form must be received by theDivision of Pensions and Benefits before December31 in order to be effective January 1 of the next cal-endar year. Once a waiver form has become effec-tive it shall be irrevocable for the entire calendaryear. The waiver will remain in effect until you sub-mit a reinstatement form to the Division of Pensionsand Benefits. The reinstatement will become effec-tive the following January 1.

If a waiver is in effect at the time of termination ofemployment or retirement, you will not be permittedto convert any amount of your noncontributorygroup life insurance coverage over $50,000.

Before completing the waiver, you should complete-ly understand the ramifications of waiving your non-contributory life insurance. For more information,refer to Internal Revenue Service Publication 525,Taxable and Nontaxable Income.

CONVERSION OFGROUP LIFE INSURANCE

If you are covered by group life insurance whileemployed, the coverage ends 31 days after youcease employment (whether for reasons of retire-ment, termination of employment, or leave ofabsence without pay).

July 200528


You are eligible to convert your group life insurancecoverage to an individual policy with the PrudentialInsurance Company, without medical examinationand at your own expense, when you retire, termi-nate employment, or lose coverage while on a leaveof absence without pay. This conversion to aPrudential policy is guaranteed (you cannot bedenied coverage for health or other reasons), but itmay be more expensive or less suitable to yourneeds than other policies for which you may qualifyfrom Prudential or other insurance carriers. Youshould consider contacting other insurance carriersand compare the available policies and costs beforeyou decide to purchase the conversion policy.(Other carriers may accept or reject your applicationbased on their evaluation of the status of yourhealth and other factors.) If you wish to purchase aconversion policy, you have a one-time option to doso prior to the 31st day after you cease employ-ment. After that date, you will not be eligible to pur-chase a conversion policy.

You may convert your life insurance to any individ-ual, non-group policy customarily offered byPrudential. You cannot convert to term insurance ora policy containing disability benefits. Under a guar-anteed conversion, the premiums you would paywould be at Prudential’s “standard” rates for the typeof policy to which you would be converting ratherthan the “preferred” rates that would be used forapplicants in good health. The individual policy willbe effective at the end of the 31 day conversiongrace period. If you do not convert to an individualpolicy by the end of the 31 day period, your cover-age will end.

To initiate the purchase of a conversion policy, youmust contact the Prudential Insurance Company(not the Division of Pensions and Benefits) throughany of its local offices or, if you live in New Jersey,you may call 1-800-262-1112. You will need to pro-vide your group insurance policy numbers, as fol-lows:

• G-14800 - This is the policy number for thebasic (noncontributory) group life insurancefor the PERS.

• G-13900 - This is the policy number for thecontributory group life insurance for thePERS.

The conversion policy can be for any amount ofinsurance up to the amount that you had whileemployed. In the case of a retirement, the maximumamount that you can purchase will be reduced by

the amount of any life insurance that you will auto-matically receive in retirement under your retirementplan.

To protect your conversion privilege it is suggestedthat you send your application for conversion toPrudential with at least one month’s premium, at thetime you file your retirement application with theDivision of Pensions and Benefits.

The following sections provide more detailed infor-mation about conversion policies for the specific sit-uations of retirement, termination of employment,leave of absence, and return to public employment.

Conversion: On Retirement

Service, Early, or Veteran Retirement

If you retire with 10 or more years of service creditin the retirement system, the amount of your grouplife insurance will be substantially reduced whenyou retire. You will automatically be covered by thisinsurance and do not need to do anything to qualify.The amount of your coverage and the amount avail-able for conversion will be listed in the Quotation ofRetirement Benefits that you will receive prior toyour retirement.

If you retire on a service retirement with less than10 years of service credit in the retirement system,you will not be entitled to any group life insurance inretirement.

The reduction (or elimination) of your life insurancecoverage will be effective 31 days after your termi-nation of employment or date of retirement,whichever is earlier. If you wish to supplement thiscoverage with either a conversion policy fromPrudential or another type of policy from eitherPrudential or another insurance carrier, it would bebest to begin exploring your options at least fourmonths prior to your retirement.

EXAMPLE: If you had group life insurance of$168,000 through the retirement system whileemployed, and that life insurance coverage drops to$21,000 at retirement, you can purchase up to$147,000 in life insurance coverage under an indi-vidual non-group policy by contacting a Prudentialagent within 31 days following your termination ofemployment.

