Tag Archives: Retirement

Retirement Planning for PERS and TPAF Members Webinar Summary

There are many aspects of the retirement process, which could affect when you receive your pension, how much you receive, and whether you are eligible for any other benefits.  A summary of the Retirement Planning for PERS and TPAF Members webinar is below.  You can also download a copy of the Retirement Planning Guidebook for more information.

To see a full description of all topics, available seminar/webinar dates and/or locations, or to register, please visit their registration page at: www.nj.gov/treasury/pensions/member‐training.shtml.

If you have any questions regarding retirement or the information from the webinar, please contact the Division of Pensions and Benefits at pensions.nj@treas.nj.gov (please allow 10-14 business days for a response) or 609-292-7524.  You can also view their Guidebook series at https://www.state.nj.us/treasury/pensions/member-guidebooks.shtml.

  • Retirement basics
    • Your pension tier will determine your eligibility based on both years of service and your age
    • You can find a breakdown of the pension tiers at https://www.state.nj.us/treasury/pensions/retirement-estimate-calculators.shtml.
    • You must apply for retirement through MBOS
    • Your Retirement Date will always be the FIRST of the month
    • Your Termination Date MUST be before your Retirement Date
    • Recommended to file 4-6 moths before Retirement Date
  • Types and Eligibility
    • Service Retirement
      • Based on your age according to your tier
        • Tier 1 or 2 – 60 years
        • Tier 3 or 4 – 62 years
        • Tier 5 – 65 years
      • You do not need to meet any minimum years of service
      • For payment calculation, see the Retirement Estimate Calculator
    • Early Retirement
      • Based on years of service according to your Tier
      • A reduction will be applied based on your age and pension Tier
        • Tier 1 – 3% per year under age 55
        • Tier 2 – 3% per year under age 55 AND 1% per year under age 60
        • Tiers 3/4 – 3% per year under age 55 AND 1% per year under age 62
        • Tier 5 – 3% per year under age 65
      • Reductions will be calculated down to to the month
    • Deferred Retirement
      • You must be vested (minimum 10 years of service), but less than amount for early retirement according to your Tier
      • You must be younger than retirement age based on your Tier
      • No reduction based on age
      • Must file before you reach your Retirement Age according to your Tier
    • Veteran Retirement
      • Must have 25 years of service and be age 55 OR 20 years of service and age 60
      • If under 35 years of service, formula is 54.5% of the highest 12 consecutive months of base salary
        • must have contributed to pension in all 12 months
      • If 35 years of service or more, formula is Years of Service/55 X Highest 12 Consecutive Months of Salary
    • Disability Retirement
      • Only available for Tiers 1-3
      • Ordinary
        • 10 years of NJ service
        • totally and permanently disabled
        • Unable to carry out duties of your job
        • 43.6% X Final Average Salary
      • Accidental
        • Active member of the pension
        • Totally and permanently disabled
        • Must be as a result of performing job duties
        • Apply within 5 years of the accident
        • 72.7% X Base Salary at Time of Accident
  • Pension Options
    • General Information
      • Must select 1 Option when you submit Retirement Application
      • All options provide lifetime payment to member – 1 payment per month
      • Some options are irrevocable once pension is Due and Payable (30 days after Retirement Day or Pension Board approves retirement, whichever is longer)
      • Pension payment is 1 month behind
    • Maximum Option
      • Highest payable benefit only to member
        • Benefits payable upon death (Last Check Benefit)
          • your last month’s payment OR balance of unrecovered contributions
            • Takes 2-3 years to recover all of your contributions
          • Beneficiary can include individuals, charities, estate, or trust
          • Spouse/partner will be notified of no survivor benefit when you retire
          • Beneficiary WILL NOT receive any further payments
    • A, B, C, D Options
      • These options allow for some level of survivor benefits, but your monthly benefit is reduced
      • Reduction is based on the age difference between you and your beneficiary and the Option you select
        • A = 100% of your benefit, B = 75%, C = 5-%, D = 25%
      • Beneficiary cannot be changed after retirement date
      • If your beneficiary dies before you, your allowance will increase to your maximum amount
    • Option 1
      • A reserve amount is set aside for your beneficiary
      • Member receives a reduced payment amount for life, which is matched by beneficiary for duration of the reserve
      • Once reserve runs out (generally 8-11 years), beneficiary stops receiving any payment
      • If you die before reserve is depleted, beneficiary gets the balance
      • You can designate multiple beneficiaries and change them after you retire
    • Options 2 and 3
      • Choose 1 beneficiary for lifetime benefits
      • Option 2 = 100%, Option 3 = 5-%
      • Member receives a reduced payment that does not change if beneficiary dies
      • Reduction is based on age difference between member and beneficiary as well as Option choice
    • Option 4
      • Beneficiary receives a specified amount upon member’s death you designate on Retirement Application
      • Benefit cannot exceed member’s monthly benefit
      • Reduction is based on a calculation using member age and beneficiary(ies) age
  • Purchasing Service Credit
    • Members can purchase service credit in 2 categories
    • Shared credit, where member only pays for their half of the payment
      • Temporary/substitute service, former membership, leave of absence, uncredited service, out-of-state service
    • Full credit, where member pays their half and employers half of payment
      • Military service, U.S. Government including Postal Service, local retirement system
    • Payment is based on age and member’s highest salary
  • Life Insurance in Retirement
    • Must be qualified and covered by Group Life Insurance while active employee
    • Must have 10 years of service or less if disabled
    • No-cost benefit is paid to named beneficiary upon death
    • Restricted to Tier 1-3 only
      • For a chart of payments, see page 15 of Handout
    • Group Life Insurance Conversion
      • Can convert Group Life Insurance coverage of active employee when member retires, but member is responsible for paying all costs that were once covered by employer
    • You can have multiple beneficiaries as both a Primary and Contingent
      • Does not have to be an individual
      • If you want to list a minor:
        • nominate a Formal Trustee for the minor OR
        • payment will be withheld until minor is 18 or there is a court-ordered Guardian of Property assigned to the minor
  • Taxes and Deductions
    • Your pension is subject to Federal Income Tax for the duration of payments
    • Your pension is subject to NJ State Income Tax once the amount of employee contributions has been recovered
      • This only applies if you live in NJ after retirement
    • The NJ Division of Pensions and Benefits does not withhold state income state for other states; you are responsible for any tax payments
  • Possible Deductions on Pension
    • Federal Income Tax
    • NJ State Income Tax
    • Health Benefits
    • Dental
    • Pension Loan
      • You can take an existing Pension Loan into retirement, but you cannot borrow any more money against your pension
    • Tax Liens
    • Court-ordered Deductions
  • Health Benefits
    • You will receive a letter in the mail before your retirement, outlining your possible costs
    • If you wish to enroll, you must prove your age by sending acceptable original documents via the Postal Service
    • Eligible Dependents
      • Spouse/partner
      • Children until age 26
      • Overage dependents if they are disabled
    • 2 carriers – Aetna or Horizon
    • Prescription plan through Optum Rx
    • 6 Dental Plans
    • Costs depend on your employer (local government, state, or local education unit)
    • Medicare Parts A and B
      • If you are already on the state sponsored health plan in retirement, you must take Medicare once you are able – 65 years of age or receive Social Security Disability for 24 continuous months
      • Must provide a copy of your Medicare Card and call to enroll
      • Once Medicare enrollment has been proved, you will automatically be enrolled in Part D (prescription)
    • You can change your plan anytime as long as you have been with the same plan for 12 months
    • If you terminate your state sponsored health insurance in retirement at any time, you will not be re-instated.
    • If you decide to waive coverage at time of retirement, you can re-enroll within 60 days of losing your current coverage
  • Dental Benefits
    • Must be enrolled in the State Health Benefits Plan
    • One time enrollment
    • Does not cover orthodontics