Deferred Retirement

If you retire on a Deferred Retirement, your lifeinsurance coverage will end 31 days after termina-tion of employment. Any life insurance coverage to

July 2005 29


which you are entitled upon retirement will not takeeffect until you reach age 60 and begin to receiveretirement benefits.

You have the one-time option to purchase a conver-sion policy prior to the 31st day after termination ofemployment (not at the time that you reach normalretirement age). The maximum amount of coveragethat you may purchase will be the differencebetween the amount of coverage you had whileemployed and the amount of coverage that you willautomatically receive when you begin to receiveretirement benefits.

Disability Retirement

If you retire on a disability retirement, your life insur-ance coverage will continue while your disabilityretirement benefits are being processed providedthat the retirement application was filed within 30days of ending your employment. You do not needto make contributions to the contributory life insur-ance plan during this time (if you are on a leave ofabsence during this time, see “Conversion:Termination of Employment or Leave of Absence”below).

If you are approved for a disability retirement youwill automatically be covered by life insurance untilyou reach age 60. The amount of this coverage willbe 1½ times your last year’s salary. At age 60, yourlife insurance coverage reduces to 3/16 of your lastyear’s salary.

You will have the option to purchase a conversionpolicy up until the day you reach age 60. The maxi-mum amount of coverage that you may purchasewill be the difference between the amount of non-contributory coverage you had while employed andthe amount of coverage that you will automaticallyreceive when you reach the normal retirement ageof 60.

If you also had contributory life insurance whileemployed, you may convert the amount of your con-tributory insurance until 31 days after termination ofemployment. Whether or not you exercise thisoption, you will still have the option to convert thenoncontributory portion of your life insurance upuntil the day that you reach normal retirement age.

Conversion: Termination of Employment orLeave of Absence

If you terminate employment without applying forretirement or your insured period during a leave ofabsence expires, you will continue to be covered for

the next 31 days. Up until the end of that 31-dayperiod, you may convert your group life insurance,without medical examination, to any individual policycustomarily offered by Prudential except term insur-ance or a policy containing disability benefits.

EXAMPLE: If you had group life insurance of$96,000 through the retirement system whileemployed, that life insurance coverage is eliminatedat termination of employment. You can purchase upto $96,000 in life insurance coverage under an indi-vidual non-group policy by contacting a Prudentialagent before 31 days following your termination ofemployment.

Conversion: Return to Public Employment

If you return to public employment after the pur-chase of a conversion policy, you must discontinueyour individual conversion policy. If you do not, youwill be required to submit satisfactory proof of insur-ability before you can be covered again in full undera group life insurance policy.

Group Life Insurance Coverage While ReceivingWorkers’ Compensation Without Pay

If you are disabled due to an illness or injury that isa direct result of your regular job duties, you may beout of work on an official leave of absence for ill-ness. If so, your contributory and noncontributorygroup life insurance will continue for the duration ofthe leave of absence, up to two years.

In order for a member to continue the contributoryportion of group life insurance, the member mustremit premiums in advance. Premiums may eitherbe remitted to the Division directly, or the employermay permit the member to pay the premium throughthe employer.

During the interval between the time you are withoutpay and the actual receipt of the Workers’Compensation award, you must be on an officialleave of absence granted by your employer.

ACCIDENTAL DEATH BENEFIT

If you die as a result of an accident during the per-formance of your regular or assigned duties, andyour death is not a result of willful negligence, yourbeneficiaries may be entitled to Accidental Deathbenefits. If approved by the Board of Trustees, yourwidow, widower, or eligible domestic partner (seedefinitions on page 31) is paid an annual pension of50 percent of your Final Salary. This benefit is a life-time benefit to your widow or widower or until

July 200530


remarriage, or to your domestic partner unless he orshe enters into a new domestic partnership or mar-riage. If there is no eligible widow, widower, ordomestic partner or if the widow, widower, or part-ner remarries or enters a new domestic partnership,a pension is paid to your eligible children in theseamounts:

• 50 percent of Final Salary to three or moreeligible children, shared equally;

• 35 percent of Final Salary to two eligible chil-dren, shared equally; or

• 20 percent of Final Salary to one eligiblechild.

If there is no eligible widow, widower, domestic part-ner, or children, a pension will be paid to your eligi-ble dependent parent(s) in these amounts:

• 25 percent of Final Salary to one eligible par-ent; or

• 40 percent of Final Salary to two eligible par-ents.

‘Final Salary’ is the total base salary on which yourpension contributions were based during the lastyear (10 or 12 months) before your death or theaccident which led to your death.

Your eligible beneficiaries for Accidental Deathbenefits are:

• Widow, Widower, or Domestic Partner,which means:

— the person to whom you were marriedbefore the date of death and to whom youcontinued to be married until the date ofyour death and who was receiving at leastone-half support from you in the 12 monthsimmediately preceding your death or theaccident which led to your death; or

— your same-sex domestic partner asdefined by Chapter 246, P.L. 2003 to whomyou were partnered until the date of yourdeath and who was receiving at least one-half support from you in the 12 monthsimmediately preceding your death or theaccident which led to your death.

Note: Under Chapter 246, P.L. 2003, adomestic partner is defined for pensionbenefit eligibility as a person of the samesex to whom the employee or retiree hasentered into a domestic partnership andreceived a New Jersey Certificate ofDomestic Partnership through application

to a local registrar (or a valid certificationfrom another jurisdiction that recognizessame-sex domestic partners, civil unions,or similar same-sex relationships).

• Child(ren), which means your unmarriedchild(ren):

— under the age of 18; or

— of any age who at the time of your deathis disabled because of mental or physicalincapacity and is incapable of substantialgainful employment because of theimpairment. This incapacity must last orbe expected to last for a continuous peri-od of not less than 12 months as affirmedby the Medical Board.

• Parent which means your parent(s) whowas(were) receiving at least one-half supportfrom you in the 12 months immediately pre-ceding your death or the accident which led toyour death. If your parent remarries after yourdeath, benefits cease.

WITHDRAWAL FROM THEPENSION FUND

(Prosecutors Part members see addendum)

When Membership Ends

Your active membership in the PERS ends if:

• you retire or die;

• you end your employment and withdraw yourcontributions from the system; or

• you have not been contributing to the retire-ment system for two years and have less than10 years of service credit. Two years is thelimit for inactive membership before anaccount is expired. (See “Expired Accounts”on page 32.)

Terminating Employment

If you terminate employment before retiring, youroptions vary depending on your vesting status atthe time of your termination (see “Vesting” on page4).

If you are vested when you terminate employment,you could apply for a Deferred Retirement, with pay-ments to begin at age 60 (See “DeferredRetirement” on page 13.)

If you are not vested before you terminate employ-ment, you will not be eligible to receive a monthly

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retirement benefit, unless you are age 58 or older,or eligible for an Accidental Disability Retirementbenefit.

If you terminate employment before vesting, youcan choose to:

• Make an immediate withdrawal of your contri-butions; or

• Leave your contributions on deposit with thePERS and retain all the service credit youhave earned, in the event you return to cov-ered employment and resume membership.As a general rule (see “Exceptions” listed atright), if you do not resume active member-ship within two years, your account will auto-matically expire and you will be requested towithdraw your contributions.

If your account expires or you elect to voluntarilywithdraw your personal contributions, all servicecredit under this membership is cancelled. If youlater return to covered employment, you may thenbe eligible to purchase the service (see “PurchasingService Credit” on page 5) to have it credited toyour new account.

Expired Accounts

If your membership has been inactive for 18months, you are not vested, and you have not filedfor and received a withdrawal of contributions, theDivision of Pensions and Benefits will send anExpiration Notice to your last known address (and acopy to your last employer in case they have a morecurrent address) to remind you that your money isstill being held in the retirement system. When noti-fied, you should file an Application for Withdrawalsince contributions left in the system for over twoyears do not accrue interest.

After two years has passed — if the Division ofPensions and Benefits is unable to contact you, oryou do not reply to the Expiration Notice by submit-ting an Application for Withdrawal — your accountwill expire and the funds in the account will betransferred to the Department of the Treasury, Officeof Unclaimed Property. When your account is trans-ferred, the Division of Pensions and Benefits willconsider your unclaimed funds to be a deemed pen-sion distribution subject to federal tax withholdingunder the federal tax rules of constructive receipt. Atthe end of the tax year in which the transfer occurs,you will be sent a Form 1099-R showing the amountyou must claim as income and the tax withheld andsubmitted to the Internal Revenue Service (IRS).