Understanding Your Pension Benefits for State Employees Webinar Summary

Below is a summary of the Division of Pensions and Benefits webinar “Understanding Your Pension Benefits for State Employees”.  The presentation was not recorded and the slides have not be released for viewing.  If you have any specific questions about your account, or need further clarification on the information covered in the webinar, please contact the Division of Pension and Benefits at pensions.nj@treas.nj.gov (please allow 10-14 business days for a response) or 609-292-7524.

  • Pension Basics
    • Defined Benefit Plan (401a), which provides lifetime benefit
    • Combination of contributions and service credit based on time served in public sector
    •  Contributions
      • Member contributes 7.5% of base salary
      • Employer contributes unspecified amount into general pension fund, not your specific account
      • Investment returns
    • Pay periods equal the amount of service time
      • Bi-weekly paid employees – 261 pay periods = 10 years/651 pay periods = 25 years/782 pay periods = 30 years
      • Monthly paid employees – 120 pay periods = 10 years/300 pay periods = 25 years/360 pay periods = 30 years
    • Once you accrue 10 years of service, you are considered Vesting, which means you cannot collect your pension until you reach your minimum age – only if you leave/are terminated before your eligibility based on your tiers
    • If you decide to collect before your eligible, you will receive a reduced amount over your lifetime
  • Pension Tiers
    • Tier 1
      • Employment start before July 1, 2007
      • Must be age 60 or have 25 years of service to collect
    • Tier 2
      • Employment start July 1, 2007 – November 1, 2008
      • Must be age 60 or have 25 years of service to collect
    • Tier 3
      • Employment start November 2, 2008 – May 20, 2010
      • Must be age 62 or have 25 years of service to collect
    • Tier 4
      • Employment start May 21, 2010 – June 27, 2011
      • Must be age 62 and have 25 years of service to collect
    • Tier 5
      • Employment start June 28, 2011 or later
      • Must be age 65 and have 30 years of service to collect
  • Pension Calculation
    • Tier 1-3
      • Years of service/55 X (Last 3 years salary average OR Highest 3 years salary average) = Gross average payment
    • Tier 4-5
      • Years of service/60 X (Last 5 years salary average OR Highest 5 years salary average) = Gross average payment
  • Life Insurance
    • There are 2 different types of life insurance
    • Non-contributory
      • Paid by employer
      • Pays out 1.5x your base salary
    • Contributory
      • Paid by employee at 0.5% of your base salary
      • Pays out 1.5x your base salary
    • Designate beneficiaries through MBOS
      • Primary and Contingent beneficiaries
      • Contingent beneficiary only gets payout if all Primary are dead
      • Cannot pay out to minor unless:
        • Formal Trustee
        • Hold in escrow account until minor turns 18
  • Purchasing Service Credit
    • If you would like to purchase service credit, process takes 3-4 months
    • Shared Cost Time
      • You must pay for a portion of the costs
      • Includes temporary time off, leave of absence, and uncredited service
    • Full Cost Time
      • Member must pay for all of the costs
      • Includes military service, federal time
      • Will not count towards health benefits, but will for salary
    • Cost of Purchase
      • Highest salary X age factor = cost of one year
    • Payment Options
      • Lump sum
      • Payroll deductions
      • Rollover from another retirement plan
      • Combination
      • Must be paid in full by retirement date
  • Pension Loans
    • Must have 3 years of posted service
    • Borrow 2 times per calendar year
    • Borrow up to half of contribution, not to exceed $50,000
    • Interest rate is 7.75 % and there is a $15.00 administrative fee
    • Repayment
      • minimum payment is never less than your pension contribution
      • Cannot exceed 5 years
      • Payment through payroll deductions
      • Cannot exceed 25% of base salary – usually matters if multiple loans are out