Should you return to covered employment beforethe two-year period ends, you have the option of anIntrafund or Interfund Transfer if you otherwise quali-fy (see “Transfers” on page 3). Should you return tocovered employment after your account has expiredor you have withdrawn your account, you will betreated as a new member in all respects. Servicecredit from a former membership may be purchasedby members returning to the system after the with-drawal of money from a former account.

Exceptions

Your membership will not end two years after yourlast contribution if:

• you are granted an official leave of absencebeyond the two-year period;

• you were laid off; or

• your position was abolished.

If your leave of absence extends beyond two years,your two-year inactive period will not begin untilyour leave of absence ends.

If you lose your job through no fault of your own(you are laid off or your position is abolished), yourinactive membership can be extended up to 10years.

You must submit documentation from your employershowing that your leave of absence was officiallyextended or that your employment was not terminat-ed voluntarily or for cause for this extension to begranted.

Note: This extension only gives you the right toresume contributing to the retirement system underthe same membership should you again obtain pub-lic employment. It gives you no other right to bene-fits (If you have less than 10 years of membershipcredit in the PERS and you reach age 60 more thantwo years from the date of your last pension contri-bution, you would not qualify for a retirement bene-fit. You would have to return to employment coveredby the PERS during the extended period of inactivemembership, for your account to be reactivated andyou would then be eligible for a retirementallowance, provided you meet all other qualificationsfor retirement.)

EXAMPLE: If you were age 55 with five years ofmembership credit at the time of layoff, youraccount could remain inactive for reemploymentpurposes until you reach age 65; however, youwould not be able to qualify for retirement benefits

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unless you returned to active employment before fil-ing for retirement.

Withdrawing Contributions

If you terminate covered employment before retire-ment, you may withdraw all your contributions withtwo percent interest less any outstanding loan bal-ance or other obligations. No interest is paid if youwere a member for less than three years. You maywithdraw only the money you have contributed andno partial withdrawal is permitted. Upon your with-drawal, all rights and privileges of membershipend.

Since the employer/employee relationship must besevered, no withdrawal will be paid if there are unre-solved legal matters concerning your termination ofemployment.

To withdraw, you must file a properly completedApplication for Withdrawal, which is available fromyour employer or the Division of Pensions andBenefits. Multiple members (see page 3) cannotwithdraw their contributions until they have terminat-ed employment in every position covered by thePERS.

In accordance with federal law, income tax must bewithheld on certain pension distributions that pro-duce an annual taxable income of $200 or moreunless the taxable amount is directly rolled over intoan individual retirement arrangement (IRA) or a newemployer’s retirement plan (if applicable). To qualify,this direct rollover must occur within 60 days of thewithdrawal check date. If payment is made directlyto you, the taxable portion is subject to 20 percentfederal income tax withholding. In addition, if youreceive payment before you reach age 59½ and youdo not roll over the taxable amount, you may haveto pay an extra tax equal to 10 percent of the tax-able portion of any payment. If you have any ques-tions concerning this federal law, call the InternalRevenue Service at 1-800-829-1040.

You may call the Division of Pensions and BenefitsAutomated Information System at (609) 777-1777for general information concerning withdrawals orinformation pertaining to your particular withdrawalclaim. If you are age 60 or older or have 10 years ormore of service credit when you file for withdrawal,you must waive any rights you have to a retirementor death benefit. This written waiver is part of a let-ter which states the amount of retirement and deathbenefits to which you are entitled if you do not with-draw.

No withdrawal application can be processed until allthe necessary information has been received fromyou and your former employer.

WORKERS’ COMPENSATION

As long as you are receiving Workers’ Compen-sation benefits (either temporary or permanent), youretain the same status as an active member. Youcannot withdraw from the PERS while you arereceiving Workers’ Compensation, have a claimpending, or are involved in litigation regardingWorkers’ Compensation unless the employer/employee relationship is severed and you completea waiver of retirement benefits.

Your employer is obligated by statute to pay yourpension contribution based on the salary you werereceiving immediately before you start receivingWorkers’ Compensation benefits if the total compen-sation you receive is less than 100 percent of yourfull salary. Your employer is not obligated, however,to make voluntary contributions, such as loans orpurchase arrears payments.

The employer's obligation to make pension contribu-tions for members receiving Workers' Compensationceases when:

• The employee voluntarily files for a retirementallowance that is subsequently approved;

• The employer files an involuntary disabilityretirement application for the employee that issubsequently approved;

• The employee voluntarily resigns fromemployment for reasons other than the inabili-ty to perform the job's functions due to theincident that was the basis for the Workers'Compensation claim; or

• The employee is terminated by the employerfor reasons unrelated to a Workers'Compensation award.

If you are approved for Ordinary DisabilityRetirement benefits and receive a Workers’Compensation award, your Workers’ Compensationaward may be reduced by the amount of yourOrdinary Disability Retirement benefit.

If you are approved for Accidental DisabilityRetirement benefits and receive receive periodicWorkers’ Compensation benefits, the pension por-tion of your retirement allowance will be reduceddollar-for-dollar by the amount of the periodic bene-fits.

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APPEALS

If you wish to appeal any administrative decision ofthe Division of Pensions and Benefits, address yourappeal to:

Secretary to the Board of Trustees Public Employees’ Retirement System Division of Pensions and Benefits PO Box 295 Trenton, New Jersey 08625-0295

Your appeal to the Board of Trustees must include acopy of the administrative decision, a detailed expla-nation of your basis for disagreement with the deci-sion, and all supporting documentation that youwish to be considered by the Board. The Board willaddress your appeal and issue a written determina-tion.

If you disagree with the determination of the Boardof Trustees, you may request a formal hearingbefore an Administrative Law Judge within theOffice of Administrative Law (OAL), by sending awritten statement to the Board of Trustees within 45days from the date of the Board’s decision. State indetail the reasons for your disagreement with theBoard’s determination and submit any and all sup-porting documentation if you have not already done

so. If no such written statement is received withinthe 45-day period, the determination shall be con-sidered final.

If your request for a formal hearing is approved bythe Board of Trustees, the Board will submit thematter to the OAL. Upon completion of this hearing,the Administrative Law Judge will submit to theBoard an initial decision which the Board mayadopt, reject, or modify. If the Board rejects or modi-fies the initial decision, it shall issue a detailed find-ings of fact and conclusions of law which willbecome the Board’s final administrative determina-tion and may then be appealed to the SuperiorCourt, Appellate Division.

When the Board of Trustees reviews your requestfor a hearing in the OAL, it determines whether thematter involves contested facts or is solely a ques-tion of law. If the appeal involves solely a questionof law, an OAL hearing is not likely to be approved.In that case, the Board shall reject your hearingrequest and issue detailed findings of fact and con-clusions of law. These findings and conclusions willbecome the Board’s final administrative determina-tion and may be appealed to the Superior Court,Appellate Division.

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Benefits and provisions of the Public Employees’ Retirement System are subject to changes by the legis-lature, courts, and other officials. While this booklet outlines the benefit and contribution schedules of thePublic Employees’ Retirement System, it is not a final statement. Complete terms governing any employ-ee benefit program are set forth in the New Jersey Statutes Annotated. Regulations, new or amended, arepublished in the New Jersey Register by the State Office of Administrative Law supplementing the NewJersey Administrative Code.

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PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

HANDBOOK EVALUATION FORM

Please rate the following aspects of this handbook:

1. Explanation of the provisions of the Public Employees’ Retirement System.

Excellent Above Average Below Poor Average Average

2. Ease of use (readability, ease in finding needed information, etc.).


3. Usefulness as a future reference.


4. I found the following section(s) or subject(s) helpful:

5. I found the following section(s) or subject(s) confusing:

6. Questions or comments:

If you need an answer to a question, be sure to include your full name, Social Security number or PERSmembership number, a daytime telephone number, and return address:

Name:

SSN or Member Number: Phone:

Address:

Please mail or fax your completed evaluation form to:

Division of Pensions and BenefitsATTN: Publications Unit

PO Box 295Trenton, NJ 08625-0295

Fax: (609) 777-1779

Thank you for your time and consideration in completing and returning this evaluation.

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NOTES

SP-0333-0705q

Documents

PERS Handbook - Paterson Public Schools