Understanding Social Security

As people prepare for retirement, one of the biggest factors revolves around Social Security.  Popular questions include “How much will I get?”, “Will it be enough?”, and “Can I still work?”.  Please join us as the Credit Union of New Jersey and Member Wealth Management unravel the intricacies of Social Security, including:

  • Social Security Eligibility
  • Filing for Benefits
  • Benefits for Spouses
  • Working after you begin collecting

Securities, Investment Advisory and Financial Planning services offered through qualified registered representatives of MML Investors Services, LLC, Member SIPC: 222 Central Park Ave Suite 1100 Virginia Beach VA 23462 (757) 490-9041. Member Wealth Management and Credit Union of NJ are not subsidiaries or affiliates of MML Investors Services, LLC.  CRN202103-244844


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Retirement Planning Program Recap

Thank you to Arlene Ferris-Waks from the Bureau of Securities for presenting on how to start preparing for retirement.  Retirement is a critical milestone that can severely affect the quality of one’s life as they age.  When considering your retirement, there are 5 steps you should go through to prepare yourself:

  1. Coordinate with your partner/spouse
  2. Determine where your money will come from after retirement (pensions, Social Security, annuities, etc.)
  3. Set a monthly budget to ensure you have enough income
  4. Determine how you will spend your time, including part-time jobs
  5. Plan for your healthcare

Planning for your retirement is a long process, so within 5 years of your retirement, you should:

  1. Review your pensions, estimated Social Security income, and other investments to make sure you are able to sustain your expenses
  2. Evaluate your taxes to ensure you can adequately afford to stay in your home or pay the income taxes from your investments
  3. Diversify your investments to ensure you have a stable and reliable income
  4. Educate yourself about the different types of investments, financial professionals, and government benefits

It is important to make sure you are secure in your financial future so consulting with a financial professional is important.  There are different types of financial professionals that may or may not fit your financial goals.  Registered Representatives generally charge a commission per transaction and do not have a fiduciary responsibility to manage your investments, which means they can pick more costly securities to ensure their commissions are higher.  Investment Adviser Representatives tend to charge a quarterly or yearly fee for managing your investment portfolio which can cost more money than the commission a Registered Representative would make if you have few transactions in a year.  However, an IAR does have a fiduciary responsibility to manage your money in your best interest and in good faith, which also means that you can take them to court.  You can always check the status and background of your investment professional through the NJ Bureau of Securities, either online or by phone at 973-504-3600.

As always, there are many investment scams to watch out for, from Ponzi schemes, to Bait and Switch, to guaranteed returns.  There is no such thing as a guaranteed return as all investing and securities come with some level of risk.  So, before you invest, seek the assistance of an attorney or CPA, consider estate planning and especially trusts if you want to pass your money on after your death, and always consider the tax implications of your investment choices.

For more information on retirement and resources to help you, you can reach out to the Social Security AdministrationAARP, FINRA, or the Employee Benefit Research Institute.  You can also contact Arlene at arlene.ferris-waks@lps.state.nj.us or 973-504-3627 regarding anything from her presentation or how the Bureau of Securities can help you on your road to retirement.

Retirement Planning

The notion of retirement often conjures images of relaxation, joyfulness, and engaging in activities we love, but quite the opposite can occur while trying to figure out how to plan for retirement.  Ensuring that we have enough tucked away to financially support us after we retirement can be daunting and a major source of stress and anxiety.  To help us ease through this transition and plan for a financially stable future, Arlene Ferris-Waks,  Director of Complaints and Investor Outreach for the New Jersey Bureau of Securities will present on retirement planning.  She will cover how to prevent becoming a victim of fraud and scammers, social security, estate planning, downsizing for retirement, and some methods that people might be able to play catch-up for saving for retirement, among other things.


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Please indicate the classes you would like to attend by clicking on the appropriate box below.

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